Indian Rupee: Outperforming Global Peers Amidst Economic Challenges

The Indian rupee depreciated by 2.9% in FY25 but outperformed currencies like the Canadian Dollar and Brazilian Real. Various global factors influenced its exchange rate. Despite geopolitical tensions, the rupee displayed stability in its NEER and appreciated in its REER, reflecting relative purchasing power growth.

The Indian rupee showed resilience by depreciating just 2.9% in the first three quarters of FY25, outperforming other international currencies such as the Canadian Dollar and South Korean Won. These insights were presented in the Economic Survey released in Parliament.

The rupee's value is subject to market forces without a designated target range. Influences include the Dollar's movement, capital flow trends, interest rate levels, crude price fluctuations, and current account balances. The strengthening USD and geopolitical issues have impacted the rupee's valuation in recent times.

Adoption of a floating exchange rate has made effective exchange rates key in assessing an economy's international competitiveness. Notably, the INR's NEER remained stable between 90-92 in 2024, while its REER appreciated, signaling strengthened purchasing power.

(With inputs from agencies.)