(March 3): Reserve Bank of India Governor Urjit Patel said the rupee is ‘broadly’ where it should be. Problem is, a central bank gauge of the currency’s trade-weighted performance shows it is overvalued.

Adding to the confusion is the government’s earlier claim that indexes managed by the RBI and the International Monetary Fund have overstated rupee gains. To prove its point, India’s finance ministry has created its own gauges of the rupee’s trade-weighted performance, and all of this has left investors grappling with the question: what is the fair value for the currency?

“It’s a tricky call,” said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. “Different gauges give a different fair value for the rupee and some are outdated in terms of the weights.”

Here are three charts to show the key arguments:

While the rupee capped a sixth straight annual decline versus the dollar in 2016, the RBI’s 36-currency real-effective exchange rate index surged to a record in December and still shows that the rupee is 16 percent overvalued. In comparison, a gauge compiled by the Bank for International Settlements shows the currency as fairly valued.

The difference in values is because of the choice of base year — RBI uses 2004-05 and BIS has 2010 — and the weights assigned to trading partner-currencies, according to the government’s Economic Survey released in January. The RBI’s gauge, for example, lends an unusually high weighting to United Arab Emirates — a major source of India’s oil and a transshipment point for exports — even though it has little to do with competitiveness.

Indexes compiled by the RBI and the IMF take India’s overall trade into consideration and have a large weight given to the euro, which has been ‘exceptionally weak’ since 2014, the Economic Survey noted.

On the other hand, the finance ministry’s new gauges focus more on India’s manufacturing competitors. Its Asia-H measure assigns significantly higher weight to Asian economies such as China, Vietnam, the Philippines that have gained global export market share since 2010, while the Asia-M model lends them moderate weights.

So, the extent of rupee overvaluation is very much a function of the construction of the index, Citigroup Inc analysts wrote in a February report.

While the rupee’s trade-weighted gains are seen by some economists as posing risks to a recovery in overseas shipments from Asia’s third-largest economy, the finance ministry seems to downplay such worries.

“India has managed to maintain export competitiveness despite capital inflows and inflation that has been greater than in trading partners,” according to the ministry’s survey.

Policy makers are less concerned on overvaluation, the Citi analysts wrote in their report, adding that “estimating rupee overvaluation might not be as simple as tracking the 36-country RBI REER anymore.”

Exports rose in six of the eight months through January even as the rupee strengthened. India’s current-account deficit is low and at a level which can be easily funded, RBI’s Patel said in an interview with the CNBC-TV18 channel last month.

“When we look at rupee valuations across our suite of models, and accounting for some of the shortcomings of REER alone as a measure, valuation does not appear to be a very significant concern at this juncture,” Dushyant Padmanabhan, a Singapore-based foreign-exchange strategist at Nomura Holdings Inc, wrote in an emailed response to questions.