HOW IS INDIAN RUPEE VALUED HOW IS THE EXCHANGE RATE FOR RUPEE CALCULATED CHANGES IN THE EXCHANGE RATE SYSTEM IN INDIA

1. INDIAN RUPEE

2. HOW IS INDIAN RUPEE VALUED
The foreign exchange rate for
conversion
of currencies depends on the
market scenario and the
exchange rate being followed
by the countries.
Floating exchange rates, or
flexible exchange rates,
are determined by market forces
without active intervention of
central governments.
Demand and supply, Inflation,
political stability, unemployment
and future prospects play an
important role.
Price of a currency is dependent
on demand and supply.
Speculations play a role in
determining the price of a
currency.
The political and economic
conditions of the issuing country
affect the price of the currency.
The future prospects of the
issuing country affect the price
of the currency

3. HOW IS THE EXCHANGE RATE FOR RUPEE
CALCULATED
Pre-1990s using
Fixed Exchange Rate
system.
The RBI maintained
a reserve of US
dollars to ensure
fixed exchange rate.
When the demand for
US dollars was high,
its value appreciated
with respect to the
rupee.
Pump US dollars into
the market from its
reserve to meet the
demand and thereby
bring down the
appreciating value of
the dollar.
If the rupee was
appreciating with
respect to the dollar,
then to maintain the
peg RBI would sell
the rupee to buy US
dollar to bring down
its value.
India has a
floating exchange
rate system where
the exchange rate
of the rupee with
another currency is d
etermined by market
factors such as
supply and demand.
For example: If the
demand for US
dollars increases in
the forex market,
the value
of the dollar will
appreciate.

4. CHANGES IN THE EXCHANGE RATE SYSTEM
IN INDIA
 The exchange rate in India changed in 1993 when the dual exchange rate system was
replaced by unified exchange rate system.
 India’s exchange rate policy has evolved over time in line with the gradual opening up
of the economy as part of the broader strategy of macroeconomic reforms and
liberalization since the early 1990s.
 In the post independence period, India’s exchange rate policy has seen a shift from a
par value system to a basket-peg and further to a managed float exchange rate
system.
 With the breakdown of the Bretton Woods System in 1971, the rupee was linked with
pound sterling. In order to overcome the weaknesses associated with a single currency
peg and to ensure stability of the exchange rate, the rupee, with effect from
September 1975, was pegged to a basket of currencies till the early 1990s.

5. THANK YOU
AKSHAY ANIL -
K06007
MATHEWS
JOSEPH - K06053
MUKESH KANNA -
K06055
RIYA ASEEF -
K06071