Inflation and devaluation

FOR more than two and a half years now, at least, the country has been seeing relentless and unending pressure on the exchange rate and the price level. The present bout of exchange rate volatility began in May 2021 and has continued unabated since then. The dollar had moved around 150 to the rupee for two years until that month. Less than 30 months later, its value doubled versus the rupee, and still the pressure is refusing to subside. It took 10 years for the dollar to double in value from 75 to 150 rupees, from 2008 till 2019. It took less than two and a half years for it to double again from May 2021 till the present. As the same time, inflation as measured by the Consumer Price Index skyrocketed only a few months after May 2021, and rose relentlessly till our time, with a few interruptions along the way. The question to ask is: what is driving this relentless surge for almost two and a half years now, punctuated with brief moments of what seems like stability? Why this persistent surge in pressure on prices over such a long period? To find the answer, do a simple exercise. This gets a bit technical, so let me explain it first. Take the money supply projections contained in the IMF staff reports of April 2021, February 2022 and September 2022. Take the overall broad money supply, called M2, as well as the aggregates called Net Domestic Assets (NDA) and the Net Foreign Assets (NFA), and put the projections into an excel sheet. Underneath each of these projections, take the data reported by the State Bank for the same period, and calculate the difference between reality and projection.