Business-Despite depreciating trend, rupee outperformed some major EM currencies in 2018-19: Survey

Notwithstanding the depreciating trend of the Indian rupee last financial year, the local unit performed better than some of the other major emerging market currencies during 2018-19, the Economic Survey said Thursday. The Economic Survey for 2018-19, tabled in Parliament by Finance Minister Nirmala Sitharaman, said the Indian rupee touched 74.4 per US dollar in October 2018, before recovering to 69.2 at March-end 2019.

During 2018-19, the domestic unit slipped by 7.8 percent against the US dollar, 7.7 percent against yen, and 6.8 percent against the euro and pound sterling. "Rupee depreciated in the first half of the year due to concerns related to the widening of CAD owing to rising crude oil prices coupled with tighter financial conditions in the US caused by an increase in Federal Funds rate by the US Federal Reserve," the survey noted.

Despite the depreciating trend, the rupee performed better than some of the other major emerging market currencies such as the Argentine Peso, Turkish Lira, Brazilian Real, and Russian Ruble, which depreciated more than 10 percent vis-a-vis the US dollar, it added. Not only in terms of the bilateral exchange rate with the US dollar, but the rupee also depreciated when measured as trade-based weighted exchange rates in 2018-19.

"Nominal Effective Exchange Rate (NEER) (36 currency trade based bilateral weights) of rupee depreciated by 5.6 percent in 2018-19. Correspondingly, Real Effective Exchange Rate (REER) also depreciated by 4.8 percent in 2018-19," the survey said. The survey further said during 2018-19, the 10-year benchmark Government Security (G-Sec) yields were volatile and closely tracked the movement in oil prices, domestic liquidity, and rupee exchange rate.