The Indian rupee derives from Sanskrit and was first issued as coins in 6th century BC in ancient India. It has been the currency throughout successive empires and dynasties. The modern rupee originated from coins issued by Sher Shah Suri in the 16th century. Shortages during WWI led to the introduction of paper currency printed by agency houses and banks. Post-independence, currencies featured images of Ashoka and Mahatma Gandhi. The value of the rupee versus the US dollar has fluctuated since 2005 due to factors like interest rates, trade deficits, capital inflows, crude oil prices, forex reserves, and relative inflation rates between the two countries.
3. The Indian currency Rupee has been derived
from a Sanskrit word.
Ancient India was the earliest issuers of coins(6th century
BC)
Over the next few centuries as empires rose and fell the
coinage system reflected the dynasties,socio-political
events,Gods,nature etc
Sher Shah Suri during his 5 year rule issued silver coins and called
them ‘Rupaiya’.
It remained in use for Mughal,Maratha and british era.
4. Acute shortage of coins durin WW1
led to printing of notes.
During political unrest of 18th century
agency houses developed banks
which printed their own currencies.
In 1858 British gained control of 100
princely states which led to the coins
having images of British Monarchs
After independence the currencies
issued have been:Ashokan Pillar
and Mahatama Gandhi banknotes
5. The Govt
on advice
of India’s
central
bank i.e.
RBI
decides on
various
denominati
ons to be
issued
Coins are
minted
by the
Govt and
RBI’s
role is
only to
distribute
it.
Faced 2
devaluation
s in 1966
and 1991
Each note has
17 languages
Its made of
cotton and cotton
rag
Has security
features like
watemark
window, security
thread etc
Latest symbol
was adopted in
2010
7. Indian currency system is a hybrid exchange system i.e.
it allows exchange rate to flow in a particular direction
until a particular range beyond which the Government
intervenes.
The various factors affecting the exchange rate of INR Vs
USD are :
Interest Rates: Higher interest rates attract foreign capital to
India which means supply of dollars.
RBI: If rupee value appreciates RBI buys Dollars,while it
sells Dollars if rupee value depreciates.
Huge Trade Deficits: India’s import > exports which has led
to trade deficit.It widened to 40,000 cr in 2013 due to ever
increasing imports which further increased Dollar demand
and led to its further appreciation as compared to rupee
8. iv. Lower Capital Inflows: Various policis,restrictions
etc have reduced the foreign inflows
v . Crude oil prices: India is major crude oil
importer….Increase in oil prices leads to inflation.It
means more Dollars required to pay the price.This
results in reduction of rupees worth as compared to
dollars.
vi. Forex reserves: The level of forex reserves In india is
expressed in Dollars.Hence when USD appreciates as
compared to rupee the forex reserve declines.
vii. Relative Inflation Rate: Inflation rate and interest
rates have inverse relationships.Given the slowdown in
India the ‘cost push’ rather than ‘demand pull’ is
increasing inflation further. This in turn is leading to
appreciation of USD as compared to INR