Despite complaints by some exporters in recent months about the negative effects of a stronger rupee on their operations, a Wharton expert says India will be better off with a stronger currency in the long run. "Indeed, it may be inevitable," said Professor Jitendra V Singh of the Wharton Business School.

'Indian firms should use the rupee's strength to their advantage by adapting their business models in innovative ways, much as Japan's automakers did during the 1980s,' Singh, who took over earlier this month as dean of Singapore's Nanyang Business School, said in an article in the August issue of Knowledge@Wharton.

'The notion that the RBI [Reserve Bank of India] can keep the rupee down may not amount to more than wishful thinking in the long term. The RBI cannot keep the rupee weak indefinitely; the rupee cannot stay down if the Indian economy is strong and the fundamentals keep pushing it up,' Singh said.

The Indian currency has risen more than 8 percent since March against the US dollar, in stark contrast to the currency's depreciation till 2002. Although the rising rupee has both good and bad effects, companies that earn revenues in dollars and whose costs are in rupees are worse off.

Singh explained why he thought Indian firms must rethink their business models.

Text: Suman Guha Mozumder

Image: An Indian travel agent waits beside a board showing exchange rates in New Delhi, April 23. India's rupee is showing new muscle as it scales nine-year highs against the dollar, alarming exporters who sell most of their goods to the United States.