‘Indian rupee performed better than currencies of Canada, Korea and Brazil’

New Delhi: The Indian rupee (INR) depreciated a modest 2.9 per cent in the first nine months of the current fiscal, performing better than other currencies like the Canadian Dollar, South Korean Won and the Brazilian Real, according to the Economic Survey tabled in Parliament on Friday.

The value of INR is market-determined, with no target or specific level or band. Various domestic and global factors influence the exchange rate of the INR, such as the movement of the Dollar Index, trends in capital flows, level of interest rates, movement in crude prices, and current account deficit.

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

One of the primary factors behind the rupee depreciation during 2024 has been the broad-based strengthening of the US dollar amidst geopolitical tensions in the Middle East and uncertainty surrounding the US election, the survey said.

It further said after adopting the floating exchange rate regime, effective exchange rates have become a prominent measure of external competitiveness of an economy’s tradable sector relative to the foreign tradable sector.