homemarket Newscurrency NewsIndian rupee depreciated 8% in FY23, appreciation bias may continue in FY24
Indian rupee depreciated 8% in FY23, appreciation bias may continue in FY24
The rupee started strong at about 75.50 on 1st April 2022 but then went on to weaken to its lowest level of 83.28 in October, and that was the period when the dollar strengthened, the dollar index strengthened from about less than 100 at the start of the year to about 114 in end September.
The Indian rupee depreciated 8 percent against the US Dollar in this financial year. The currency weathered net outflows of more than $7 billion. At the end of FY23, one US dollar costs more than Rs 82.
The rupee started strong at about 75.50 on April 1, 2022, but then went on to weaken to its lowest level of 83.28 in October, and that was the period when the dollar strengthened, the dollar index strengthened from about less than 100 at the start of the year to about 114 in end September.
The rupee weathered a lot, it weathered FPI outflows of the net of $7.50 billion and a gross outflow of almost $23 billion. It also weathered a high current account deficit in the second quarter where the CAD touched 4.4 percent of GDP, the highest since 2013.
The Reserve Bank of India did appear to help the rupee and defended the rupee at around 80, but then it let go when the current account deficit worsened.
Now, lately, the rupee has been appreciating in the last quarter because the current account deficit turned into a surplus in the fourth quarter. It looks like the appreciation bias is likely to continue in FY24 because commodities and crude prices seem to be subdued, and the current account looks under control because of good service exports.
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