Subbarao: Weak Rupee May Not Boost Exports
HYDERABAD, India--A weakening rupee doesn't necessarily mean Indian exports are becoming more competitive, the central bank governor said Friday, a day when the local currency fell to a nearly one-year low against the dollar.</br></br>"It is somewhat misleading to believe that we can get export competitiveness from our exchange rate," Duvvuri Subbarao said at an event in the southern Indian city of Hyderabad, referring to a sharp drop in the rupee's value against the dollar.</br></br>The rupee is down nearly 6% against the dollar since the beginning of May. On Friday, the rupee tumbled to 57.12 against the dollar--its lowest level in nearly a year and close to the all-time low of 57.33 hit on June 22, 2012.</br></br>The rupee and many other currencies are hit because of a global rush to buy dollars as the U.S. economy shows signs of a revival in growth. Concerns over India's gaping current-account deficit worsened the local unit's fall.</br></br>Mr. Subbarao's comments debunk observations by some economists that the rupee's weakness has a silver lining as it makes Indian exports more competitive, while also discouraging nonessential imports because of higher cost.