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How far is the Indian nominal exchange rate from equilibrium?

Author

Listed:
  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

  • Krittika Banerjee

    (Indira Gandhi Institute of Development Research)

Abstract

Examining misalignments from equilibrium exchange rates for eight key emerging markets does not find evidence of systemic overvaluation. Swings associated with global events suggest changes are driven more by surges in global capital. The Indian equilibrium nominal rate depreciated since 2012 despite real appreciation but the range of 68-71 for INR/USD was close to equilibrium in 2018.

Suggested Citation

  • Ashima Goyal & Krittika Banerjee, 2019. "How far is the Indian nominal exchange rate from equilibrium?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-030, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2019-030
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2019-030.pdf
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    References listed on IDEAS

    as
    1. Raju Huidrom & M. Ayhan Kose & Hideaki Matsuoka & Franziska L. Ohnsorge, 2020. "How important are spillovers from major emerging markets?," International Finance, Wiley Blackwell, vol. 23(1), pages 47-63, March.
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    3. Ashima Goyal, 2018. "Evaluating India’s exchange rate regime under global shocks," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 11(3), pages 304-321, September.
    4. Olivier Blanchard & Gian Maria Milesi-Ferretti, 2012. "(Why) Should Current Account Balances Be Reduced?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(1), pages 139-150, April.
    5. Helene Rey, 2013. "Dilemma not trilemma: the global cycle and monetary policy independence," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 1-2.
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    More about this item

    Keywords

    Nominal exchange rate; Misalignments; India; Emerging market economies;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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