Re loses to greenback, however wins in opposition to different heavyweights

The rupee‘s latest slide vis-a-vis the US greenback masks its relative energy in opposition to a basket of prime world currencies, together with the pound, euro, yen and yuan, illustrating the evident disconnect between a unidirectional world rush for USD belongings and India’s strong macroeconomic fundamentals.

“The rupee’s appreciation in opposition to a bunch of main currencies is in distinction to its losses versus the US greenback,” mentioned Bhaskar Panda, government vice chairman,

. “This one-off occurs when a rustic’s foreign money is barely shedding worth as a result of secular greenback energy. India’s macroeconomic potential stays unchanged over the long run, and the central financial institution is now prioritising inflation administration.”

The rupee has shed about 4.32% in opposition to the greenback this calendar 12 months; in contrast, it has superior as much as 6.21% in opposition to the opposite main world currencies, Bloomberg information compiled by ETIG confirmed.

The native unit gained essentially the most in opposition to the Japanese yen – at 6.21%. The rupee appreciated 3.86% versus the British pound and a pair of.98% versus the euro. The rupee’s rise in opposition to the Chinese language yuan is 0.68%.

“This is without doubt one of the uncommon events when the rupee is shedding worth to the greenback, however gaining in opposition to some main currencies,” mentioned Madan Sabnavis, chief economist at

. “Any such appreciation will assist curb imported inflation on items from the non-dollar based mostly settlements.”


The central financial institution’s intervention technique is aimed toward arresting the rupee’s slide and minimising the impression of imported inflation.

“An inflation-focused central financial institution, too, seems eager to arrest the rupee’s freefall, which is obvious in its intervention technique,” Sabnavis mentioned.

Greenback Index

The greenback index lately touched a two-decade excessive, crossing the 100 mark and hitting 104 within the second week of Could, illustrating the impression of a rush globally to the security of belongings denominated in {dollars}. That is the best degree for the greenback index since December 2002, when the world economic system was rising from the impression of the 9/11 assaults.

The rupee Friday rose 0.23% to shut at 77.55 a greenback. It hit a brand new all-time low of 77.80 Tuesday.

India’s imports from China totalled $94.17 billion in FY22 in contrast with $21.25 billion of exports, confirmed information compiled by the Financial institution of Baroda Financial Analysis.

For Japan, imports have been value $14.4 billion versus $6.17 billion of exports. From the entire of the euro area, India imported items value $50.89 billion final monetary 12 months, when native producers exported items value $64.98 billion.

To make sure, RBI is in search of to maintain its foreign exchange pile at $600 billion to make sure India’s macroeconomic fundamentals aren’t dented by means of this era of a greenback surge globally.

“Though the rupee is slipping to report lows, its tempo of fall is slower in comparison with different currencies,” mentioned Keta Kurkute, government vice chairman, United Monetary Consultants, a foreign exchange advisory. “With out the RBI’s intervention, the rupee would have misplaced extra, upsetting the inflation battle. The appreciation in opposition to main currencies displays that.”
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