Indian rupee ends 2022 as Asia's worst-performing currency
The Indian rupee has had a lackluster 2022. It ended 2022 as Asia's worst-performing currency. Today, the rupee finished at 82.72 against the US dollar, bringing an end to the volatile year that saw the currency reeling under macroeconomic pressure. The Singapore dollar is 2022's best performer with the only major Asian currency to make an annual gain against the dollar.
Why does this story matter?
- 2022 has been a tough year for the global economy. However, India has managed to keep things under control despite strong macroeconomic headwinds.
- India's stock market has been one of the best in the world this year. The same can't be said about the Indian rupee though.
- The currency's struggle, however, has nothing to do with the Indian economy's fundamentals.
Rupee breached 83 mark this year to hit record low
The Indian rupee ended 2021 at 74.33 against the US dollar. Since then, it has fallen 11.3%, its biggest annual decline since 2013. In 2013, the rupee was Asia's third-worst performer. The currency's performance in 2022 makes five consecutive annual declines against the US dollar since 2018. In October this year, the rupee hit a record low of 83.12 per dollar.
Rupee's fall in 2022 can't be compared to 2013
Although 2022 saw the rupee's worst performance since 2013, the two are not similar. In 2013, the rupee was falling against every major currency. However, this year, it was stable against all major currencies except the US dollar. It's not just the rupee that lost against the dollar in 2022. Every other major currency was in the losing column as well.
A strong dollar sent the rupee to the pits
The Indian rupee's poor performance this year is strongly connected to the rallying dollar. The US Federal Reserve's hawkish monetary policy to control inflation sent the dollar soaring. The dollar is headed for its biggest gain since 2015. The rupee wasn't also aided by the Ukraine-Russia crisis, which resulted in high oil prices. As a net importer of oil, this too affected rupee's value.
