The Indian rupee's ranking slipped to 20th in 2013 from 15th in 2010 in the global foreign exchange market turnover even though currencies of other emerging economies, such as China, Brazil, South Africa and Turkey, improved, according to a survey on central banks conducted by the Bank for International Settlement (BIS).
The global triennial survey on foreign exchange turnover showed trading in foreign exchange markets averaged $5.3 trillion per day in April 2013, up from $4.0 trillion in April 2010 and $3.3 trillion in April 2007.
The relatively more flexible Indian rupee's (INR) share in the overall daily turnover in the currency markets was just 1%, while China's inflexible renminbi's (CNY) share was 2.2%, reflecting China’s growing clout in international economic arena, especially trade and foreign investment flows.
The Indian rupee slipped from 15th to 20th position in three years, coinciding with a sharp slowdown in economic growth from 9.3% in 2010-11 to a decadal low of 5% in 2012-13 and a widening of the current account deficit (CAD) from 2.7% of GDP to 4.8%.
The Indian rupee was among the worst-performing Asian currency, depreciating by almost a fifth since end May when US Fed announced its intention to taper the quantitative easing programme. While the Chinese economy has also slowed from 10%-plus to less than 8% within three years, its currency for the first time became one of the top 10 — it climbed to 9th in 2013 from 17th in 2010. The Brazilian real moved up from 21st to 19th between 2010 and 2013, while South African Rand improved to 18th from 20th.
While announcing a raft of measures to arrest the rupee fall on the first day of his office on September 4, new RBI governor Raghuram Rajan highlighted the need to liberalise rules further to make the Indian rupee more acceptable in the global arena.
“This might be a strange time to talk about rupee internationalisation, but we have to think beyond the next few months. As our trade expands, we will push for more settlement in rupees. This will also mean that we will have to open up our financial markets more for those who receive rupees to invest it back in. We intend to continue the path of steady liberalisation,” he had said.
India has just concluded a new currency swap arrangement with Japan by raising the limit to $50 billion from $15 billion. The government