According to India's Monthly Economic Review for May, the recent depreciation of the rupee, which fell about 10% against the US dollar in FY26, may bolster the country's export competitiveness. The Finance Ministry emphasizes that this adjustment should not be viewed solely as a sign of economic weakness, as it has improved India's real effective exchange rate (REER), which dropped to 92.72 in April 2026, its lowest level in over a decade. This change could enhance India's share in global manufacturing and trade. However, the review cautions that the benefits of a weaker rupee depend on sustained global demand and inflation control. Historical data from FY14 showed that despite a sharp rupee depreciation, exports declined due to weak global demand. Furthermore, rising import costs for crude oil and other commodities could negate some competitiveness gains if inflation accelerates. Despite these challenges, India's macroeconomic position remains robust, with foreign exchange reserves around $697 billion, sufficient to cover nearly 11 months of imports.