MUMBAI, April 24 (Reuters) – The Indian rupee’s valuation versus other major currencies calculated on a trade-weighted basis has fallen to its lowest in more than a decade, hit by the Iran war-driven surge in crude oil prices and chunky foreign portfolio outflows.<\/p>\n
\n The South Asian currency’s 40-currency real effective exchange rate, which accounts for inflation differentials between different economies, fell to 92.72, the Reserve Bank of India’s latest bulletin released late on Thursday showed.<\/p>\n
\n The REER is now hovering well below its long-run average of 98.25, pointing to a deeply undervalued rupee against historical norms.<\/p>\n
\n Relatively subdued inflation in India has weighed on the REER in recent months, adding to the impact of the rupee’s roughly 4.5% year-to-date decline, analysts said. The currency hit a record low of 95.21 per dollar in late March.<\/p>\n
\n Despite the extent of the rupee’s undervaluation, analysts see little near-term scope for a recovery.<\/p>\n
\n While the rupee is highly undervalued on a REER basis relative to historical ranges, it is likely to remain under pressure in the near term due to dollar demand “from ramp-up in oil imports to secure supplies and by sizeable equity outflows amid heightened risk aversion,” analysts at BofA Global Research said in a note.<\/p>\n
\n The March reading caps a roughly 15-point decline from late-2024 highs, marking one of the sharpest real depreciations episodes in years.<\/p>\n
\n A weaker real-effective exchange rate helps make exports out of India more competitive, while increasing the cost of imports. It also offers foreign investors a cheaper entry point to the currency, even while hitting the value of their existing investments in Indian equities and fixed income in foreign currency terms.<\/p>\n
\n A narrower six-currency gauge suggests the rupee’s undervaluation is starker. The rupee’s 6-currency REER declined to 89.61 in March, the lowest on record for data going back to April 2015 and well-below the series average of nearly 100. <\/p>\n
\n The U.S., China, United Arab Emirates, Russia, Saudi Arabia and Singapore were the country’s 6-largest trading partners in the 2024-2025 fiscal year, trade ministry data show. <\/p>\n
\n “For long-term investors, the rupee’s current valuation provides an attractive entry point,” V. Anantha Nageswaran, India’s chief economic adviser, told Bloomberg News on Thursday.<\/p>\n
\n The Indian central bank has assumed a dollar-rupee exchange rate of 94 in its forecasts for fiscal year 2026-27. A 5% depreciation from those levels would add about 40 bps to inflation and 25 bps to growth, per RBI estimates. <\/p>\n
(Reporting by Jaspreet Kalra; editing by Nimesh Vora and Ronojoy Mazumdar)<\/p>\n
\n By Jaspreet Kalra<\/p>\n","protected":false},"excerpt":{"rendered":"MUMBAI, April 24 (Reuters) – The Indian rupee’s valuation versus other major currencies calculated on a trade-weighted basis…\n","protected":false},"author":2,"featured_media":417182,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60,123],"class_list":["post-417181","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/417181","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=417181"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/417181\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/417182"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=417181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=417181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=417181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}