A weakening rupee does not translate into exports growth, a study by industry body, the Punjab, Haryana and Delhi Chamber of Commerce and Industry (PHDCCI) has found.
The study revealed that India's exports actually grew robustly during the years when the rupee had appreciated strongly, and decelerated during the years the rupee depreciated.
Latest export data seem to back this up. Despite a highly depreciating rupee, India's exports in April grew by a mere 3.2 per cent, at $24.50 billion.
The study found that the rupee appreciated significantly during 2007 against the dollar, a year when India posted healthy export growth of about 15 per cent. “The high export growth despite a dear rupee may be attributed to strong world demand, which is evident from world GDP growth of 5.4 per cent, supported by domestic conditions (India's GDP grew at 10 per cent),” says Mr S. P. Sharma, Chief Economist, PHDCCI Research Bureau.
On the other hand, during the post-Lehman global financial crisis period (2009), the rupee depreciated significantly against the dollar, and India's exports growth stagnated at 6 per cent.
“When the rupee appreciated during fiscal year 2007, the trade deficit was at a moderate level of around $59 billion. However, when the rupee met with significant depreciation during the Lehman crisis year (fiscal year 2009), the trade deficit also touched its decadal peak of around $116 billion,” the study points out.