With currencies weakening and global economic turmoil, Prime Minister Narendra Modi held a meeting on Tuesday with industrialists, bankers and economists to analyse the current situation and identify solutions.
The rupee fell by 36 paise (0.5 per cent) to close at a two-year low of 66.82 against the American dollar on Monday on firm dollar demand from banks and importers and volatile domestic equities. The Indian currency has depreciated about 7 percent since April.
The depreciation of the rupee would have ambiguous impact on Indian textile industry. Fall in rupee will possibly benefit the Indian textile exporters as China could further devalue its currency to increase competition.
The recent devaluation of the yuan has led to a weakness in the rupee against the dollar. So far in 2015-16, the rupee has depreciated 13.9 per cent and 6.6 per cent against the euro and dollar, respectively.
The depreciating rupee has prompted textile and apparel importers abroad to renegotiate the terms of their contracts with Indian exporters. Now, new contract orders are being deferred till the Indian currency stabilises.
