Why India’s currency slide is creating US tariff relief for exporters
The lower rupee is helping Indian industries that have been absorbing tariff losses in the hopes of a US-India trade deal, analysts say
The rupee depreciated beyond 90 to the US dollar this week, deepening a slide that began last week.
While the currency’s weakness is driving up the cost of essentials such as oil imports and overseas tuition, it has also brought some short-term relief to India’s labour-intensive exporters, many of whom have been hit by US tariffs of up to 50 per cent.
Ajay Sahai, director general of the Federation of Indian Export Organisations, told This Week in Asia that the depreciation was allowing exporters, including apparel and footwear producers, to absorb part of the tariff burden and hold on to their customers in their largest market.
“They are managing in the hope that we will have a bilateral agreement with the US soon. For them, the rupee depreciation brings a little relief,” he said.
India’s merchandise exports fell 11.8 per cent year on year to US$34.4 billion in October, with shipments to the US dropping 8.5 per cent – the second straight month of contraction.