Cross-country comparisons of exchange rate movements are often made on an inflation adjusted basis or what is called in real effective terms, viz. the Real Effective Exchange Rate (REER).
On a financial year basis, i.e., between April 2022 and December 2022, the INR depreciated 3.4 per cent and 4.0 per cent measured in terms of 6-currency and 40-currency trade weighted indices, respectively. Thus, even in real terms, the INR witnessed modest depreciation in the face of global spill overs.
NEER
In terms of the 6-currency NEER (trade-weighted), the rupee depreciated by 4.4 per cent in December 2022 over April 2022.
Similarly, the rupee depreciated by 4.7 per cent in terms of 40-currency NEER22 (trade-weighted) in December 2022 over April 2022.
