Rupee has weakened

The rupee has weakened significantly over the past year, falling from 84.7 to 89.7 against the US dollar. Its depreciation has been even sharper against the euro (9.4 per cent) and the British pound (14.3 per cent). It has also lost value against the Japanese yen and the Chinese yuan. In nominal terms, therefore, the rupee has depreciated against all major global currencies.

- By Tirthankar Mitra

This depreciation comes at a time when price inflation in India is low — lower than inflation in the US, the UK, the Eurozone, and Japan.

The rupee's Real Effective Exchange Rate (REER) has also declined. Reserve Bank of India data shows the REER index falling from an all-time high of 108.1 in November 2024 to 97.5 in October 2025. In other words, the rupee has shifted from being overvalued to being undervalued.