Exchange Rates

PPP-based estimates show India as the world's third-largest economy, highlighting how currency distortions mask real purchasing power, domestic demand strength, and global economic influence

From services trade trends and POSH gaps in IT firms to rupee volatility, labour reforms, and Arctic geopolitics, here are the key insights from today's Business Standard Opinion page

India is no longer the closed, simple economy of the 1970s. When the RBI attempts to fix the price of the rupee, it must contend with the incentives of millions of rational actors

Today's Opinion page covers Trump's tariff strategy, the Supreme Court's passive euthanasia ruling, rupee depreciation amid West Asia tensions, farm diversification and a Syria war book review

India's economy is growing faster than peers, but a weakening rupee may delay its move past Japan to become the world's fourth-largest in dollar terms

The Indian rupee slipped past ₹90 per dollar in December 2025, down 4.9% for the year, underperforming peers amid volatile capital flows and uneven forex support

Factoring in only domestic inflation could lead to a shortfall

When seen historically, India's exchange rate arrangement, both de-facto and de-jure, was floating from 1999 to 2022 (independent, managed, and floating)

RBI deputy governor Poonam Gupta says the IMF's 'crawl-like' label is a sub-classification based on recent volatility data, and does not change India's managed-float exchange rate regime

For the same amount remitted, compare how much the recipient will get across different service providers

There is high negative correlation between the India 10-year and US 10-year bond yield spread and rupee-dollar exchange rate

One way to assess how much you paid is to compare the amount sent with the amount received

Traders now eye the US Federal Reserve meeting outcome for further cues on dollar movement, said dealers

The IMF had first moved to the "stabilised" classification for India from "floating" in December 2023

The Indian currency's rapid fall from 85 to 86 in just 16 days, and from 86 to 87 in another 15 days, highlights the volatility in the foreign-exchange market during those months

The RBI must come out with an official explanation, but until it does, we can only guess. But there are a few reasonable hypotheses

RBI showing greater tolerance for exchange rate under Governor Malhotra

Policymakers can get export growth for some time through subsidies, whether a production-linked incentive or a falsified exchange rate

REER represents the inflation-adjusted, trade-weighted average value of a currency against its trading partners

India now holds about $650 billion in reserves, enough to finance nearly a year of imports. The problem is that global financial markets have even more firepower