Question

Which of the following is a consequence of rupee depreciation?

1. Decrease in the cost of imports
2. Foreign trips will become cheaper
3. Exports will become less competitive
4. Increase in remittances from abroad

Answer 1

Correct Answer - Option 4 : Increase in remittances from abroad

The correct answer is Option 4.

• Rupee depreciation badly affects importers or those who wish to visit foreign countries for holidays as they need more local currency to get the same service or product.
• When rupee depreciates exporters from India are benefited. (Eg: Software companies, seafood exporters etc.)
• Depreciation of rupee benefits the overseas Indians as those who are working abroad will gain more on remitting money to their homeland. Hence, Option 4 is the correct answer.