When leading currencies of the world were ‘floated’, we adopted a policy of the ‘moving peg’. However, progressive exchange rate depreciation could make its impact felt only with the growth of our economy and its deepening contacts with rest of the world.
The force of this impact increased when we accelerated the pace of economic reforms and opened up our economy to the world both as a matter of considered policy shift and under WTO pressure.
According to the official assessment of the developments, since early 1990s, rupee depreciated in both nominal and real terms. And, this was supplemented by various export promotion measures by the government.
These factors led to the strengthening of exports of major commodities like gems and jewellery, textiles, engineering odds, chemicals and related products, and ores and minerals.
The inference is that for further strengthening of our external sector and for improving our international competitive strength, we should intensify our domestic economic reforms, especially those which remove various impediments to export growth. Such reforms should be accompanied by further tariff reforms for strengthening the country’s global competitiveness.