Understanding the value of INR

At least 10 currencies have been reported to be stronger than the US dollar. But, stronger currency is not a lucrative investment option.

Now, let’s have a look at the journey of rupee against dollar. When India became independent in 1947, a rupee was equivalent to just 1 US dollar. In the mid-sixties, the rupee was devalued and one US dollar was equivalent to 7.5 Indian rupees.

After 50 years of independence, the rupee had fallen to about 65 against the US dollar. Today in April 2020, the rupee has plumbed record depths against the US dollar and breached the 77 mark last week on Monday.

If we dig a bit into the dollar dominance scenario, we find a host of economic problems engulfing the economy. Foreign Institutional Investors (FIIs), who have had a very important role in the Indian stock market, are leaving the country.

Flight of FIIs from Indian markets has put pressure on the value of the rupee against the dollar. The falling rupee can cause further fall in FIIs investment in Indian markets, which can result in a further fall of the rupee.

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