 "rupee")
There is no unanimity on what is the rupee’s fair value, neither among currency dealers nor among economists. Besides, various models and technical charts paint contradictory scenarios. On a trade-based measure, the rupee is overvalued and should depreciate. The real effective exchange rate (REER), which gauges the rupee’s strength vis-à-vis six major currencies and again 36 of India’s trading partners, shows the currency is hugely overvalued.
On a 36-currency trade basis, with base year 2004-05, the rupee is around 16 per cent overvalued. On a six-currency basis, comprising currencies of India’s major trading partners, the 2004-5 base shows the rupee
