Since India’s Independence in 1947, the valuation of the Indian Rupee (INR) against the world’s most powerful currency, the US Dollar (USD) has had a dynamic shift. As of today, that is August 15, 2024, 1 USD is approximately Rs 83.94, a stark contrast to its rate of Rs 3.30 in 1947, the year of India’s Independence.
Let’s take a look at the intriguing evolution of the USD to INR exchange rate and the factors that shaped this journey.
Pre-Independence era
During the pre-independence era, that is, before 1947, the Indian currency was heavily influenced by the British colonial policies. In simple termsm the British currency, Pound, dominant stage set the stage for hoe the Indian Rupee was valued globally.
The intriguing evolution of the USD to INR exchange rate | Image: Wikipedia (Representative)
At that time, the Rupee was linked to the Pound as the US dollar was pegged to gold under the Bretten Woods Agreeement.
Moreover, the Great Depression of the 1930s also further weakened the global economies, including the Indian currency, setting the stage or base for the currency that followed.
The Post-Independence Period (1947–1990)
Post the Independence in 1947, India free from the British rule, maintained a fixed exchange rate system.
Furthermore, the government and the Reserve Bank of India (RBI) managed the rupee’s value, which at the initial phase remained stable at Rs 3.30 per USD.
The shift from a par value system to a pegged system and later to a basket peg in 1975 reflected India’s gradual adaptation to global currency trends.
A Turning Point: Economic Reforms and Liberalisation (1991–2000)
A year faces with many balance of payment crisis, 1991, led to many major economic reforms in the country.
The year also witnesses a fall in Indian rupee sharply with USD to INR rising to Rs 35 and further by Rs 45 by the period 2000.
However, the liberlisation opened the doors for foreign investment as well.
The 21st Century (2001–2023)
Starting at Rs 47 per USD in 2001, the rupee hovered around Rs 75 by 2020.
Post the Independence in 1947, India free from the British rule, maintained a fixed exchange rate system | Image: Wikipedia (Representative)
The 2008 global recession and the COVID-19 pandemic had lasting impacts on the rupee’s value. By 2023, the USD to INR exchange rate had reached Rs 82.73.
Recent Trends and Projections (2024 Onwards)
As of August 2024, the exchange rate is around Rs 83.94 per USD, with slight fluctuations.
Some of the key factors that influenced the USD to INR exchange rate include the trade balance, inflation, interest rates, foreign investments, geopolitical events and so on.
