To get started first we need to check out the Rupee VS Dollar relationship over a period of time. I start from the time of Independence but the crisis of 1991 led to a severe devaluation of money and in 1993 exchange rates were left to be controlled by market sentiments with the central government intervention in case of extreme volatility.
1948-1962 : 4.79 Rupee against a Dollar
1966 : 7.57 Rupee against a Dollar
1975 : 8.39 Rupee against a Dollar
1985 : 12 Rupee against a Dollar
1991 : 17.90 Rupee against a Dollar
1993 : 31.37 Rupee against a Dollar
2000-2010 : 40-50 Rupee against a Dollar
As am writing this, the current exchange rate is 62.13 Rupees against a Dollar while the lowest Rupee-Dollar exchange rate was recorded to be 68.80 Rupees against a Dollar.
Now as you might have noticed on the Indian Rupee note : "I promise to pay the bearer a sum of X Rupees" with the signature of the Governor of R.B.I. This means if by any chance you loose faith in the currency then you can exchange what you have in hand with gold of equal amount. This means for every rupee that enters the economy it is backed by gold of equal amount.
Here the American Dollar comes into picture as Americans were quick to see the potential power of Petrol and its importance at par with gold. Hence they signed an agreement with the Middle East countries that they would offer them protection from external attacks in return of which they will sell petrol only in exchange for American Dollar.
Suppose India wants to buy petrol , so it asks the Middle East countries to supply petrol but they don't recognize the Indian Rupee. Hence India would ask U.S.A. to provide it Dollars in exchange for Rupee. So far so good as long as India buys petrol from the Middle East. But if we don't require that much quantity of petrol and ask America to exchange its dollars , America would simply say that is there anything written on the American Dollar which has been promised. It is simply put is a Debt.
The reality is American white paper is equivalent to a hefty amount of Indian rupee which they can print suiting to their whims.
So whoever is reading this, the one and only panacea to this problem is to increase the production, consumption and dependence on Indian manufactured goods as this would decrease the criminal outflow of Indian Rupee outside as the foreign products we buy at hefty prices are in fact very cheaply produced. Hence , the only way is to increase our dependence in Indian goods, only then can we move ahead in saving our Rupee from tumbling further down and raise it to its former glory.
1948-1962 : 4.79 Rupee against a Dollar
1966 : 7.57 Rupee against a Dollar
1975 : 8.39 Rupee against a Dollar
1985 : 12 Rupee against a Dollar
1991 : 17.90 Rupee against a Dollar
1993 : 31.37 Rupee against a Dollar
2000-2010 : 40-50 Rupee against a Dollar
As am writing this, the current exchange rate is 62.13 Rupees against a Dollar while the lowest Rupee-Dollar exchange rate was recorded to be 68.80 Rupees against a Dollar.
Now as you might have noticed on the Indian Rupee note : "I promise to pay the bearer a sum of X Rupees" with the signature of the Governor of R.B.I. This means if by any chance you loose faith in the currency then you can exchange what you have in hand with gold of equal amount. This means for every rupee that enters the economy it is backed by gold of equal amount.
Here the American Dollar comes into picture as Americans were quick to see the potential power of Petrol and its importance at par with gold. Hence they signed an agreement with the Middle East countries that they would offer them protection from external attacks in return of which they will sell petrol only in exchange for American Dollar.
Suppose India wants to buy petrol , so it asks the Middle East countries to supply petrol but they don't recognize the Indian Rupee. Hence India would ask U.S.A. to provide it Dollars in exchange for Rupee. So far so good as long as India buys petrol from the Middle East. But if we don't require that much quantity of petrol and ask America to exchange its dollars , America would simply say that is there anything written on the American Dollar which has been promised. It is simply put is a Debt.
The reality is American white paper is equivalent to a hefty amount of Indian rupee which they can print suiting to their whims.
So whoever is reading this, the one and only panacea to this problem is to increase the production, consumption and dependence on Indian manufactured goods as this would decrease the criminal outflow of Indian Rupee outside as the foreign products we buy at hefty prices are in fact very cheaply produced. Hence , the only way is to increase our dependence in Indian goods, only then can we move ahead in saving our Rupee from tumbling further down and raise it to its former glory.
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