ranjan

In 1947, India was not engaged in trade and had no external borrowing, so it was not possible for Rupee to be equal to Dollar. India had a very low growth of less than 1% at that time, so it was not possible for the INR to have the same value as equal to USD. Before the Dollar became the standard global currency, INR was measured against the British Pound.   In 1966, USD was equal to INR 4.76 and after devaluation when it was pegged to USD,  it was equal to INR 7.50. Devaluation happened because India was facing big financial crisis. This crisis effected the foreign currency reserves adversely and INR became unacceptable overseas.  India was unable to pay for imports and the option left was to borrow money from abroad.  There were several factors which contributed  to the depreciation of Indian rupee against the Dollar like the Capital flows, Crude oil prices, Govt. debt, Current account and balance of payments, Currency war, Dollar index, Inflation rate, Political stability, Interest