This refers to “Rupee depreciation does not help us” (Business Line, August 15). Though dollar earnings of exporters rise when the rupee depreciates, importers have to pay more for capital goods and machinery. The RBI’s directive to exporters to convert half their foreign-exchange earnings into rupees to make dollars available in the market had disappointed exporters. Instead, unnecessary imports should be curbed and more foreign direct investment attracted to increase the supply of dollars. A Tobin tax may also help bring dollar revenue and control the flow of foreign institutional investment.
- N.R. Nagarajan (HBL)
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