8/22/2013

INR/USD Exchange Rates: Charts of the Day

Indian Rupee symbol
I had briefly mentioned about the plight of the Indian Rupee in my last week's post, "Is India's growth story over?"

Subsequently, the Indian Rupee has been touching daily lows against the US Dollar with today's close at 65.4207! In fact, Deutsche Bank is forecasting that the Rupee could go down to 70 in a month's time.

This raised my curiosity: how has the INR performed against the USD historically?

As usual, I turned to the Google Public Data Explorer for help. And, it didn't disappoint!

The following chart shows the historical official INR-USD exchange rate:


Now, the above chart clearly shows that the Rupee has been depreciating against the Dollar since the economic liberalization began in 1991. In fact, it weakened by 205% over the 22 years from 1990 to 2012!

Purely from a personal observation, I claim that there has been only one period (2002-05) when the Rupee appreciated against the Dollar due to a strong economy. The appreciation in 2007 & 2010 had more to do with the problems in the US economy than anything else.

One drawback of the above chart is that it only shows data till 2012.

So, what is the scene lately? To answer this question, I looked up the site of RBI (Reserve Bank of India, the central bank) and found the information for the last 6-months:

As can be seen from the above chart, the situation has deteriorated further with the Rupee losing 17% in a span of just 6 months.

This will, undoubtedly, have large number of adverse consequences on the overall economy. I will not be surprised if India is not able to grow even at a lower projected rate of 5% in the current fiscal year.