The rupee has been facing crisis for quite some time now. Last week, the currency hit a new record-low of 58.95 against the US Dollar, and although later it recovered to some extent buoyed by RBI's intervention in the forex market, Fitch's upgrading of India's credit outlook, and assurance from the government of steps to curb further fall, the gain was not enough to prevent it from registering its sixth consecutive weekly loss. During the current financial year up to June 14, the rupee depreciated by 5.8 percent.

What significance does this hold for our exporters? Beyond doubt some exporters will benefit from the ongoing rupee crisis. The sector has been facing demand slump in the global markets, and now with such a depreciation it is expected that our exports would be more competitive in the global markets, and this will ultimately lead to export growth. In fact, some media reports have already noted that some sectors like apparel and agriculture are rejoicing at the fall of the currency.

But this is not the complete picture. Although the weak rupee may bring some short-term gain to the export sector, currency depreciation can't do any real good to an economy, and definitely not when current account deficit (CAD) is so bad.

In addition, many of our export sectors like petroleum, coal, gems and jewellery, electronics and plastic products largely depend on imported raw materials, and as a result, whatever advantages of the weaker rupee we take now will soon be mitigated. Also, I don't think there is any historical relationship between currency depreciation and export growth. We can draw many examples of this from the past years when the country's exports fell despite sharp rupee depreciation. Only a competitive advantage based on innovation and productivity can ensure sustainable development of the sector in the long-term.

So, I don't cheer the fall of the rupee, but at the same time I find nothing wrong in taking the advantage of it by an exporter. In contrast, I believe more dollar earnings at this moment by means of higher exports will turn out to be helpful to the economy to some extent, and this is the reason behind RBI's recent decision to increase the limit of per export transaction through online payment gateways to $3000 to $10,000. This move will help increase the supply of dollars in the market. In addition a number of sectors, including gems and jewellery, healthcare, handicrafts, carpets and furniture, collectibles and toys, etc. will benefit from the measure.

The RBI yesterday kept its key policy rates unchanged. This has come as no surprise. Although May inflation fell to a three-year low of 4.7 percent and April IIP grew at a slower-than-expected 2.2 percent, CAD and the rupee are bigger concerns at this moment. Meanwhile, the Centre yesterday released foreign trade figures which show 1.1 percent y-o-y fall in exports and increase of trade deficit to $20.1 billion due to high gold imports. This development is also concerning.

I invite readers' feedback on the current economic, fiscal, and monetary conditions.