The ratio of total external transactions (gross current account flows plus gross capital account flows) to GDP – an indicator of both trade and financial integration – was 112 per cent in 2008–09 up from 44 per cent in 1998–99. 5. There is another fundamental aspect that we cannot lose sight of.
Indian Rupee has to adjust its value vis-a-vis other major foreign currencies to reflect inflation and growth differentials. In a market ruled by multiplicity of pressures, it is too optimistic to expect this adjustment to always happen in a smooth and secular manner spread across the time horizon.