India at 75, Rupee at 80

The current bout of rupee depreciation must be a humbling experience for the National Democratic Alliance that has often mocked at the United Progressive Alliance government’s inability to prevent the rupee depreciation during its regime. This is because the most recent trends show that the rupee depreciation has now further accelerated from around `74 per dollar in early January 2022 to reach a peak of `80 per dollar by the fourth week of July, a depreciation of around 8%.

To be fair, the Indian rupee is not the only currency that has depreciated against the dollar in the recent period. The global currency market has been in a flux since the synchronous raising of the interest rates as a part of the reversal of the soft money stance by the monetary authorities across the globe. The Federal Reserve of the United States (US) has cumulatively hiked rates by 150 basis points since March 2022. However, the trends in exchange rates of important currencies have varied sharply. In fact, some major currencies have appreciated or strengthened against the dollar in the first seven months of the year, including the Brazilian real (4.7%), the British pound (7.2%), and the euro (9.8%), even as the rupee depreciated by 4.3% during the period.