1 USD in INR in 1947: Here is the history of the Indian rupee's exchange rate
The US dollar is one of the most widely used currencies and holds great influence in international trade. And its value has always been on the higher side, determining the value of other currencies in the world. As a result, the value of the Indian currency, like that of other currencies, is determined by comparing it to the dollar.
Exchange rate was different when we convert INR to USD in 1947. But when we convert INR to USD Forex Online today, the Indian currency has a lesser value than the USD. So to achieve a better rate, many travellers who go abroad convert INR to USD and then convert it to local currencies.
The dollar is far easier to trade than any other currency, and it emerged as a vital means of trade after World War I. This part (1 USD in INR in 1947) of history gives us a better understanding of INR's evolution since then.
Take a look at this graph, which illustrates the changing value of 1 USD in INR from1947 to 2022.
This chart depicts the changing value of 1 USD to INR from 1947 to 2022, and you can observe that 1 dollar to rupee in 1947 has risen over the years. It will show you how far the INR has progressed and where the US dollar will be at the end of 2022.
Graph showing the changing value of 1 USD in INR from1947 to 2022
Devaluation of the Indian rupee since 1947 (1 USD in INR in 1947)
Devaluation refers to a decrease in the domestic currency's outward value while the internal value remains unchanged. If there's an unfavourable Balance of Payments, a country devalues its currency (BOP). If a country's Balance of Payments is on the negative side, it must weaken its currency so that exports become cheaper and imports become more expensive.
Since the British were ruling India before its independence, the Indian rupee was tied to the British Pound then, which kept the value constant for a short time. According to reports, 1 pound was worth 13 INR from 1927 until 1966. The agreement came to an end in 1966, and the rupee began to depreciate. Until 1971, when India launched its 5 Year Plan following independence, the Indian rupee was pegged to the US dollar a 7.5 rupees per dollar rate.
The1947 was a crucial period for the Indian economy. There were no external loans on India's balance sheet at the time of independence. However, when the British left India, the Indian economy became paralysed due to a lack of appropriate planning and capital formation.
The Indian government was experiencing a budget deficit and was unable to borrow extra funds from outside due to a negative savings rate. The 1962 India-China war, the 1965 Indo-Pakistan war, and a massive drought in 1966 disturbed the Indian economy's manufacturing capability, causing inflation to rise.
- It is said that the Economic Crisis of 1991 was the most challenging period for the Indian economy. During this time, the fiscal deficit was 7.8% of GDP, interest payments consumed 39% of total government revenue, the current account deficit was 3.69 percent of GDP, and India was on the verge of being declared a defaulter. To address all of these issues, the government depreciated the Indian currency once more, resulting in a 1 USD = 24.58 INR exchange rate.
So what was the precise value of 1 USD in INR in 1947?
Currently, the INR is worth less than the USD, but this was not always the case. Scenario 1 USD in INR in 1947 was substantially different when India gained independence in 1947. It was likely that the 1 INR equaled 1 USD in the past.
There are numerous theories why rupees had a higher worth in 1947. However, because there was no metric system in place, all currencies had the same value. Another theory is that since India was a British-ruled country prior to 1947, the INR had a higher worth because the pound had a higher value. It is assumed that in 1947, one pound equaled 13.37 rupees, and hence, the USD value should be INR 4.16.
So since 1947, the Indian rupee has been subjected to a number of events that have lowered its value significantly. As discussed, multiple economic crises, devaluation, privatisation, and World Bank Loans have all played a role in deciding the value of 1 USD to INR.
The US federal funds rate has remained unchanged at 0.25 percent for the last 10 years, including the Great Recession of 2008. It has an impact on the current exchange rate of INR to USD.
To conclude, a lot is determined by the INR to the USD exchange rate. It demonstrates that India was economically behind and raises import rates. At the same time, when converting INR to USD, travellers going overseas get less. The foreign exchange rate delivers less money in exchange for INR, and this is why Indian travellers prefer to carry USD when travelling abroad.
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