The rupee has been the worst performing currency in Asia during the last 12 months, having fallen most against the US greenback. However , a sharp depreciation has not been peculiar to India with most of the world's major currencies falling against the dollar during this period.
The global situation partially explains RBI's stance to remain relatively unflustered despite an 18% drop in 12 months. The dollar index, which is measured against a basket of currencies including euro, yen, pound, Canadian dollar , Swedish krona and Swiss franc, has gained 8.52% in the last one year. In the last 12 months, the only three major world currencies to have gained against the dollar were that of Japan, China and Hong Kong. If one were to look at the currency markets since the last three months after the European crisis exacerbated, only one currency - the Japanese Yen -gained against the dollar.
What this means is that the dollar has turned expensive not just for India but for a host of countries, which partially neutralizes the impact of the devaluation . This could also explain the absence of panic among investors although dollar returns have shrunk significantly in the last 12 months.