INDIAN RUPEE VS U.S. DOLLAR

APPRECIATION OF RUPEE:- Appreciation of rupee means that

there is increase in value of rupee in global market or in simple terms rupee has become stronger than before in global market.

DEPRECIATION OF INDIAN RUPEE:-

Depreciation of rupee means that there is a reduction in value of rupee in global market or the rupee has become weaker than before in global market.

WHY RUPEE NEED TO APPRECIATE:-

To control inflation. To reduce production cost. Reduce foreign debt. Cheaper imported goods.

WHY RUPEE NEEDS TO DEPRECIATE:-

Forex reserve. Major export dependent. A meant against job lossess.

Chronology of India’s Exchange rate policy:-

1947(When India became member of IMF): Rupee tied to pound.

18 September, 1949: Pound devalued; India maintained par with pound.

6 June, 1966: Rupee is devalued, Rs.4.76 = $1 after devaluation Rs.7.50 = $1 (57.5%).

18 November, 1967: UK devalued pound, India did not devalued.

August 1971: Rupee pegged to gold/dollar, International financial crisis.

18 December, 1971: Dollar is devalued. 20 December, 1971: Rupee is pegged to pound sterling

again. 1971-1979: The rupee is overvalued due to India’s policy of

import substitution.

23 June, 1972: UK float pound, India maintains fixed exchange rate with pound.

1975: India links rupee with basket of currencies of major trading partners. Although the basket was periodically altered, the link was maintained until the 1991 devaluation.

July 1991: Rupee devalued by 18-19%. March 1992: Dual exchange rate, LERMS,

Liberalized Exchange Rate Management System. March 1993: Unified exchange rate: $1 = Rs.31.37 1993/1994: Rupee is made freely convertible for

trading but not for investment purposes.

RUPEE VS DOLLAR:-YEAR EXCHANGE RATE( RUPEE VS

US DOLLAR)

1970 7.576

1975 8.409

1980 7.887

1985 12.369

1990 17.504

1995 32.427

2000 45.000

2006 48.336

2007(oct) 38.48

2008(june) 42.51

2008(oct) 48.88

2009(oct) 46.37

2010(jan) 46.21

FACTOR AFFECTS THE EXCHANGE RATE :-

Dollar selling or buying by exporter and corporate

Global price of crude oil Capital inflow and outflow Reserve bank Dollar weakness and strengthening

against other currencies

IMPACT OF DOLLAR FLUCTUATION ON INDIAN ECONOMY

Until the 70’s and 80’s India aimed to be self reliant by concentrating more on imports and allowing very little export to cover import cost. However, this could not be last long the oil price rise in the 1970 and 80s created a big gap in India’s Balance of Payment. This gap widened during Iraq’s attempt to take over Kuwait.

Thereafter, exports also contributed to FX reserve along with the FDI into the Indian economy and reduced BOP gap.

THANK YOU

SUBMITTED TO: SUBMITTED BY: ANAND MODI ABHIJEET SINHA MBA(FT) VI SEMESTER ROLL NO.:

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