For all the forecasts of a sharp depreciation to 70 per dollar and beyond, the Indian rupee barely budged in 2016, weakening by just 2.6%. In March last year, former RBI governor Raghuram Rajan had said that market forces bring the exchange rate to its Goldilocks level and the regulator only intervenes to smoothen the journey. Going by his words, the rupee seems to have found its Goldilocks level. The Bank for International Settlement (BIS) would certainly have you believe that the Indian rupee is at its fair value. Its REER (Real Effective Exchange Rate) for the rupee puts the currency at a mild overvaluation of 1.09% last December.

Source: Mint February 20, 2017 02:18 UTC