ranjan

  Indian Rupee and Devaluation  Indian Rupee was settled at Rs.13/- per pound and dollar @ Re.1/-  in 1947 after partition. It continued up to 1966 when first devaluation took place. This was carried out since Govt, was consistently facing balance of payment deficit since 1950 and failure of Govt. efforts to revive and have positive trade balance Moreover, war with Pak in 1965 and cutting off of foreign aid by USA and other countries fueled the crisis.Rise in fuel prices all around did put pressure on inflation as well.  In 1991, second devaluation took place due to downward pressure on Indian Rupee from international markets. It was a part of Economic reforms.The restrictions were relaxed on imported capital goods. Import Export policy replaced import quotas with tariffs causing major overhaul of trade policy Devaluation is undertaken as a means of correcting deficit in balance of payments.        Foreign Exchange variations and causes Foreign Exchange is one of the most impo