History Of Indian Rupee As An Exchange Rate

2332 Words10 Pages
Exchange rate regime in Indian Context History of Indian Rupee as an exchange rate Only once as an independent nation India had choice of a exchange rate being defined as Indian rupee with reference to its foreign country trade partners. After successful independence and followed by constitution of India effect from 26th January 1950, India followed an exchange rate system which Indian Rupee linked to the British Pound Sterling. This system of exchange rate regime continues until mid- 1970’s, this period characterise by the breakdown of Bretton wood Exchange system around the world. In 1975 the system of Indian Rupee ties with Pound-sterling were broken and India started a managed or controlled floating exchange rate regime with which Indian Rupee linked to a number of currencies(‘basket currencies) of India’s major trading partners. One rupee of 1947 is not the same as one rupee today, not only in terms of appearance but in terms of purchasing power as well. From 1950-1951 until mid-December 1973, India had an exchange rate regime with the rupee pegged to the pound sterling, except for the devaluations in 1966 and 1971. In 1975, the rupee’s ties to the pound sterling were severed and India established a float exchange regime, with the rupee’s exchange rate being linked on a controlled, floating basis to a “basket of currencies” of India’s major trading partners. Post liberalization, the rupee underwent change from a controlled regime to a “managed” or “dirty” float
Get Access