Real Effective Exchange Rate Depreciates In 2018-19 Says Economic Survey

The Real Effective Exchange Rate of Indian Rupee depreciated in 2018-19, making India's exports potentially more competitive, noted the latest Economic Survey. The Indian Rupee traded in the range of 65-68 per US$ in 2017-18 but depreciated to a range of 70-74 in 2018-19. The income terms of trade, a metric that measures the purchasing power to import, has been on a rising trend, possibly because the growth of crude prices has still not exceeded the growth of India's export prices. The exchange rate in 2018-19 has been more volatile than in the previous year, mainly due to volatility in crude prices, but not much due to net portfolio flows. The composition of India's exports and import basket has almost remained unchanged in 2018-19 over 2017-18. Petroleum products, precious stones, drug formulations, gold and other precious metals continue to be top export items. Crude petroleum, pearl, precious, semi-precious stones and gold remain as top import items. India's main trading partners continue to be the US, China, Hong Kong, the UAE and Saudi Arabia

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