India's real gross GDP grew by 7.4 per cent year-on-year in the second quarter of 2004 and the rupee depreciated by less than 1 per cent in the first half of the same, the US treasury department has said in a report.
India targets a real effective exchange rate (REER) benchmark based on cross-border inflation differentials and currency movements, according to the Congressionally mandated report on international economic and exchange rate policies.
"Although the Reserve Bank of India does not intervene to curtail short-term volatility relative to the US dollar, the exchange rate has not been allowed to stray too far from its REER benchmark."
The US bilateral merchandise trade deficit with India rose to $4.8 billion for the first half of 2004, compared to $4.1 billion for the first half of 2003, the report further said.
Foreign exchange reserves stood at $114.15 billion at the end of June, up from $96.5 billion at the end of 2003.