The U.S. Dollar is the most traded and valuable currency worldwide, playing a crucial role in determining the value of other currencies in the global market. Its exchange rate with the Indian Rupee fluctuates, generally ranging between 64 INR to 77 INR. Many travelers exchange these currencies for their trips. Historically, 1 USD was worth very little against the INR in 1947 and for some years following that, but market conditions now cause the rates to vary without a fixed benchmark. Examining the performance of the INR against the USD over the past decade can provide insight into these changes.
In 2011, the rupee hit a record low mainly due to domestic economic issues, continuous capital outflows, and strong demand for the Dollar. It dropped from 43 to 47 INR in January and further fell to 54 INR in August. A lack of foreign investments also added to this decline, making the Dollar scarce throughout the year.
The year 2012 brought changes with a high trade deficit, low capital inflows, and inflation causing further pressure on the rupee, which initially strengthened to 48 INR but later depreciated by over 25%, ending the year at 55 INR per Dollar.
In 2013, the rupee continued to lose value, especially with intensified demand for the Dollar and increased imports. By the end of May, it had fallen from 55 to 57 INR due to capital outflows by foreign investors, among other economic factors.
The rupee faced ups and downs in 2014, starting at 61 INR and maintaining that value by the year’s end despite global market influences and local elections. It also saw a considerable change in its value against the pound and Euro.
In 2015, the rupee depreciated by more than 5% against the Dollar, trading around 66 INR in December. Anticipation for a rise in its value the following year was fueled by changes in the forex market.
Demonetization in 2016, a significant move by the Indian government, aimed at replacing old currency notes, caused market turmoil and controversy, though it did help narrow the currency gap. The INR improved slightly from 71 to 67 INR but couldn’t maintain this progress for long.
2017 started with a weakened rupee at 68 INR due to election uncertainties but improved by year-end to 63 INR, aided by financial inflows and low-interest rates in the US and Europe, which brought cheap credit to India.
In 2018, the rupee had a rough patch, largely because of India’s weak macroeconomic factors and a strong demand for Dollars. It reached its lowest point that October and was predicted to average around 69 INR for the year.
During 2019, the rupee weakened, especially in the first quarter, reaching 72 INR against the Dollar, with ongoing tensions between China and the U.S. contributing to its instability.
The arrival of the COVID-19 pandemic in 2020 weakened the rupee further, despite significant foreign investments. It briefly reached 76 INR against the Dollar, marking it as one of the most challenging years for the currency.
As of 2021, the rupee is around 72.89 INR to the Dollar, though it fluctuates regularly. Factors such as oil prices and the withdrawal of foreign investments greatly influence its value, alongside government debt which diminishes investor interest, causing inflation.
To summarize, the exchange rate between the INR and USD is a key economic indicator for India. It has seen many fluctuations over the last decade due to various factors, but the rate is expected to stabilize between 72 and 74 INR this year as global demand adjusts.
