The Reserve Bank of India net sold $3.6 billion in June, likely to contain excess depreciation of the Indian rupee. The local currency closed at 85.47 per dollar in June, about 12 paise stronger than its level at the beginning of the month at 85.50/$1.
The real effective exchange rate (REER), the weighted average of India’s currency against a basket of six major currencies, remained largely stable at 98.35 in July.
A REER of less than 100 implies that the currency is undervalued, thereby enhancing export competitiveness.
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