Rupee holding up better than South Korean Won, Brazilian Real despite pressures, notes Economic Survey

Rupee

The Indian rupee, facing pressure in last few months due to foreign outflows and strength in dollar, has been performing better than other global peers like the Canadian Dollar, South Korean Won and the Brazilian Real, the Economic Survey 2025 highlighted on January 31.

In the first nine months of FY25 (up to 6 January, 2025), the INR depreciated a modest 2.9%, performing better than currencies such as the Canadian Dollar, South Korean Won and the Brazilian Real, which depreciated by 5.4%, 8.2% and 17.4% respectively during the same period, the Economic Survey said.

The survey added that one of the primary factors behind Rupee's depreciation in 2024 has been the broad-based strengthening of dollar, at a time of geopolitical tensions in the Middle East and uncertainty around the US election.

On January 30, Moneycontrol reported that Indian rupee emerged as the least volatile currency against the US dollar among its Asian and global peers. Data showed that the rupee is among the fourth-least volatile currencies in Asia. It is also among the second-least volatile currency against the Japanese Yen, British Pound, Euro, and the Chinese Yuan, during October to January.

The Rupee ranks fourth in terms volatility, among Asian peers, after the Hong Kong Dollar (-0.26%), the Taiwanese Dollar (-2.57%) and the Chinese Renminbi (-3.12%) , Bloomberg data showed.

The rupee depreciated to 86.5900 against the US dollar on January 30, from 83.8213 against the greenback on October 1, 2024. In the last three months, it has depreciated around 3.19% against the US dollar.

The rupee has been on the depreciation path for last few months owing to various factors like widening trade deficit, rising crude prices, and a surge in the dollar index after the US Federal Reserve hinted at fewer rate cuts in 2025. India's sluggish growth in Q2FY25 and foreign investor outflows from equities too contributed to Rupee's weakness.