Exchange Rate History of the Indian Rupee

The Indian rupee is the official currency of India. The exchange rate of the Indian rupee has gone through several phases of fluctuations and devaluation over the years. In this article, we will take a look at the historical exchange rate of the Indian rupee and how it has evolved over time.

Pre-Independence Period

Before India’s independence in 1947, the Indian rupee was pegged to the British pound sterling at a fixed exchange rate of 1 pound = 13.33 rupees. This fixed exchange rate system had been established in 1898 by the British Raj, and it remained in place until the end of World War II. During this period, the Indian rupee was stable, and inflation was under control.

Post-Independence Period

After India gained independence, the Indian rupee was no longer pegged to the pound sterling. Instead, the government decided to peg it to the US dollar at a fixed exchange rate of 1 dollar = 4.76 rupees. This system of fixed exchange rates lasted until 1975, when the government decided to move to a managed float system.

During the 1960s and 1970s, India faced a severe balance of payments crisis, which led to a series of devaluations of the Indian rupee. In 1966, the exchange rate was devalued by 57.4%. In 1971, following the Indo-Pakistan war, the exchange rate was devalued again by 36.5%. In 1975, as part of the move to the managed float system, the exchange rate was further devalued by 12.5%.

Managed Float Period

In 1975, the Indian rupee was shifted to the managed float system, where the exchange rate was allowed to fluctuate within a certain range. The Reserve Bank of India (RBI) would intervene in the foreign exchange market to maintain the stability of the currency.

During the 1980s and 1990s, the Indian rupee remained relatively stable. However, in 1991, India faced another balance of payments crisis, which led to a sharp devaluation of the currency. In a span of just a few months, the Indian rupee lost more than 25% of its value against the US dollar.

Liberalization Period

After the balance of payments crisis of 1991, the Indian government adopted a policy of economic liberalization and reforms. The Indian rupee became fully convertible on current account transactions in 1994, and on capital account transactions in 2002. The Indian rupee was allowed to float freely in the foreign exchange market, and the RBI only intervened in the market to prevent excessive volatility.

During the liberalization period, the Indian rupee appreciated against the US dollar. From 1991 to 2008, the exchange rate of the Indian rupee moved from 17.50 rupees per US dollar to 39.45 rupees per US dollar. This appreciation was due to increased foreign investments and rising exports.

Global Financial Crisis and Recent Years

In 2008, the global financial crisis hit India, leading to a sharp depreciation of the Indian rupee. From 2008 to 2013, the exchange rate of the Indian rupee moved from 39.45 rupees per US dollar to 68.80 rupees per US dollar. This depreciation was due to several factors, including the global economic slowdown, rising oil prices, and political instability in India.

In recent years, the exchange rate of the Indian rupee has been relatively stable, hovering around the 70 rupees per US dollar mark. The RBI has been intervening in the foreign exchange market to prevent excessive volatility, and the Indian government has been implementing several measures to boost economic growth and attract foreign investments.

Conclusion

The exchange rate of the Indian rupee has gone through several phases of fluctuations and devaluation over the years. From a fixed exchange rate system in the pre-independence period to a managed float system in the 1970s, and a fully convertible and freely floating currency in the liberalization period, the Indian rupee has evolved significantly over time. The recent stability in the exchange rate of the Indian rupee is a reflection of the government’s efforts towards economic growth and stability. However, as with any currency, the exchange rate of the Indian rupee remains vulnerable to global economic and political factors.

Quest'articolo è stato scritto a titolo esclusivamente informativo e di divulgazione. Per esso non è possibile garantire che sia esente da errori o inesattezze, per cui l’amministratore di questo Sito non assume alcuna responsabilità come indicato nelle note legali pubblicate in Termini e Condizioni
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