The impact of sharp appreciation of the rupee since November last year on different segments of the economy is being carefully assessed in industry, forex and money market circles with a view to determining whether the hardening Indian currency is the result of stronger fundamental factors. There is also a desire to know if there has been a technical strengthening with a surge in forex reserves.
However, an analysis of rupee movements against other major currencies reveals that there has been only a modest appreciation against the British pound and the euro. The Japanese yen has of course firmed up against the rupee like the Chinese yuan. The weakening of the dollar against other major currencies has thus been mainly responsible for the significant improvement in the external parity of the Indian currency vis-À-vis the green back.
The rise is noticeable particularly after April this year because, out of the total improvement of 12.21 per cent, the rise in April-October was 9.03 per cent.
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