Declining inflows signal tough year for rupee, experts warn

The rupee is in for a rough ride next year, industry sources and currency experts have warned, insisting that the local currency might face a significant devaluation as its current facade of stability is not backed by economic fundamentals. To back up their assertion, experts point to the current fiscal year’s data indicating troubling trends. For instance, remittances dropped by 10.3 per cent year-on-year during the five months from July to November, resulting in a $1.3 billion loss compared to the year-ago period. This decline followed a $4bn decrease in remittances in the last fiscal year. Export figures are also not encouraging, with proceeds falling 4.4pc to $2.57bn in November and rising by a meagre 2pc during July-November. These dwindling inflows are set against the backdrop of import expenditures that are twice as high as exports during the five-month period, further straining the rupee’s position amid the rising demand and poor inflows of dollars.