The impact and exchange rate appreciation or depreciation of Indian Rupee against the dollar on different sectors of Indian economy depends on a number of factors like elasticity of exports and imports, import intensity of exports, relative prices of domestic and global products etc. The softening of international commodity prices, particularly crude oil prices, notwithstanding the moderate nominal depreciation, will have favourable impact on the value of imports, trade and current account balances as well as macroeconomic stability. While there is a depreciation of the rupee vis-à-vis US dollar in nominal terms, the impact on the economy is best assessed by the real effective exchange rate (REER) which is defined as a weighted geometric average of nominal exchange rates of the home currency in terms of the foreign currencies adjusted for relative price differential. In terms of REER, there has been an appreciation of 3.7% in 2015-16 (April-October) compared to 2014-15 (April-October).

 The average annual exchange rate of the rupee depreciated from ₹ 54.4 per US dollar in 2012-13 to ₹ 60.5 in 2013-14 and further to ₹ 61.1 in 2014-15. In the current fiscal 2015-16 (April-November), the average monthly exchange rate of rupee (RBIs reference rate) was ₹ 64.6 per US dollar.

 The exchange rate of the rupee is by and large market determined. The Government and the RBI are closely monitoring the emerging external position including exchange rate of the rupee in nominal and real terms and on an on-going basis calibrating policies or regulations to support robust macroeconomic outcome.

 This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha.

Exchange rate policy: monitoring nominal and real currency movements to calibrate measures supporting macroeconomic stability. Exchange rate movements affect sectors differently based on export/import elasticities and relative prices; international commodity prices and nominal exchange rate shifts influence import costs, trade and current account balances, and macroeconomic stability. The economic impact is better measured by the real effective exchange rate (REER), a weighted geometric average of nominal bilateral rates adjusted for relative price differentials, and authorities monitor nominal and real exchange rates to calibrate policy and regulation.