India’s Real Effective Exchange Rate (REER) for 2023–24 was slightly below the level consistent with its long-term fundamentals, according to a monthly report by the Reserve Bank of India (RBI). The report clarified that the views expressed in the bulletin article are those of the authors and do not represent the official views of the RBI.
Since the early 2000s, India’s 40-currency trade-weighted REER has appreciated on average by 1 per cent annually, while the nominal effective exchange rate (NEER) has depreciated by approximately 2 per cent per year, the report noted.
In October 2024, the rupee appreciated by 1.8 per cent month-on-month (M-o-M) in terms of the 40-currency REER. This was driven by the nominal appreciation of the rupee alongside positive inflation differentials.
The REER, which measures the value of the Indian rupee against a basket of other currencies, slightly decreased from 105.44 in August to 105.15 in September 2024. A lower REER indicates that the rupee became marginally more competitive in international markets.
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