The Indian rupee had exhibited resilience for a significant period last year, as reflected in ranged movements despite sharp depreciation in emerging market currencies/trading partners. As seen in the chart below, the currency was ranged between 83.00-84.00 since Sep last year, with continued RBI intervention in spot markets. The INR depreciated rapidly in the last three months – this was in line with the strength in the USD (in anticipation of fewer rate cuts this year following the upcoming administrations’ reflationary policies). Despite this, the INR has depreciated less markedly when compared to its emerging market peers – driving the REER to 108.14, indicating that on a real basis, the currency is overvalued by 8.14% over its major trading partners. The sharp rise in REER is to do with active RBI intervention
