Rupee-Dollar Exchange Rate

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Source: CMIE Economic Outlook, 1 Finance Research

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What does the Rupee-Dollar Exchange Rate data represent?

The Rupee-dollar Exchange Rate data represents the value of the Indian Rupee (INR) against the US Dollar (USD).
It indicates how many Indian Rupees are needed to purchase one US Dollar.

This exchange rate is a critical financial indicator, reflecting the relative strength of the Indian economy to the global economy, particularly the United States.
It is influenced by a wide range of economic activities, including international trade, investment flows, and monetary policy.
Exchange rates play a crucial role in determining the cost of imports and exports, affecting the overall balance of payments of a country.
Fluctuations in the exchange rate can impact Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) to India, as they affect the return on investment for foreign investors.
The Reserve Bank of India (RBI) may adjust monetary policy in response to exchange rate movements to control inflation and stabilise the economy. Also, it intervenes in the foreign exchange market to stabilise the Rupee, which can impact the domestic money supply.
The Rupee-Dollar Exchange Rate directly affects India's trade with the US and other countries. Changes in the exchange rate can influence the cost of imported goods and services and affect consumer spending and demand patterns. It influences investor sentiment, and stock valuation particularly companies with significant foreign revenue or those dependent on imports.

The level of competitiveness of Rupee in global trade helps to improve India's trade balance and current account, especially in terms of exports and imports.
A weaker Rupee makes Indian exports more competitive, but increases the cost of imports, and vice versa with a stronger Rupee.
A depreciating Rupee can lead to inflationary pressures, but it attracts foreign capital as it allows foreign investors to purchase more Indian assets with the same amount of foreign currency.