History of the Rupee
India was one of the first issuers of
coins (6th Century BC)
The word rūpya which means "a
coin of silver“
The silver coin remained in use
during the Mayura,Mughal Era,
Maratha Era as well as in British India.
Silver coins of mayura
Rupee coins of
British coins (18th
Acute shortage of silver during
the First Word war, led to the
introduction of paper currency
Among the earliest issues of paper
rupees include; the Bank of
Hindustan (1770–1832), the General
Bank of Bengal and Bihar (1773–75), and
the Bengal Bank (1784–91).
Udaya Kumar Dharmalingam, the man who designed the rupee symbol
Launched on 8 July 2011
The rupee was subdivided into 16 annas.
Each anna was subdivided into either 4 paisas.
So One rupee was equal to 16 Annas, 64
In 1957, decimilasation occurred and the
rupee was divided into 100 Naye Paise.
After a few years, the initial "Naye" was
Stainless steel coinage of 10, 25 and 50 paise,
was introduced in 1988 and of one rupee in
The Indian rupee Vs. Other currencies
The Indian rupee was a silver based
The stronger economies at that
time were on the gold Standard.
which had severe consequences on
the standard value of the currency.
The Indian Rupee was trading at
around 24 British pence.
•Continued trade deficits
•Could not borrow money from abroad
•The government issued bonds to the RBI
•Increased the money supply
•The Indo-Pakistani War of 1965
•US and other countries friendly towards Pakistan to
withdraw foreign aid to India
•The drought of 1965/1966 which resulted in a sharp
rise in prices.
•As a result of above The Indian Rupee was trading at
around 6 British pence.
1991 Economic crisis
•Started having balance of payments
problems since 1985
•By the end of 1990 serious economic
•Foreign exchange reserves could barely
finance three weeks’ worth of imports
•Economic liberalizations, Globalizations
•At the end of 1999, the Indian Rupee was
In the period 2000–2007, the Rupee stopped
declining and stabilized ranging between 1 USD
= INR 44–48
In 2007, the Indian Rupee reached a record
high of Rs.39 per USD, on account of sustained
foreign investment flows into the country.
The trend has reversed lately with the 2008
world financial crisis as Foreign investors
transferred huge sums out to their own
India's Currency, The Rupee, Has
Plummeted To A Record Low Against The
(Indian Rupee = American Dollar)
* 2013 (Aug 28)
Since January the rupee has plunged
In the last three months it’s dropped
The biggest such decline in nearly 18
On Wednesday India’s currency posted
its biggest one-day drop ever
Now sits at a record low against the
Deprecation Of Rupee
More and more
rupees are brought in
our country and
dollars are sold
More and more
rupees are sold and
dollars are brought
This is resulting in creating more actual
as well as speculative demand for the
dollar and other convertible
The balance of payments (BOP) is the
place where countries record their
monetary transactions with the rest of
In the current account, goods,
services, income and current transfers
In the capital account, physical assets
such as a building or a factory are
Goods (general merchandise, goods used for
processing other goods)
Services (transportation, business services,
tourism, royalties or licensing)
Income (money going in or out of a country from
salaries, portfolio investments, direct investments or
any other type of investment.)
Current Transfers (workers' remittances,
donations, aids and grants, official assistance and
The balance of the current account tells us if
a country has a deficit or a surplus.
A surplus is indicative of an economy that is
a net creditor to the rest of the world.
A deficit reflects government and an
economy that is a net debtor to the rest of the
Theoretically, the balance should be zero,
but in the real world this is improbable.
Recession in developed economies like US
made big institutions to pull out their money
The fear of bubble bursting in gold has
resulted in investors viewing dollar as a safe
• Trade deficit has widened by 40,000 crores in
the last quarter. This has resulted in increased
imports and spike in dollar demand
Perception of lack of clarity on policy front
is also fanning speculative demand wherein
the Reserve Bank of India (RBI) on one day
said it will tighten liquidity and on yet
another said it will inject $1 billion in the
India's foreign exchange (Forex) reserves
are enough to cover imports of seven
month only. The forex reserves have
declined in the recent months. Due to low
reserves, the RBI can't intervene
aggressively in the currency markets.
India's gross domestic product (GDP)
growth fell to a decade low of 5 percent
in 2012-13. The situation is unlikely to
improve much this year. Foreign investors
are pulling money out of the Indian
markets due to slow growth.
Dependence on Foreign money
India's current account deficit was
financed by foreign money for the last
many years. Withdrawal of money by
overseas investors is leading to the
weakness in the rupee.
Recovery in the US
The slow but steady recovery in the US is
making the greenback stronger against
Indications that the US may withdraw or
ease the fiscal stimulus package that has
been on since a few years ago to tide over
the economic crisis there, could potentially
put the brakes on funds for developing
The decision by the Reserve Bank and the
government to impose temporary
restrictions on capital flows has not gone
down well with the markets, as it will not
only discourage Indian companies from
investing abroad, but also foreign firms
from pumping money into India.
The rupee is also following the
trend seen in the currencies of
other emerging economies
such as Brazil, Indonesia,
Russia and South Africa.
Speculative trading in the currency markets
is putting further pressure on the Indian
To balance demand & supply
Proper implementation of monetary policy and fiscal policy in our
Stability in imports & exports etc.
The value of the rupee in terms of dollars will
depend over time on the erosion of its value in
terms of purchasing power internally. If inflation
has been at say, 7 percent, the rupee will have to fall
to that extent unless the importing countries are
themselves victims of inflation. That is not the case.
Hence, the rupee has fallen the most compared to
other currencies because we had nearly the highest
inflation. Eventually, the rupee will stabilize,
barring short-term disturbances, after correcting
the loss in its domestic purchasing power. The
rupee will not go back to 45 to the dollar; at best it
will stabilize at 51-52.