The rupee may need further depreciation to address trade shocks. Its real effective exchange rate has fallen to a 2013 taper tantrum level. Economists suggest a potential 10% weakening of the REER within a year. Global trends and domestic rates might be misaligned, causing currency pressure. The Reserve Bank of India has sold significant dollars to support the rupee.
The rupee may need further depreciation to address trade shocks. Its real effective exchange rate has fallen to a 2013 taper tantrum level. Economists suggest a potential 10% weakening of the REER within a year. Global trends and domestic rates might be misaligned, causing currency pressure. The Reserve Bank of India has sold significant dollars to support the rupee.
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