New Delhi: The Indian currency Rupee was the least volatile major currencies among its emerging market peers and a few advanced economies in the just-concluded financial year 2023-24, according to the Monthly Economic Review report of the Department of Economic Affairs under the Ministry of Finance.
The Rupee-USD exchange rate hovered in the range of Rs 82-83.5 per USD.
According to the report, the Rupee also exhibited the lowest volatility in 2023-24 compared to the previous three years.
“The relative stability of the rupee, despite a stronger US dollar and elevated US treasury yields, reflects the strength of the Indian economy’s sound macroeconomic fundamentals, financial stability, and improvements in external position,” the report read.
Going forward, robust foreign inflows and comfortable trade deficits are expected to keep the rupee within a “comfortable range”.
In 2022-23, the Indian Rupee was in the news cycle for a considerable part, though not for good reasons. Monetary policy tightening by various central banks to contain inflation, the war in Ukraine leading to price rise for crude oil and subsequent realignment in the global energy supply chain, and strengthening of the US dollar index kept the Indian currency under pressure.
In 2022, the Rupee depreciated over 11 per cent on a cumulative basis, data showed. It breached the 83-mark against the US dollar in mid-October, to hit an all-time low.
RBI’s possible intervention in the forex market to stabilize the rupee seemed to have reaped dividend of late. Typically, the RBI from time to time intervenes in the markets through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
Coming back to the Monthly Economic Review report, India’s foreign exchange reserves which have reached an all-time high are sufficient to cover 11 months of projected imports.
Also, the current foreign exchange reserves are sufficient to cover more than 100 per cent of total external debt. Notably, capital inflows in India saw a significant turnaround in the just-concluded financial year 2023-24.
India’s foreign exchange reserves have risen for the seventh straight week to hit an all-time high of USD 648.562 billion in the week that ended on April 12. Foreign exchange reserves have risen about USD 23 billion, on a cumulative basis, in 2024 so far.
(With inputs from ANI)
