EXCHANGE RATE COMPETITIVENESS OF THE INDIAN RUPEE: INSIGHTS FROM NEER AND REER TRENDS (2007-2023)

Abstract

Through a thorough examination of the Nominal Effective Exchange Rate (NEER) and the Real Effective Exchange Rate (REER), this study examines the Indian Rupee's exchange rate competitiveness from 2007 to 2023. In light of significant internal and international events like the COVID-19 epidemic, the global financial crisis, and economic reforms, it investigates how changes in these indicators reflect India's trade dynamics, inflation management, and governmental interventions. The results show a recent divergence between NEER and REER, indicating structural changes in the economy and highlighting the need of productivity and inflation control in maintaining export competitiveness. The report offers policy recommendations targeted at preserving currency stability and strengthening India's position in international commerce using data from the RBI and BIS.

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