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Indian Rupee Best Asian Currency in 2015
Feb 25, 2016

Indian Rupee turned out to be one of the best performers in 2015 among all Asian and BRICS currencies, excluding Yen. Currency volatility continued to plague Asian units as both global and local factors exerted pressure in 2015, but the Indian Rupee was comparatively better off in the region.

  • The currency’s depreciation of about five per cent against the dollar was less than the losses of most of its other Asian peers. The Indian Rupee also fared better in 2014, when it weakened by only two per cent.

  • The Indian Rupee was caught between the leviathans like the U.S. dollar and China’s yuan devaluation and the erosion of rupee against the dollar continued relentlessly in 2015. However, the Rupee fared much better despite a pullout by foreign funds from the emerging markets, including India, as an interest rate hike was expected from the U.S. Federal Reserve.

  • The Rupee was stable when the U.S. raised the benchmark interest rate and has actually strengthened against the dollar since then. 

  • The rupee ended 2015 at 66.15 a dollar.

  • Its Asian counterparts like the Indonesian Rupiah weakened by 11.30 per cent and the Thai Baht depreciated 9.5 per cent against the dollar. 

  • Only the Chinese currency fared marginally better, losing only 4.6 per cent.

BRICS Nations: Among the BRICS nations also the Indian currency fared well. 

  • The Brazilian Real depreciated 49 per cent against the dollar while the South African Rand declined 34.75 per cent.

The Indian currency, which tumbled 12.4 per cent in 2013, started recovering in 2014. Experts attribute the relative stability of the rupee to the improved macro-economic conditions.

Forex Reserves:
The country’s foreign exchange reserves rose by more than $75 billion since the currency crisis of 2013. From about $274.8 billion in early September 2013, foreign exchange reserves rose to $351 billion as on 25 December, 2015.

In the two and half year since the currency crisis, the twin deficits—fiscal and current account—have narrowed. In 2013-14, the fiscal deficit was 4.5 per cent of the GDP, which is now seen at 3.9 per cent for 2015-16.

Similarly, the Current Account Deficit (CAD) in the first quarter of 2013-14 zoomed to a record high of 4.9 per cent of the GDP. CAD has since narrowed to 1.6 per cent of GDP during the July-September quarter of the current financial year and is expected to be 1 per cent of GDP in 2015-16, mainly due to soft crude oil prices.

 


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