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Dollar vs Rupee: History From 1947 To 2023

Unraveling the Journey: USD vs INR

For over two decades, the Indian Rupee has engaged in a battle against the US Dollar, navigating through shifting monetary regulations and economic practices. The constant fluctuations in the rupee’s value against the dollar have sparked ongoing discussions, particularly concerning Forex transactions for travel purposes. This article delves into the intriguing history of the USD-INR exchange rate, shedding light on major economic events that have shaped India’s currency landscape.

Dollar And Rupee History

Dollar Vs Rupee (Before Independence)

The pre-independence era was marked by British colonial control, significantly influencing India’s economy and currency. The British Pound’s convertibility to USD, along with the gold-anchored US dollar, set the stage for global exchange rates under the Bretton Woods Agreement.

The 1930s Great Depression took a toll on the global and, consequently, India’s economy. Some argue that, in 1947, a dollar had a higher worth in rupees due to the comparative value of the British pound. It is estimated that £1 equaled 13.37 Rupees, making $1 worth 4.16 Rupees at that time.

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Dollar Vs Rupee (After Independence)

Post-independence, India adopted a fixed exchange rate system to manage exchange rate volatility. However, wars with Pakistan and China, coupled with global events like the 1970s oil crisis, impacted the Rupee’s stability. In response to the Nixon shock in 1971, India made adjustments, transitioning from a par value approach to a pegged system and eventually to a basket peg.

Pegged System and Basket Peg

India experimented with a pegged exchange rate, linking its currency to the US dollar or Euro to stabilize its value and prevent drastic swings. The basket peg involved a collection of various currencies, determining the market value of another currency.

How The Value Of Currency Is Determined?

In most countries, currency values are determined by floating exchange rates, driven by the principles of demand and supply. A currency in higher demand commands a higher value. There’s also the less common pegged exchange mechanism, where a country fixes its currency value in reference to another currency.

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USD vs Rupee (21st Century)

From 2001 to 2023, the USD to INR exchange rate showcased India’s economic growth, beginning around 1 USD to 1 INR in 2001, dipping to approximately 75 in 2020, and projecting a further decline to around 80 in 2023. Global events, including the 2008 financial crisis and the COVID-19 pandemic, influenced the INR’s value.

US Dollar In Indian Market (Rupee)

The demand for the US dollar in India, driven by imports, influences the exchange rate. If the Rupee’s value falls significantly, the government can intervene, purchasing Indian currency with US dollars to stabilize the Rupee.

Will Rupee Get Strong?

Long-term projections suggest the Rupee starting around 79.79 in 2025, averaging 80 rupees mid-year, and surging to 86.97 by year-end. The Finance Minister, Nirmala Sitaraman, emphasized India’s robust fundamentals amid a strengthening dollar.


Despite reaching a historical low of 80, the Indian Rupee has fared relatively better than other emerging-market currencies. The inflation gap between the US and India remains a key factor affecting the Rupee’s value. Effective fiscal and monetary policies can aid India in stabilizing its currency value amidst these fluctuations.

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Sources: Thomas Cook, Forbes India, Unacademy

By Palak Sharma, reporting for True To Life

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