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INR Vs USD; Underling the reasons...
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4TH YR. IMBA, UTKAL UNIVERSITY, BBSR, ODISHA, INDIA.
CONTENTS
1. Introduction
2. Reasons for rupee depreciation
3. Impacts of rupee depreciation
4. Rupee's journey since independence
5. Charts & graphs
6. Conclusion
INTRODUCTION
DOLLAR:
After second world war ,America was one of thecountry which had goodeconomic conditions duringthat time America had goldstock of 25 billion dollar.Therefore dollar wasconsidered as globalcurrency.
RUPEE:
The basic monetary unit of
India. In 1991 we opened our
economic system for foreign
companies and made fixed
exchange rate on the basis of
demand and supply of dollar.
IMPACTS OF RUPEE DEPRICIATION
1. Increase in Import Bill
2. Higher Inflation
3. Direct Impact on Consumers
4. Overseas Indians
5. Positive impact on mutual fund investors
6. Capital Account Deficit
7. Higher burden of Debt for Companies & Govt.
8. Slowdown of Growth and Unemployment
9. Volatile domestic equity market
10. Exporters
REASONS FOR RUPEE
DEPRICIATION
1. Price of crude oil
2. Performance of dollar
with respect to other
currencies
3.Volatility in the equity
market
4. Speculative Trading
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5. Contraction of Indian
economy
6. Low Forex Reserves
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RUPEE'S JOURNEY SINCE
INDEPENDENCE
• The Dollar-Rupee parity of 1947
• Devaluation during the high inflation period of
1970s
• The strong dollar period of 1980s
• Devaluation after the economic liberalization of
1991
• Present situation
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YEAR EXCHANGE RATE
INR/USD
1947 1
1975 10.4
1990 17.5
1995 32.4
2000 45
2006 48.3
2007 38.5
2008 48.9
2009 46.4
2011 55.3
2012 57.2
2013 61.2
2014 61.5
RUPEE'S JOURNEY 1947-2014
CONCLUSION
The rupee’s decline affects everyone in the economy because
it feeds directly and indirectly into general inflation, which is a
continuing problem even as output growth decelerates and therefore
hits common people hard.
Depreciation in rupee is not a permanent phenomenon but it
is due to various reasons, some of which are stated above. Since there
are various internal as well as external reasons behind this situation,
it is not always easy to make situation better in a blink of eye. It takes
time to bring back the situation to the normal state. The RBI and
other government agencies are doing their best to tackle this
situation.
