40-currency basket
Rupee's real effective exchange rate falls to 105.17 in Sept vs 105.44 Aug
This story was originally published at 19:26 IST on 21 October 2024
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--RBI: Rupee effective FX rate index 105.17 in Sept vs 105.44 in Aug
--CONTEXT: Real FX rate index for trade-weighted, 40-currency basket
NEW DELHI – The rupee's real effective exchange rate against a basket of 40 currencies, in terms of trade-based weights, fell to 105.17 in September from 105.44 in August, according to data released by the Reserve Bank of India on Monday.
The Indian currency rose 0.1% against the dollar last month due to weakness in the dollar index after the US Federal Reserve cut interest rates by 50 basis points at its September meeting. The dollar index, which measures the strength of the dollar against six major currencies, fell 1% last month.
Even though the rupee rose against the US dollar in September, its real effective exchange rate fell as other currencies rose comparatively sharply against the greenback. The RBI likely intervened through dollar purchases to build up its foreign exchange reserves, which capped the rise in the Indian currency, according to dealers.
"In terms of the 40-currency real effective exchange rate, the INR (Indian rupee) depreciated by 0.3% (month-on-month) in September 2024 as depreciation of the INR in nominal effective terms more than offset positive relative price differentials," according to a paper by central bank staff on State of the Economy in the RBI monthly bulletin.
The 40-currency basket includes the currencies of Angola, Australia, Bangladesh, Brazil, Canada, Chile, China, Egypt, the European Union, Ghana, Hong Kong, Indonesia, Iran, Iraq, Israel, Japan, Kenya, Kuwait, Malaysia, Mexico, Nepal, Nigeria, Oman, Qatar, Russia, South Korea, Saudi Arabia, Singapore, South Africa, Sri Lanka, Switzerland, Taiwan, Tanzania, Thailand, Turkey, Ukraine, the United Arab Emirates, the UK, the US, and Vietnam. End
US$1 = INR 84.07
Reported by Pratiksha
Edited by Deepshikha Bhardwaj
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