Indian currency falls more than 100 paisa in a day to Rupees 71 from 70 against the US dollar
Discuss the impact of this situation on Indian exports imports and on BOP

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Solution

Dear Student,

In this case there is depreciation of currency.
$1= Rs.71
$1= Rs.70
It is appreciation of $ and depreciation of Rs. So depreciation of currency make domestic goods cheaper to foreigners in international market . It is increase in exchange of the country which leads to increase in inflow of foreign exchange. This reduces deficit , depreciation of currency makes market expensive . so imports falls

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Indian currency falls more than 100 paisa in a day to Rupees 71 from 70 against the US dollar Discuss the impact of this situation on Indian exports imports and on BOP

Indian currency falls more than 100 paisa in a day to Rupees 71 from 70 against the US dollar
Discuss the impact of this situation on Indian exports imports and on BOP