One common argument by experts who claim that there is nothing to be worried about the decline and fall of the Indian Rupee in recent times is that the Indian Rupee is not the only currency that is falling, and that other emerging market currencies are also falling equally badly. In order to test this out, we will look at the movement of the rupee as a function of other so-called “emerging market” currencies.
I’m just going to offer the graphs here (of movements of various currencies against the rupee) without any comment. All graphs are of the form “how many units of foreign currency does it take to buy a rupee”. So the higher this graph, the higher the level of the rupee compared to this particular foreign currency. And it is on purpose that I’ve drawn all charts starting from Jan 1st 2008, so that the US financial crisis is also captured.