India rupee appreciation/depreciation factors

Subject: Economy

Context:

The Indian currency is trading relatively weaker compared with emerging market peers such as the Brazilian real and the South African rand
Concept:

• Currency appreciation is an increase in the value of currency comparing to another currency.
• Currency depreciation is an opposite of currency appreciation, it is a fall in the value of a currency.
• Numerous factors determine exchange rates.
• Many of these factors are related to the trading relationship between the two countries.
• Exchange rates are relative, and are expressed as a comparison of the currencies of two countries.
• The following are some of the principal determinants of the exchange rate between two countries.
  • Differentials in Inflation
  • Differentials in Interest Rates
  • Current Account Deficits
  • Public Debt
  • Terms of Trade