USD to INR Exchange Rate History? The US dollar is the most widely used money in the world. The value of other currencies in the worldwide market is determined by the value of the US dollar, which is considered the benchmark currency.
The US dollar is also one of the most widely utilised international investment and trade currencies. The USD is far easier to trade than any other currency. Since then, the dollar has gotten a lot of attention worldwide. In light of this, the INR currency, like many others, is valued by comparing it to the dollar. The history of the INR, on the other hand, aids in a better knowledge of the Indian economy.
You are breaking the monotony on the age-old subject of how the Indian rupee has declined since 1947. We’ve come up with a precise response that clears the haze surrounding this old subject. It’s nothing more than a legend. If you believe that exchanging one dollar for one rupee in 1947 would have resulted in precisely one rupee, you are mistaken. You might wonder why. Here’s the solution:
- There were no outstanding credits on India’s balance sheet when it gained Independence in 1947, keeping the Indian Rupee parity with the US Dollar.
- Another aspect to remember is that India was ruled by the British before it gained Independence. As a result, the Indian Rupee was tied to the British Pound, keeping the value consistent at the time, which didn’t last long.
- According to reports, 1 pound was for 13 INR from 1927 to 1966. The agreement ended in 1966, and the rupee began to depreciate.
- Until 1971, when India launched its 5 Year Plan following Independence, the Indian Rupee was pegged to the US dollar at 7.5 rupees per dollar.
Another question emerges: what was the exact value of one dollar in Indian rupees in 1947?
USD-INR: Indian Rupee Drops to 9-Month Low Against US Dollar.
Although, after Independence, the Indian rupee was pegged to the British Pound at a rate of 1 rupee = 1 shilling and 6 pence, which translates to 13 1/3 rupees per British Pound. However, according to reports, the British Pound would have been worth around 4 USD at the time, implying that the US dollar would have been worth more than Rs 3.
Note: In 1950, India became a republic. In 1952, India’s constitution came into being. 1 USD was equal to 4.16 INR or 4.16 NCU at the time. (The NCU stands for National Currency Unit.)
Also, see: How to avoid a common travel gaffe when converting US dollars to Indian rupees.
Factors Affecting “The Indian Rupee Depreciation” (1 USD to INR) – A Brief History
The beginning
USD to INR Exchange Rate was large before India’s Independence in 1947; the Indian currency was first assessed against the US dollar. Given that the national balance sheet was devoid of any credit or debit, it could equate the value of 1 INR to 1 USD.
The value of Indian money, on the other hand, was taken from the British Pound, which was worth 13 INR at the time. Because there was no conventional form of currency comparison until 1944, the INR’s value against the British Pound remained dominant.
Dollar vs Rupee issues by year from 1947 to 1967
In 1947, 1 INR was worth 4.76 rupees (if a direct comparison is not made). Maintained this value until 1966. However, beginning in the 1950s, the Indian economy began to deteriorate. It was because of the country’s international creditworthiness.
The situation was made worse by the 1962 conflict between India and China, followed by the 1965 war between India and Pakistan, and the drought that ravaged the country in 1966. By 1967, all of this had pushed the exchange rate to INR 7.50.
Further depreciation of the rupee owing to the 1973 oil crisis
The rupee value decreased to 8.10 in 1974 due to the 1973 Oil Shock, caused by the Organization of Arab Petroleum Exporting Countries’ decision to reduce output.
To deal with the problem and the ensuing political turmoil, India borrowed foreign currency, causing the Indian currency to depreciate. Throughout the 1980s, the exchange rate declined, reaching a peak of 17.50 in 1990.
In 1990, 1 USD equalled 1 INR – the economic crisis.
In the 1990s, India’s economy was undergoing a difficult period. At the time, interest payments accounted for 39% of the government’s revenue. The fiscal deficit has shrunk to 7.8% of GDP, and India is the verge of defaulting on its debt obligations.
The Indian currency had to be devalued as a result of the crisis. Devaluation is when a country’s currency loses value in the international market while maintaining its internal worth. India followed a similar method to reduce the cost of its export market while increasing the cost of its import market.
The effect of devaluation on the INR value since 1992
In 1992, the devaluation changed from 1 USD to 25.92 INR. Since then, the value of the Indian rupee has fallen to the current rate of 74.57 INR. In 2004, the dollar price was 45.32 INR, and it grew to 62.33 INR during the next ten years. In 2016, February saw the highest dollar-to-INR exchange rate at 68.80 INR.
USD to INR in the year 2021
The current exchange rate for one US dollar is 74.57 Indian rupees. The price of crude oil mainly determines the value of the INR. As the oil price rises, so does the value of the Indian rupee, and vice versa. Another factor is the retreat of foreign investors from the Indian market. Investors may lose interest in the country’s market due to government debt, resulting in inflation.
These and other factors may combine to produce additional depreciation of the INR in the future.
Forecast for USD to INR in 2021
The Indian rupee is attempting to reverse last year’s stunning recovery against the US dollar as coronavirus cases arise.
Could the Indian rupee remain stable and trade below its 52-week low if economic data improves?
The currency benefits from increased exports, but if the country’s vaccination goals continue to fall and different agencies impose more limitations, it could jeopardise its economic prospects.
According to the Ministry of Commerce and Industry, India’s trade imbalance increased from $9.76 billion in February to $14.11 billion in March. Non-petroleum sales increased by 58.2 per cent year over year, bringing exports to an all-time high of $34 billion. Imports increased by 52.9 per cent on an annualised basis to $48.12 billion, a record high.
On March 26, the Reserve Bank of India’s (RBI) foreign exchange reserves fell below $580 billion. It’s down from $582.27 billion the week before. Forex reserves have been slowly improving over the last 18 months after dropping below $400 billion in 2019.
The RBI’s April policy meeting is scheduled for next week. Interest rates are expected to remain unchanged:
the benchmark rate will stay at 4%, while the reverse repurchasing agreement rate will continue at 3.35 per cent. Despite investors pouring through the numbers, the global financial markets are focused on the spike in new COVID-19 infections.
To summarise, we believe that most of the variables, at least the fundamental ones, will make it difficult for the RBI to keep the rupee at present levels. It will rely heavily on the economy’s recovery and the effective combat of the pandemic.
Our judgement of the situation is simple: if the new vaccine efficiently combats the pandemic, it will be the most significant element supporting the economy and the rupee in the months ahead. Given the mixed results, it’s challenging to create a fair, reasonable estimate. We estimate the rupee to move in a 72.70-74.50 range this year, with the RBI employing its vast reserves to halt or prevent any further decline beyond that level.
Check out here month wise USD to INR Forecast for 2021 & 2022
In 1947, the exchange rate of the US dollar to the Indian rupee (INR) was
Currently, the INR is worth less than the USD; however, this was not always the case. The scenario was substantially different when India gained Independence in 1947. It is thought that 1 INR equalled 1 USD in the past. There are numerous theories on why the 1 Dollar rupee had a higher value in 1947. The most prevalent explanation is that there was no metric system; hence all currencies were equal in value.
Another argument is that because India was a British-ruled country before 1947, the INR had a higher worth because the Pound had a higher value. In 1947, one Pound was thought to be worth 13.37 rupees; hence the value of the US dollar should have been INR 4.16.
History of the US Dollar vs Indian Rupee
The story began in 1944 when we signed “The Britton Woods agreement. This agreement decided the value of every currency in the world. During India’s Independence, everyone was gradually adjusting to it. Since 1947, when India gained Independence, the value of the rupee has steadily declined.
According to the modern metric system, the value of INR to USD in 1913 should be 0.09, and if we stick to the 1 USD = 1 INR argument, the value of INR to USD increased up to 3.31 in 1948, 3.67 in 1949, and 7.50 in 1970.
The fluctuating exchange rates of the Indian currency to the US dollar
1 INR was never equal to 1 USD, according to official data. It was forced to join the international metric system, which caused the rupee’s value to fluctuate simultaneously when India obtained Independence.
Factors that influenced the current state of the Indian Rupee (INR)
Since its Independence, the Indian Rupee has been subjected to several events that have lowered its value. Multiple economic crises, privatisation, devaluation, and World Bank loans have all played a role in deciding the value of 1 USD to INR.
The federal funds rate in the United States has remained unchanged at 0.25 per cent for the last ten years, including the Great Recession of 2008. It also influences the current exchange rate of INR to USD.
Decimalization
In 1957, the decimal system was implemented. The Indian rupee was divided into 100 naye paisas (new paisas in Hindi/Urdu). The prefix naye was dropped, but the value remained the same.
This move was deemed necessary because decimalisation has traditionally been associated with modernity, revolutionary financial system, and economic change.
The money was made accessible to every Indian resident by making the lower denominations an amount of Indian currency, but it also boosted the value of the INR.
Economic disasters in 1966
India was still a developing economy at the time. In such conditions, it is projected that India will import more than it exports. Many attempts were made to maintain a favourable trade balance, but they failed. Since the 1950s, India has experienced a continuous balance of payments deficit. The devaluation of 1966 resulted from the government’s first severe financial crisis.
India is involved in two major wars with China and Pakistan. After Pandit Jawaharlal Nehru, India’s leadership changed several times. Another reason contributed to the rupee’s 57 per cent depreciation, bringing the exchange rate to Rs 7.5/$.
It was a significant factor in lowering the INR to the USD exchange rate. Inflation drove up Indian prices, and the exchange rate skyrocketed. (See also: 8 Countries Where the Rupee Is King.)
The economic crises of 1991
1991 is regarded as the year of financial change In India. Indian economists acknowledged the importance of liberalisation in 1991. This change was part of India’s industrialisation plan, which began in the 1970s to relax limitations on imported capital goods.
The government had a balance of payment difficulty, which caused the economic catastrophe. It was on the verge of default due to constant delays. The rupee’s value has dropped to Rs 25 per dollar.
Once the economy liberalised, the Indian Rupee fell to Rs 35 per dollar. Another factor contributing to the situation was the open market’s control over the exchange.
The year of depreciation is 2013.
On May 22, 2013, the INR was 55.48 per dollar, and after fifteen days, it had dropped to 57.07 per dollar. This shift increased dollar demand from imports and capital withdrawals from the debt market by FIIs, causing the rupee to decrease in value.
Demonetization in 2016
In 2016 the current Indian government took steps to phase out older currency notes and replace them with newer banknotes. It ultimately contributed to the INR falling from 67 to 71 in the following years, but much was said and done in response to the move.
Conclusion
The INR determines a lot of the USD exchange rate. It demonstrates that India was an economically backward country that increased import rates. At the same time, when converting INR to USD, travellers going abroad get less.
Because the foreign exchange rate delivers less money in exchange for INR, Indian travellers prefer to carry USD abroad. (Also see: 10 things to check before getting foreign currency)
