Facts for Prelims (FFP)
Source: Reuters
Context: The Indian rupee has reached a nearly two-year high in valuation against major trading partner currencies due to central bank intervention and increased domestic inflation.
The rupee’s 40-currency real effective exchange rate (REER) showed a 5.7% overvaluation by the end of September, the highest since November 2021.
The RBI’s focus on preventing the rupee from weakening, coupled with inflation, has contributed to the high REER, although analysts believe the RBI doesn’t consider it an outlandishly overvalued currency.
