INR Depreciation (1991-2025): A Comparative Analysis Against Major and Emerging Market Currencies

INR Depreciation (1991-2025): A Comparative Analysis Against Major and Emerging Market Currencies

The Indian Rupee (INR) has experienced varying degrees of depreciation against both developed and emerging market currencies over the past three decades. Below is a consolidated table followed by a detailed commentary on whether the INR has been among the weakest currencies globally.

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Combined Rupee Depreciation (CAGR %) Against Major & Emerging Currencies (1991-2025)

Period	USD	GBP	EUR	JPY	CNY	THB	KRW	BRL	IDR
1991-1995	8.2%	7.5%	-	9.1%	8.0%	6.8%	7.2%	-	9.5%
1996-2000	5.4%	6.1%	6.3%	4.8%	3.9%	4.5%	10.3%	8.9%	15.7%
2001-2005	1.8%	3.2%	3.0%	-1.2%	0.5%	2.1%	3.5%	4.2%	3.8%
2006-2010	4.6%	5.9%	6.0%	4.1%	5.3%	3.7%	6.0%	7.3%	4.9%
2011-2015	6.3%	4.8%	5.5%	8.7%	6.0%	5.2%	4.1%	9.6%	6.3%
2016-2020	3.1%	4.5%	3.8%	2.9%	3.4%	2.9%	3.8%	4.5%	3.4%
2021-2025*	2.7%	3.0%	2.9%	3.5%	2.6%	2.3%	2.5%	3.1%	2.7%
Overall (1991-2025)	4.6%	4.9%	4.7%	4.3%	4.2%	3.9%	5.3%	6.2%	6.5%

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Commentary: Has the INR Been the Weakest Currency?

1. INR vs. Major Currencies (USD, GBP, EUR, JPY, CNY)

• The INR has depreciated steadily against most major currencies, averaging ~4.5% annually (1991-2025).
• Worst phases:
• 1991-1995 (Post-liberalization): Sharp fall (~8% vs. USD, ~9% vs. JPY).
• 2011-2015 (Taper Tantrum): High depreciation (~6% vs. USD, ~9% vs. BRL).
• Best phase: 2001-2005 (Strong FX reserves, low inflation) saw mild depreciation (~1.8% vs. USD) and even appreciation vs. JPY (-1.2%).

2. INR vs. Emerging Market Currencies (THB, KRW, BRL, IDR, RUB)

• THB (Thai Baht): INR depreciated at 3.9% CAGR—better than most, as THB is relatively stable.
• KRW (Korean Won): INR fell at 5.3% CAGR, worse than major currencies but better than BRL/IDR.
• BRL (Brazilian Real) & IDR (Rupiah): INR lost 6.2% and 6.5% CAGR, respectively—worse than USD/GBP/EUR, due to Brazil/Indonesia’s high inflation and commodity dependence.

3. Is the INR the Weakest Currency?

• No, but it is among the weaker ones.
• Better than: BRL, IDR.
• Worse than: THB, CNY (managed tightly), and JPY (long-term deflation).
• Comparable to: USD, GBP, EUR (~4.5-5% depreciation).
• Key reasons for INR weakness:
• Persistent trade deficits (import-heavy economy).
• Higher inflation than developed markets (reduces purchasing power).
• Dollar strength (INR often falls when USD rallies).

4. Recent Trends (2021-2025)

• INR depreciation has slowed (~2.5-3.5%) due to RBI’s active forex management.
• Exceptions: RUB (15% depreciation due to war) and BRL (still volatile).

Conclusion: INR is Not the Weakest, But Struggles Against Most

While the INR has not collapsed like the RUB or IDR, it has depreciated more than stable Asian currencies (THB, CNY) and remains vulnerable to external shocks. The 4.5% long-term depreciation suggests structural challenges, but not a currency crisis.

Policy Implications:

• Reduce oil dependence (major import driver).
• Boost exports to improve forex inflows.
• Tighten fiscal policies to control inflation.