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.

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%

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.

 

Comments

Post a Comment

Popular posts from this blog

Tamil Nadu’s Economic and Social Journey (1950–2025): A Comparative Analysis with Future Horizons

-
Executive Summary Tamil Nadu has transformed from an agrarian economy in 1950 to India’s second-largest state economy by 2023–24, with a GSDP of ₹31 lakh crore and a per capita income (₹3,15,220) 1.71 times the national average. Its diversified economy—spanning automotive, textiles, electronics, IT, and sustainable agriculture—is underpinned by a 48.4% urbanization rate, 80.3% literacy, and a 6.5% poverty rate. Compared to Maharashtra, Gujarat, Karnataka, AP, and India, Tamil Nadu excels in social indicators (HDI: 0.708) and diversification, trailing Maharashtra in GSDP scale and Karnataka in IT dominance. Dravidian social reforms, the Green Revolution, post-1991 liberalization, and the 2021 Industrial Policy were pivotal. State budgets show opportunities in infrastructure and renewables but face constraints from welfare spending (40%) and debt (25% GSDP). Projected GSDP growth of 8–9% through 2025 hinges on electronics, IT, and green energy, leveraging strengths like a skilled workfor...
Read more

The U.S. Security Umbrella: A Golden Parachute for Allies

-
The U.S. Security Umbrella: A Golden Parachute for Allies, a Budget Sinkhole for Others The United States’ massive defense spending, averaging 3.4–3.7% of GDP ($778–968 billion annually from 2020–2024), has reshaped global geopolitics, providing a security blanket for allies like Japan, Germany, South Korea, Canada, and Australia while forcing adversaries like Russia to overspend on defense. Allies thrive with low budgets—Japan at 1.4%, Canada at ~1.5%, South Korea at ~2.5%, Australia at ~2.1%, and Germany at 1.8% in 2024—channeling savings into economic growth that fueled their prosperity over 50 years. Russia’s spending soared to 7.1% of GDP ($149 billion) in 2024, driven by Ukraine and NATO pressures, while China’s 1.7% ($314 billion) and India’s 2.4% ($86.1 billion) reflect strategic priorities. The U.S. security umbrella enabled allies’ wealth, but now The U.S. is impatient with allies. Is this lopsided system sustainable?   Historical Context: The U.S. as Global Sheriff Sinc...
Read more

India’s Integrated Air Defense and Surveillance Ecosystem

-
Image
India’s Integrated Air Defense and Surveillance Ecosystem: An Analysis with Comparisons to Israel and China India’s air defense and surveillance ecosystem, centered on the Integrated Air Command and Control System (IACCS), integrates ground-based radars (e.g., Swordfish, Arudhra), Airborne Early Warning and Control (Netra AEW&C), AWACS (Phalcon), satellites (RISAT, GSAT), and emerging High-Altitude Platform Systems (HAPS) like ApusNeo. Managed by DRDO, BEL, and ISRO, it uses GaN-based radars, SATCOM, and software-defined radios for real-time threat detection and response. The IACCS fuses data via AFNET, supporting network-centric warfare. Compared to Israel’s compact, advanced C4I systems and China’s vast IADS with 30 AWACS, India’s six AWACS/AEW&C and indigenous focus lag in scale but excel in operational experience (e.g., Balakot 2019). Future plans include Netra Mk-1A/Mk-2, AWACS-India, and HAPS by 2030. Challenges include delays, limited fleet size, and foreign platform d...
Read more