Rupee is fairly valued: Experts

Technical charts suggest currency might strengthen

There is no unanimity on what is the rupee’s fair value, neither among currency dealers nor among economists. Besides, various models and technical charts paint contradictory scenarios. On a trade-based measure, the rupee is overvalued and should depreciate. The real effective exchange rate (REER), which gauges the rupee’s strength vis-à-vis six major currencies and again 36 of India’s trading partners, shows the currency is hugely overvalued. 

On a 36-currency trade basis, with base year 2004-05, the rupee is around 16 per cent overvalued. On a six-currency basis, comprising currencies of India’s major trading partners, the 2004-5 base shows the rupee