Question:
“Depreciation of currency may promote exports of a nation.”
Defend or refute the given statement with valid arguments.
“Depreciation of currency may promote exports of a nation.”
Defend or refute the given statement with valid arguments.
Defend or refute the given statement with valid arguments.
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Currency depreciation can benefit exports but may lead to higher import costs and inflation.
Updated On: Feb 9, 2026
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Solution and Explanation
Depreciation of a currency reduces the price of exports in foreign currency terms, making them more competitive in the global market.
This increases the demand for exports, boosting a nation’s trade balance.
However, it may also increase the cost of imports, leading to inflationary pressures within the domestic economy.
Example: If the Indian rupee depreciates against the US dollar, Indian goods become cheaper for US buyers, increasing export demand.
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