Against the backdrop comfort of a healthy foreign exchange reserve position of US $400 billion, rupee touching lifetime low of INR 70.32 on 16th August 2018 has not been officially considered as a worrying sign for the Indian economy. This historic low nose-diving of rupee against USD is also seen as a temporary phenomenon arises because of mounting pressure on rupee due to ongoing Turkish crisis. Pundits of the currency market are judging the rupee amongst the worst-performing currencies in the region against the dollar for this year. In absolute number of Rupee breaching the INR 70 reflects the weakness of the currency but in the trade-dominated world, it needs to be looked at in relative terms.
|While the Indian currency is the worst performing currency in the region (down about 8.5 percent in the year 2018) but among the emerging economies performance of the Indian currency against the dollar was better. Russian Ruble is down by 13.7 percent, Brazilian Real is down by 14.8 percent, Argentinean Peso is down by 37.8 percent, South African Rand is down by 9.9 percent and Turkish Lira is down by whopping 42 percent.|
|To stem the fall of rupee, RBI has sold $21 billion in the spot and $10 billion in the forward currency market and as has been reflected in the declining foreign exchange reserve position of India. Foreign exchange reserve of India has reached a record high of US $426.028 billion on 13th April, 2018 while on 10th August, 2018 the reserve has come down to US $400.881 billion (comprises of foreign currency assets US $376.265 billion, gold of US $20.691 billion, SDR of US $1.466 billion and IMF Drawing rights of US $2.458 billion).|
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