{"id":114959,"date":"2021-06-26T10:53:36","date_gmt":"2021-06-26T05:23:36","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=114959"},"modified":"2021-07-01T11:43:45","modified_gmt":"2021-07-01T06:13:45","slug":"a-crystal-ball-gaze-at-where-the-indian-rupee-could-be-headed","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-crystal-ball-gaze-at-where-the-indian-rupee-could-be-headed\/","title":{"rendered":"A crystal ball gaze at where the Indian rupee could be headed"},"content":{"rendered":"\n<p><b><span data-contrast=\"none\">Why Rupee fluctuates\u00a0vis-a-vis other\u00a0currencies?<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Reason for fluctuation in rupee:<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"none\">India\u2019s foreign exchange reserves.\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">For example,\u00a0an increase in forex reserves is an indication that India is getting in more dollars than India\u2019s\u00a0spending.\u00a0This\u00a0will push\u00a0India\u2019s\u00a0current and capital accounts into surplus zone\u00a0and\u00a0impact the exchange rates.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"none\">Daily fluctuations caused by foreign portfolio investment (FPI) flows.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">External factor of the dollar, and other currencies<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">The dollar is driven by the US economy as well as its Federal Reserve\u2019s policies.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">For example,\u00a0the Fed\u2019s recent indication that it would raise its policy rate of funds in the years ahead. This might push\u00a0global investors back to US. This will\u00a0<\/span><b><span data-contrast=\"none\">strengthen the dollar and weaken the rupee<\/span><\/b><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"none\">The RBI will\u00a0intervene\u00a0for buying or selling dollars to stabilize the Indian currency.\u00a0This also affect exchange rate.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">The concept of the real effective exchange rate (REER)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">What is real effective exchange rate (REER)?<\/span><\/b><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"54\" aria-setsize=\"-1\" data-aria-posinset=\"122\" data-aria-level=\"1\"><span data-contrast=\"none\">It is the weighted average of a country&#8217;s currency in relation to an index or basket of other major currencies. The weights are determined by comparing the relative trade balance of a country&#8217;s currency against that of each country in the index.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"54\" aria-setsize=\"-1\" data-aria-posinset=\"123\" data-aria-level=\"1\"><span data-contrast=\"none\">An increase in a nation&#8217;s REER is an indication that its exports are becoming more expensive and its imports are becoming cheaper. It is losing its trade competitiveness.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Definitions<\/span><\/b><span data-contrast=\"none\">:\u00a0Foreign exchange reserves, FPI, real effective exchange rate<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Source<\/span><\/b><span data-contrast=\"none\">:\u00a0<\/span><a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=256f0473a41&amp;imageview=0\"><span data-contrast=\"none\">Livemint<\/span><\/a><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Rupee fluctuates\u00a0vis-a-vis other\u00a0currencies?\u00a0 Reason for fluctuation in rupee:\u00a0 India\u2019s foreign exchange reserves.\u00a0\u00a0\u00a0 For example,\u00a0an increase in forex reserves is an indication that India is getting in more dollars than India\u2019s\u00a0spending.\u00a0This\u00a0will push\u00a0India\u2019s\u00a0current and capital accounts into surplus zone\u00a0and\u00a0impact the exchange rates.\u00a0\u00a0 Daily fluctuations caused by foreign portfolio investment (FPI) flows.\u00a0 External factor of the dollar,&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/a-crystal-ball-gaze-at-where-the-indian-rupee-could-be-headed\/\">Continue reading <span class=\"screen-reader-text\">A crystal ball gaze at where the Indian rupee could be headed<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[8043,1566,3127,9],"tags":[],"class_list":["post-114959","post","type-post","status-publish","format-standard","hentry","category-current-affairs-cat","category-daily-factly-articles","category-economy","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704659342},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=114959"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114959\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=114959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=114959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=114959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}