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The rupee‘s recent slide vis-a-vis the US dollar masks its relative strength against a basket of top world currencies, including the pound, euro, yen and yuan, illustrating the evident disconnect between a unidirectional global rush for USD assets and India’s robust macroeconomic fundamentals.

“The rupee’s appreciation against a group of major currencies is in contrast to its losses versus the US dollar,” said Bhaskar Panda, executive vice president,

. “This one-off happens when a country’s currency is only losing value due to secular dollar strength. India’s macroeconomic potential remains unchanged over the long term, and the central bank is now prioritising inflation management.”

The rupee has shed about 4.32% against the dollar this calendar year; by contrast, it has advanced up to 6.21% against the other major global currencies, Bloomberg data compiled by ETIG showed.

The local unit gained the most against the Japanese yen – at 6.21%. The rupee appreciated 3.86% versus the British pound and 2.98% versus the euro. The rupee’s rise against the Chinese yuan is 0.68%.

“This is one of the rare occasions when the rupee is losing value to the dollar, but gaining against some major currencies,” said Madan Sabnavis, chief economist at

. “Any such appreciation will help curb imported inflation on goods from the non-dollar based settlements.”


The central bank’s intervention strategy is aimed at arresting the rupee’s slide and minimising the impact of imported inflation.

“An inflation-focused central bank, too, looks keen to arrest the rupee’s freefall, which is evident in its intervention strategy,” Sabnavis said.

Dollar Index

The dollar index recently touched a two-decade high, crossing the 100 mark and hitting 104 in the second week of May, illustrating the impact of a rush globally to the safety of assets denominated in dollars. This is the highest level for the dollar index since December 2002, when the world economy was emerging from the impact of the 9/11 attacks.

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

India’s imports from China totalled $94.17 billion in FY22 compared with $21.25 billion of exports, showed data compiled by the Bank of Baroda Economic Research.

For Japan, imports were worth $14.4 billion versus $6.17 billion of exports. From the whole of the euro region, India imported goods worth $50.89 billion last financial year, when local manufacturers exported goods worth $64.98 billion.

To be sure, RBI is seeking to keep its forex pile at $600 billion to ensure India’s macroeconomic fundamentals aren’t dented through this period of a dollar surge globally.

“Even though the rupee is slipping to record lows, its pace of fall is slower compared to other currencies,” said Keta Kurkute, executive vice president, United Financial Consultants, a forex advisory. “Without the RBI’s intervention, the rupee would have lost more, upsetting the inflation fight. The appreciation against major currencies reflects that.”


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