Trading in the rupee: Starting to look like serious numbers

by Vimal Balasubramaniam and Ajay Shah.

The rupee-dollar is the most important price of the Indian economy. It is discovered on the currency market. What are the contours of this market? Specifically:

How big is the daily trading in the rupee? Where does the rupee stand, in global rankings of currencies? Where does trading . . . → Read More: Trading in the rupee: Starting to look like serious numbers

The rupee: Frequently asked questions

q: How big is the market for the rupee?

The rupee is now a big market. Summing across both spot and derivatives, perhaps $30 billion a day of onshore trading and $40 billion of offshore trading takes place. Both these markets are tightly linked by arbitrage. In other words, for all practical purposes, it’s . . . → Read More: The rupee: Frequently asked questions

What in the world is happening to the rupee?

The INR/USD rate is now nudging Rs.50 to the dollar. This is a big move over a short period: a depreciation of 12.1 per cent over the 84 days from 1 July till 23 September.

What fluctuations of the INR/USD can we reasonably expect?

After the rupee became a float, so far, it has . . . → Read More: What in the world is happening to the rupee?

India is losing the market for trading the Indian rupee

The recent order by the Competition Commission of India on NSE and MCX-SX has a bunch of difficulties based on a lack of understanding of new age industries where a pricing of zero is quite feasible and important, a focus on protecting a competitor instead of upholding competition, etc. I wrote about this in . . . → Read More: India is losing the market for trading the Indian rupee

A Puzzling Data Revision

Ordinarily, official statistics get revised because at first, provisional estimates are released, and when the full data filings come in, then improved estimates are put out.

In the case of RBI’s data about RBI’s trading on the currency market, such data revisions should ordinarily not arise.

But yesterday, data released by RBI modified the . . . → Read More: A Puzzling Data Revision

Is There a Problem With Rupee Appreciation?

There is a lot of talk about capital inflows, rupee appreciation, concerns about export competitiveness, etc. It made me pull up the data to look at what is going on. The graph shows the nominal and real effective exchange rate of the rupee. The source is the BIS: the best computation of these indexes . . . → Read More: Is There a Problem With Rupee Appreciation?

Structural Change in the Indian Exchange Rate Regime

The rupee/dollar rate has gained in flexibility. In order to visualise what has changed, it’s useful to look at a graph of the time-series of weekly percentage changes, expressed in absolute terms. That is, a change of -3% or +3% is shown as a bar of height 3 in this graph:

The vertical blue . . . → Read More: Structural Change in the Indian Exchange Rate Regime