Acknowledgment: Prof L N Dahiya for helpful comments and constructive criticisms.
The almighty dollar has finally proven to be vulnerable, as most currencies have seen sharp appreciations against it in the past few months. An appreciating rupee implies cheaper imports and India's imports are more than its exports. In fact, whenever the currency of a country moves up, it is usually implicit that the economy of the country is doing well, but implications are not always verified in reality and a rising Indian currency may lead to a problem of plenty. This paper studies the real implications of the appreciation of the rupee on the Indian economy and shows that in the long run, the Indian economy has less to lose and more to gain.
