Rupee rising against $? Not all that much!

This is an article written by Ajay Shah on a web portal. In this article the writer argues that the hype over rupee's appreciation is blown out of proportion. It is true that rupee appreciated about 15% in 2007 itself against the dollar but it was because of the reason that dollar lost its value.

Going by the US Fed's 'nominal major currencies index,' the USD lost 29.43% during 2002-07. Going by the 'nominal broad dollar index,' the USD lost 20.43% over this same period. If the USD is dropping and we try to hang on to a nominal value of the USD, then we are trying to force a depreciation of the INR. The appreciation as seen in the REER is very small (roughly 10%) when compared with that seen in the INR/USD rate.

This article indeed adds a new dimension to the ongoing discussion about rupee's appreciation and exporters' lobbying for RBI's intervention.