Statsguru: Six charts explain falling rupee and how it impacts the economy

The Reserve Bank of India has been defending the rupee and has lost a significant amount of foreign exchange reserves

Rising crude oil prices and global liquidity tightening have significantly weakened the rupee.

It has been touching fresh lows for a while, ending the month of June at 78.97 against the US dollar. It closed at Rs 79.04 on Friday. The dollar exchange rate was close to Rs 74 at the beginning of the year (chart 1). The dollar has strengthened against most other currencies. But a comparison with emerging market peers shows that India’s currency has fallen more than many other countries (chart 2).

Domestic fundamentals may have played their part as did heavy foreign portfolio outflows (chart 3).