The rupee's valuation against currencies of major trading partners has surged to a near two-year high on central bank intervention and elevated domestic inflation. The rupee's 40-currency real effective exchange rate (REER) shows the rupee was overvalued by 5.7% at September-end, according to the Reserve Bank of India's monetary policy report released Friday. This is the most over-valued the rupee has been since November 2021.
The REER is computed using the nominal exchange rates adjusted for inflation.
The RBI regularly intervenes in the foreign exchange markets and stepped up intervention in September.
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