Arthashastra, written byChanakya, the prime minister to the firstMauryan emperorChandragupta Maurya (c. 340–290 BCE), mentions silver coins asrūpyarūpa, gold coins assuvarṇarūpa, copper coins astamrarūpa, and lead coins assīsarūpa.Rūpa means 'shape' or 'form'.[14]
In the intermediate times following the Guptas, there appears to have been no fixed monetary system of coinage as reported in the travelogueDa Tang Xi Yu Ji.[17]
During his five-year rule from 1540 to 1545,SultanSher Shah Suri issued a coin of silver, weighing 178grains (or 11.53 grams), which was also termed therupiya.[18][19] DuringBabur's time, the brass to silver exchange ratio was roughly 50:2.[20] The silver coin remained in use during theMughal period, theMaratha era as well as inBritish India.[21] Some of the earliest issuers ofpaper rupees include theBank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–1775, established byWarren Hastings), and the Bengal Bank (1784–91).[22]
Chart showing exchange rate of Indiansilver rupee coin (blue) and the actual value of its silver content (red), againstBritish pence. (From 1850 to 1900)
Historically, therupee was asilver coin. This had severe consequences in the nineteenth century when the strongest economies in the world were on thegold standard (that is, paper linked to gold). The discovery of large quantities of silver in the United States and several European colonies caused thepanic of 1873 which resulted in a decline in thevalue ofsilver relative to gold, devaluing India's standard currency, an event known as "the fall of the rupee". Following the panic, the world descended into a 'Long Depression', which resulted in bankruptcies, escalating unemployment, a halt in public works, and a major trade slump that lasted until 1897.[24]
Following theSepoy Rebellion in 1857, the British government took directcontrol of India. From 1851, gold sovereigns were produceden masse at theRoyal Mint inSydney. In an 1864 attempt to make the Britishgold sovereign the "imperial coin", the treasuries inBombay andCalcutta were instructed to receive (but not to issue) gold sovereigns; therefore, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the poundsterling, a conclusion was reached that it could not replace thesilver dollar in theStraits Settlements with the Indian rupee (as the British East India Company had desired). Since thesilver crisis of 1873, several nations switched over to agold exchange standard (wherein silver or banknotes circulate locally but with a fixed gold value for export purposes), including India in the 1890s.[25]
In 1870, India was connected to Britain by a submarinetelegraph cable.Around 1875, Britain started paying India for exported goods in India Council (paper) Bills (instead of silver).
If, therefore, the India Council in London should not step in to sell bills on India, the merchants and bankers would have to send silver to make good the (trade) balances. Thus a channel for the outflow of silver was stopped, in 1875, by the India Council in London.[26]
The great importance of these (Council) Bills, however, is the effect they have on the Market Price of Silver: and they have in fact been one of the most potent factors in recent years in causing the diminution in the Value of Silver as compared to Gold.[27]
The Indian and Chinese products for which silver is paid were and are, since 1873–74, very low in price, and it therefore takes less silver to purchase a larger quantity of Eastern commodities. Now, on taking the several agents into united consideration, it will certainly not seem very mysterious why silver should not only have fallen in price[26]
The great nations had recourse to two expedients for replenishing their exchequers, – first, loans, and, second, the more convenient forced loans of paper money۔[26]
TheIndian Currency Committee or Fowler Committee was a government committee appointed by theBritish-run Government of India on 29 April 1898 to examine the currency situation in India.[28] They collected a wide range of testimony, examined as many as 49 witnesses, and only reported their conclusions in July 1899, after more than a year's deliberation.[23]
The prophecy made before the Committee of 1898 by Mr. A. M. Lindsay, in proposing a scheme closely similar in principle to that which was eventually adopted, has been largely fulfilled. "This change," he said, "will pass unnoticed, except by the intelligent few, and it is satisfactory to find that by this almost imperceptible process, the Indian currency will be placed on a footing which Ricardo and other great authorities have advocated as the best of all currency systems, viz., one in which the currency media used in the internal circulation are confined to notes and cheap token coins, which are made to act precisely as if they were bits of gold by being made convertible into gold for foreign payment purposes.[29] The committee concurred in the opinion of the Indian government that the mints should remain closed to the unrestricted coinage of silver and that a gold standard should be adopted without delay...they recommended (1) that the British sovereign be given full legal tender power in India, and (2) that the Indian mints be thrown open to its unrestricted coinage (for gold coins only).
These recommendations were acceptable to both governments and were shortly afterwards translated into laws. The act making gold a legal tender was promulgated on 15 September 1899, and preparations were soon thereafter undertaken for the coinage of gold sovereigns in the mint at Bombay.[23]
Silver, therefore, has ceased to serve as, and standard; and the Indian currency system of to-day (that is 1901) may be described as that of a "limping" gold standard similar to the systems of France, Germany, and Holland, and the United States.[23]
The Committee of 1898 explicitly declared themselves to be in favour of the eventual establishment of a gold currency. This goal, if it was their goal, the Government of India have never attained.[29]
In 1913,John Maynard Keynes writes in his bookIndian Currency and Finance that during the financial year 1900–1901, gold coins (sovereigns) worth £6,750,000 were given to the Indian people in the hope that they would circulate as currency. But against the expectation of the Government, not even half of that was returned to accounts. As this experiment failed spectacularly, the government abandoned the practice but did not abandon the narrative of the gold standard. Subsequently, much of the gold held by the Government of India was shipped to theBank of England in 1901 and held there.[30]
At the onset of theFirst World War, the cost of gold was very low and therefore the pound sterling had high value. But during the war, the value of the pound fell alarmingly due to rising war expenses. At the end of the war, the value of the pound was only a fraction of what it had been before the war. It remained low until 1925, when the thenChancellor of the Exchequer (finance minister) of the United Kingdom,Winston Churchill, restored it to pre-war levels. As a result, the price of gold fell rapidly. While the rest of Europe purchased large quantities of gold from the United Kingdom, there was little increase in her gold reserves. This dealt a blow to an already deteriorating British economy. The United Kingdom began to look to its possessions as India to compensate for the gold that was sold.[31]
However, the price of gold in India, on the basis of the official exchange rate of the rupee around 1s. 6d., was lower than the price prevailing abroad practically throughout[clarification needed]; the disparity in prices made the export of the metal profitable; and this continued for almost a decade. Thus, in 1931–32, there were net exports of 7.7 millionounces, valued at INR 57.98crore. In the following year, both the quantity and the price rose further: net exports totalled 8.4 million ounces, valued at INR 65.52 crore. In the ten years ended March 1941, total net exports were of the order of 43 million ounces (1337.3 tons) valued at about INR 375 crore, or an average price of INR 32-12-4 pertola.[32]
In the autumn of 1917 (when the silver price rose to 55pence), there was danger of uprisings in India (against paper currency) which would handicap seriously British participation in the war. Inconvertibility (of paper currency into coin) would lead to a run onPost Office Savings Banks. It would prevent the further expansion of (paper currency) note issues and cause a rise of prices, in paper currency, that would greatly increase the cost of obtaining war supplies for export; to have reduced the silver content of this historic [rupee] coin might well have caused such popular distrust of the Government as to have precipitated an internal crisis, which would have been fatal to British success in the war.[33]
From 1931 to 1941, the United Kingdom purchased large amounts of gold from India and its many other colonies just by increasing price of gold, as Britain was able to pay in printable paper currency. Similarly, on 19 June 1934,Roosevelt made[clarification needed]Silver Purchase Act (which increased the price of silver) and purchased about 44,000 tons of silver, paying with papersilver certificates.[34]
In 1939, Dickson H. Leavens wrote in his bookSilver Money: "In recent years the increased price of gold, measured in depreciated paper currencies, has attracted to the market (of London) large quantities (of gold) formerly hoarded or held in the form of ornaments in India and China".[33]
In 1957, the rupee wasdecimalised and divided into 100naye paise (Hindi for "new paise"); in 1964, the initialnaye was dropped.
Many still refer to25-,50- and 75-paise coins as 4, 8, and 12annas, respectively; compare the expression "twobits" in colloquialAmerican English for a quarter-dollar coin.
In 2010, anew rupee sign (₹) was officially adopted. Asits designer explained, it was derived from the combination of theDevanagari consonant "र" (ra) and theLatin capital letter "R" without its vertical bar.[36] The parallel lines at the top (with white space between them) are said to make an allusion to theflag of India,[37] and also depict an equality sign that symbolises the nation's desire to reduceeconomic disparity. The first series of coins with the new rupee sign started in circulation on 8 July 2011. Before this, India used "₨" and "Re" as the symbols for multiple rupees and one rupee, respectively, and these symbols are still used in situations where the official symbol is unavailable. At an international level, like India, some nations' currencies are also Rupees. When the (₹) symbol is unavailable, then INR is used to represent the Indian currency.
Like banknotes it will be uniquely identifiable and regulated by the central bank. Liability lies with RBI. Plans include online and offline accessibility.[42] RBI launched the Digital Rupee for Wholesale (e₹-W) catering to financial institutions for interbank settlements and the Digital Rupee for Retail (e₹-R) for consumer and business transactions.[40] The implementation of the digital rupee aims to remove the security printing cost borne by the general public, businesses, banks, and RBI on physical currency which amounted to₹49,848,000,000.[clarification needed][43]
British East India Company (EIC) was given the right in 1717 to mint coins in the name of theMughal emperorFarrukhsiyar on the island of Bombay. By 1792 the EIC demonetised all other coins till they were reduced to only 3 types of coins, i.e. EIC, Mughal &Maratha coins. After EIC expanded its control over India, it brought the "Coinage Act of 1835" and started to mint coins in the name of the British king.EIC rule was replaced byBritish Crown raj which brought the "Paper Currency Act of 1861" and the "Uniform Coinage Act of 1906".[44]
India's first coins after independence were issued in 1950 in denominations of 1pice,1⁄2, one and two annas,1⁄4,1⁄2 andone-rupee. The sizes and composition were the same as the final regal issues, except for the one-piece (which was bronze, but not holed).
In 1964, India introducedaluminium coins for denominations up to 20p.
The firstdecimal-coin issues in India consisted of1,2,5, 10, 25 and 50naye paise, and1 rupee. The 1 naya paisa was bronze; the 2, 5, and 10 naye paise were cupro-nickel, and the 25 naye paise (nicknamedchawanni; 25 naye paise equals 4annas), 50 naye paise (also calledathanni; 50 naye paise equalled 8 old annas) and 1-rupee were nickel. In 1964, the wordsnaya/naye were removed from all coins. Between 1957 and 1967, aluminiumone-,two-,three-,five- andten-paise coins were introduced. In 1968 nickel-brass20-paise coins were introduced, and replaced by aluminium coins in 1982. Between 1972 and 1975, cupro-nickel replaced nickel in the25- and50-paise and the 1-rupee coins; in 1982, cupro-nickeltwo-rupee coins were introduced. In 1988stainless steel 10-, 25- and 50-paise coins were introduced, followed by 1- and5-rupee coins in 1992. Five-rupee coins, made frombrass, are being minted by theReserve Bank of India (RBI).
In 1997 the 20 paise coin was discontinued, followed by the 10 paise coin in 1998, and the 25 paise in 2002.
Between 2005 and 2008 new, lighter fifty-paise, one-, two-, and five-rupee coins were introduced, made from ferritic stainless steel. The move was prompted by the melting-down of older coins, whose face value was less than their scrap value. The demonetisation of the 25-paise coin and all paise coins below it took place, and a new series of coins (50 paise – nicknamedathanni – one, two, five, and ten rupees with the new rupee sign) were put into circulation in 2011. In 2016 the 50 paise coin was last minted. Coins commonly in circulation are one, two, five, ten, and twenty rupees.[48][49] Although it is still legal tender, the 50-paise (athanni) coin is rarely seen in circulation.[50]
Value, rupee sign, year of issue, grains depicting the agricultural dominance of the country
2020
The coins are minted at the four locations of theIndia Government Mint. The₹1,₹2, and₹5 coins have been minted since independence. The Government of India is set to introduce a new₹20 coin with a dodecagonal shape, and like the₹10 coin, also bi-metallic, along with new designs for the new versions of the₹1,₹2,₹5 and₹10 coins, which was announced on 6 March 2019.[52]
TheGovernment of India has the only right to mint the coins and one rupee note. The responsibility for coinage comes under the Coinage Act, 1906 which is amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the fourIndia Government Mints atMumbai,Kolkata,Hyderabad, andNoida.[53] The coins are issued for circulation only through theReserve Bank in terms of theRBI Act.[54]
After independence, theGovernment of India Mint, mintednumismatics coins imprinted with Indian statesmen, historical and religious figures. In the years 2010 and 2011, for the first time ever,₹75,₹150 and₹1000 coins were minted in India to commemorate the Platinum Jubilee of theReserve Bank of India, the 150th birth anniversary of the birth ofRabindranath Tagore and 1000 years of theBrihadeeswarar Temple, respectively. In 2012, a₹60 piececoins was also issued to commemorate 60 years of the Government of India Mint, Kolkata.₹100 coin was also released commemorating the 100th anniversary ofMahatma Gandhi's return to India.[55]Commemorative coins of₹125 were released on 4 September 2015 and 6 December 2015 to honour the 125th anniversary of the births ofSarvepalli Radhakrishnan andB. R. Ambedkar, respectively.[56][57]
The threePresidencies established by the BritishEast India Company (Bengal,Bombay andMadras) each issued theirown coinages until 1835. All three issued rupees and fractions thereof down to1⁄8- and1⁄16-rupee in silver. Madras also issued two-rupee coins.
Copper denominations were more varied. Bengal issued one-pie,1⁄2-, one- and two-paise coins. Bombay issued 1-pie,1⁄4-,1⁄2-, 1-, 11⁄2-, 2- and 4-paise coins. In Madras, there were copper coins for two and four pies and one, two and four paise, with the first two denominated as1⁄2 and one dub (or1⁄96 and1⁄48) rupee. Madras also issued theMadras fanam until 1815.
All three Presidencies issued goldmohurs and fractions of mohurs including1⁄16,1⁄2,1⁄4 in Bengal,1⁄15 (a gold rupee) and1⁄3 (pancia) in Bombay and1⁄4,1⁄3 and1⁄2 in Madras.
In 1835, a single coinage for theEIC was introduced. It consisted of copper1⁄12,1⁄4 and1⁄2anna, silver1⁄4,1⁄3 and 1 rupee and gold 1 and 2 mohurs. In 1841, silver 2 annas were added, followed by copper1⁄2pice in 1853. The coinage of the EIC continued to be issued until 1862, even after the company had beentaken over by the Crown.
In 1862, coins were introduced (known as "regal issues") which bore the profile ofQueen Victoria and the designation "India". Their denominations were1⁄12anna,1⁄2pice,1⁄4 and1⁄2 anna (all in copper), 2 annas,1⁄4,1⁄2 and one rupee (silver),[58] and five and ten rupees and onemohur (gold). The gold denominations ceased production in 1891, and no1⁄2-anna coins were issued after 1877.
In 1906, bronze replaced copper for the lowest three denominations; in 1907, acupro-nickel one-anna coin was introduced. In 1918–1919 cupro-nickel two-, four- and eight-annas were introduced, although the four- and eight-annas coins were only issued until 1921 and did not replace their silver equivalents. In 1918, the Bombay mint also struckgold sovereigns and 15-rupee coins identical in size to the sovereigns as an emergency measure during the First World War.
In the early 1940s, several changes were implemented. The1⁄12anna and1⁄2pice ceased production, the1⁄4 anna was changed to a bronze,holed coin, cupro-nickel andnickel-brass1⁄2-anna coins were introduced, nickel-brass was used to produce one- and two-annas coins, and the silver composition was reduced from 91.7 to 50 per cent. The last of the regal issues were cupro-nickel1⁄4-,1⁄2- and one-rupee pieces minted in 1946 and 1947, bearing the image ofGeorge VI, King and Emperor on the obverse and anIndian lion on the reverse.
After independence, new designs were introduced to replace the portrait ofGeorge VI. The government continued issuing the₹1 note, while theReserve Bank of India (RBI) issued other denominations (including the₹5,000 and₹10,000 notes introduced in 1949). All pre-independence banknotes were officially demonetised with effect from 28 April 1957.[59][60]
The design of banknotes is approved by thecentral government, on the recommendation of the central board of theReserve Bank of India.[3] Currency notes are printed at the Currency Note Press inNashik, the Bank Note Press inDewas, theBharatiya Reserve Bank Note Mudran (P) Ltd atSalboni andMysore and at the Watermark Paper Manufacturing Mill in Narmadapuram. TheMahatma Gandhi Series of banknotes are issued by the Reserve Bank of India as legal tender. The series is so named because the obverse of each note features a portrait ofMahatma Gandhi. Since its introduction in 1996, this series has replaced all issued banknotes of theLion Capital Series. The RBI introduced the series in 1996 with₹10 and₹500 banknotes. The printing of₹5 notes (which had stopped earlier) resumed in 2009.
As of January 2012, the new'₹' sign has been incorporated into banknotes of theMahatma Gandhi Series in denominations of₹10,₹20,₹50,₹100,₹500 and₹1,000.[61][62][63][64] In January 2014 RBI announced that it would be withdrawing from circulation all currency notes printed prior to 2005 by 31 March 2014. The deadline was later extended to 1 January 2015. The deadline was further extended to 30 June 2016.[65]
On 8 November 2016, the RBI announced the issuance of new₹500 banknotes in a new series afterdemonetisation of the older₹500 and₹1000 notes. The new₹500 banknote has a stone-grey base colour with an image of theRed Fort along with theIndian flag printed on the back. Both the banknotes also have theSwachh Bharat Abhiyan logo printed on the back. The banknote denominations of₹200,₹100 and₹50 have also been introduced in the newMahatma Gandhi New Series intended to replace all banknotes of the previousMahatma Gandhi Series.[66] On 13 June 2017, RBI introduced new₹50 notes, but the old ones continue being legal tender. The design is similar to the current notes in the Mahatma Gandhi (New) Series, except they will come with an inset 'A'.
The new Indian banknote series features a few micro-printed texts in various locations. The first one lies on the inner surface of the left temple of Gandhi's spectacles that reads "भारत" (Bhārata), the Hindi word for India. The next one (which is printed only in 10 and 50 denominations) is placed on the outer surface of the right temple of Gandhi's spectacles near his ear and reads "RBI" (Reserve Bank of India) and the face value in numerals "10" or "50". The last one is written on both sides of Gandhi's collar and reads "भारत" and "INDIA" respectively. Currency notes have 17 languages on the panel which appears on the reverse of the notes.
In 1861, theGovernment of India introduced its first paper money through thePaper Currency Act.[78] The₹10 note was introduced in 1864,₹5 note in 1872,₹10,000 note in 1899,₹100 note in 1900,₹50 note in 1905,₹500 note in 1907 and₹1,000 note in 1909. The first set of notes, known as the "Victoria Portrait" Series, were unifaced and featured two language panels on hand-moulded paper. This series' name is derived from the portrait ofQueen Victoria which appeared in the upper-left corner of the notes.[79] In 1917,₹1 and₹21⁄2 notes were introduced.[80]
In 1867, the Victoria Portrait series was withdrawn and replaced with the unifaced "Underprint Series" in response toforgery. Underprint Series notes featured 4 language panels in the "Green Series" (notes which featured a green underprint). The languages on the notes differed in relation to where the note was issued. The amount of language panels was increased to 8 in the "Red Series" (notes which featured a red underprint). The Underprint Series remained largely unchanged until the introduction of the "King's Portrait" Series in 1923.[79]
The King's Portrait Series were introduced in May of 1923 on aten rupee note.
TheReserve Bank of India began banknote production in 1938, issuing₹2,₹5,₹10,₹50,₹100,₹1,000 and₹10,000 notes while the government continued issuing₹1 note but demonetized the₹500 and₹21⁄2 notes.
Officially, the Indian rupee has a market-determined exchange rate. However, theReserve Bank of India trades actively in the USD/INR currency market to impacteffective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to theUS dollar is ade facto controlled exchange rate. This is sometimes called a "managed float". On 9 May 2022, the Indian rupee traded at ₹77.41 against the US dollar, hitting an all-time low.[82] Other rates (such as the EUR/INR and INR/JPY) have the volatility typical offloating exchange rates, and often create persistentarbitrage opportunities against the RBI.[83] UnlikeChina, successiveadministrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to ensure low volatility in exchange rates, and not to influence the rate (or direction) of the Indian rupee in relation to other currencies.[84]
Also affecting convertibility is a series ofcustoms regulations restricting the import and export of rupees. Legally, only up to₹25000 can be imported or exported in cash at a time, and the possession of₹200 and higher notes inNepal is prohibited.[85][86] The conversion of currencies for and from rupees is also regulated.
RBI also exercises a system ofcapital controls in addition to (through active trading) in currency markets. On the current account, there are no currency-conversion restrictions hindering buying or selling foreign exchange (although trade barriers exist). On the capital account, foreign institutional investors have concerning convertibility to bring money into and out of the country and buy securities (subject to quantitative restrictions). Local firms can take capital out of the country to expand globally. However, local households are restricted in their ability to diversify globally. Because of the expansion of the current and capital accounts, India is increasingly moving towards fullde facto convertibility.
There is some confusion regarding the interchange of the currency with gold, but the system that India follows is that money cannot be exchanged for gold under any circumstances due to gold's lack of liquidity;[citation needed] therefore, money cannot be changed into gold by the RBI. India follows the same principle as Great Britain and the US.
Reserve Bank of India clarifies its position regarding the promissory clause printed on each banknote:
"As per Section 26 ofReserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer. The Bank's obligation to pay the value of banknote does not arise out of a contract but out of statutory provisions. The promissory clause printed on the banknotes i.e., "I promise to pay the bearer an amount of X" is a statement that means that the banknote is a legal tender for X amount. The obligation on the part of the Bank is to exchange a banknote for coins of an equivalent amount."[87]
1991 – India began to lift restrictions on its currency. Several reforms removed restrictions on current account transactions (including trade, interest payments, andremittances) and some capital asset-based transactions. Liberalised Exchange Rate Management System (LERMS) (adual-exchange-rate system) introduced partial convertibility of the rupee in March 1992.[88]
1997 – A panel (set up to explore capital account convertibility) recommended that India move towards full convertibility by 2000, but the timetable was abandoned in the wake of the1997–1998 Asian financial crisis.
2016 – TheGovernment of India announced thedemonetisation of all ₹500/- and ₹1,000/- banknotes of theMahatma Gandhi Series.[90] The government claimed that the action would curtail the shadow economy and crack down on the use of illicit "black money" and counterfeit cash to fund illegal activity and terrorism.[91][92]
2023 –Reserve Bank of India issued a circular on19 May stating currency notes of ₹ 2000 denomination will be withdrawn from circulation[93] The reason given for this withdrawal is the decline in the number of currency notes in circulation. According to the circular, there were only 10.8% of Notes in Circulation on March 31, 2023.[94]
Graph of exchange rates of Indian rupee (INR) per USD 1, GBP 1, EUR 1, JPY 100 averaged over the month, from September 1998 to May 2013.Data Source: Reserve Bank of India reference rate
For almost a century following theGreat Recoinage of 1816, and adoption of theGold Standard, until the outbreak of World War I, the silver-backed Indian rupee lost its value against a basket of gold-pegged currencies and was periodically devalued to reflect the then currentgold to silver reserve ratios. In 1850, the official conversion rate between the pound sterling and the rupee was £0 / 2s / 0d (or £1:₹10), while between 1899 and 1914, the official conversion rate was set at £1 to 1s to 4d (or £1:₹15). However, this was just half of market exchange rates between 1893 and 1917.
Thegold-to-silver ratio expanded between 1870 and 1910. Unlike India, Britain was on the gold standard. To meet the Home Charges (i.e., expenditure in the United Kingdom), the colonial government had to remit a larger number of rupees, and this necessitated increased taxation, unrest and nationalism.
Between both world wars, the rate improved from 1s to 6d (or £1:₹13.33), and remained pegged at this rate for the duration of theBreton Woods agreement, to its devaluation and pegging to the US dollar, at $1:₹7.50, in 1966.[95][96]
Following the country's independence, India implemented aPar value exchange rate regime until 1971. The country switched toa fixed exchange rate regime in 1971 and graduated to a basket peg against five major currencies in 1975. Since 1991, the rupee has been under a floating exchange rate regime.[97]
The first major impact on the rupee's exchange rate after independence was the devaluation of the pound sterling against the US dollar in 1949, which impacted currencies that maintained a peg to the sterling, which included the Indian rupee.[98] In 1966, the Indian rupee was devaluated by 57% againstUnited States dollar, which also led to the depreciation of the sterling.[99] Five years later, when theBretton Woods system was suspended, India initially announced that it will maintain a fixed rate of $1 to INR 7.50 and leave the sterling under a floating regime.[100] However, by the end of 1971, following theSmithsonian Agreement and the subsequent devaluation of the US dollar,India pegged the rupee with the pound sterling once again at a rate of £1 to INR 18.9677.[101] During this period,India had a non-commercial exchange rate with theSoviet Union. The ruble to rupee exchange rates was announced by the Soviet Union, as the ruble was not a freely traded currency and the commercial trade between both nations used to take place in rupees following atreaty between India and the Soviet Union in 1953.
In September 1975, the exchange rate of the Indian rupee started to be determined based on the basket peg. The details of currencies which form the basket, and their weightage were kept confidentially byReserve Bank of India and the exchange rate of the rupee based on market fluctuation of these currencies was periodically announced by the RBI.[102][103]
The next major change that occurred was the devaluation of the rupee by about 18% in July 1991 following thebalance of payments crisis.[104] Thereafter, in March 1992, the Liberalized Exchange Rate Management System was introduced, enabling the transition to afloating exchange rate regime.
Indian rupees per currency unit averaged over the year[105][106]
As theStraits Settlements were originally an outpost of the BritishEast India Company, the Indian rupee was made the sole official currency of the Straits Settlements in 1837, as it was administered as part ofBritish India. This attempt was resisted by the locals. However,Spanish dollars continued to circulate and 1845 saw the introduction of coinage for the Straits Settlements using a system of 100cents = 1 dollar, with the dollar equal to the Spanish dollar orMexican peso. In 1867, the administration of the Straits Settlements was separated from India and theStraits dollar was made the standard currency, and attempts to reintroduce the rupee were finally abandoned.[107]
The Indian government introduced theGulf rupee as a replacement for the Indian rupee for circulation outside the country with the Reserve Bank of India (Amendment) Act of 1 May 1959.[108] The creation of a separate currency was an attempt to reduce the strain on India's foreign reserves from gold smuggling. After India devalued the rupee on 6 June 1966, those countries still using it – Oman, Qatar, and the Trucial States (which became theUnited Arab Emirates in 1971) – replaced theGulf rupee with their owncurrencies. Kuwait and Bahrain had already done so in 1961 with theKuwaiti dinar and in 1965 with theBahraini dinar, respectively.[109]
TheBhutanese ngultrum is pegged at par with the Indian rupee; both currencies are accepted in Bhutan. TheNepalese rupee is pegged at₹0.625; the Indian rupee is accepted in Bhutan and Nepal, except₹500 and₹1000 banknotes of theMahatma Gandhi Series and the₹200,₹500 banknotes of theMahatma Gandhi New Series, which are not legal tender in Bhutan and Nepal and are banned by their respective governments, though accepted by many retailers.[110] On 29 January 2014, Zimbabwe added the Indian rupee as alegal tender to be used.[111][112]
^The total sum is 200% because each currency trade is counted twice: once for the currency being bought and once for the currency being sold. The percentages above represent the proportion of all trades involving a given currency, regardless of which side of the transaction it is on.
^Goyal, Shankar (1999), "The Origin and Antiquity of Coinage in India",Annals of the Bhandarkar Oriental Research Institute,80 (1/4),Bhandarkar Oriental Research Institute: 144,JSTOR41694581,Panini makes the statement (V.2.120) that a 'form' (rüpa) when 'stamped' (ahata) or when praise-worthy (prašamsa) takes the endingya (i.e.rupya). ... Whether Panini was familiar with coins or not, hisAstadhyayi does not specifically state.
^"Mogul Coinage".RBI Monetary Museum.Reserve Bank of India. Archived fromthe original on 5 October 2002.Sher Shah issued a coin of silver which was termed the Rupiya. This weighed 178 grains and was the precursor of the modern rupee. It remained largely unchanged till the early 20th Century
^Dughlat, Mirza Muhammad Haidar. "CXII". In Elias, N. (ed.).The Tarikh-I-Rashidi. Translated by Ross, E. Denison. Ebook Version 1.0 Edited and Presented By Mohammed Murad Butt. Karakoram Books – via Internet Archive.
^Balachandran, G. (1996). John Bullion's Empire: Britain's Gold Problem and India Between the Wars. Routledge.ISBN978-0-7007-0428-6, p. 6
^S. L. N. Simha, ed. (2005) [1970]."2. Currency, Exchange and Banking Before 1935"(PDF).History of the Reserve Bank of India. The Reserve Bank of India. pp. 40–81.Archived(PDF) from the original on 28 October 2022. Retrieved28 October 2022.
^Rituparna Kar and Nityananda Sarkar:Mean and volatility dynamics of Indian rupee/US dollar exchange rate series: an empirical investigation in Asia-Pacific Financial Markets (2006) 13:41–69, p. 48.doi:10.1007/s10690-007-9034-0 .
^"Pound devalued 30 per cent".The Guardian. Guardian Century 1940-1949. 19 September 1949.Archived from the original on 9 December 2021. Retrieved19 April 2022.
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