Economists therefore advise looking at an index of the nominal effective exchange rate, which compares the rupee’s value versus other exchange rates, weighing each by their share in trade. Sources. RBI and IMF. The indices are normalized to January 2013=100. An increase denotes an appreciation. By this metric in Figure 5, the rupee has remained relatively flat since early 2015.
What we have given up against the dollar, we have gained against the Euro or the Real, so overall, in trade-weighted terms, the rupee has been flat. But wait a minute, our economist friends will say. Inflation in India is higher than inflation in most other countries. This affects competitiveness.