Rupee Hits Record Lows Against Dollar: How India’s Currency Fell Over a Century

New Delhi: The Indian rupee has plunged to an all-time low against the US dollar, trading past ₹91 per dollar earlier this week, though it later recovered slightly to ₹89.27. Experts warn that the rupee could remain under pressure due to persistent trade deficits, foreign capital outflows, and uncertainty over India-US trade agreements.

Historical Context:
A century ago, the rupee was far stronger compared to the dollar. In 1925, 1 rupee was equivalent to 10 US dollars, primarily because India’s currency was pegged to the British pound during colonial rule. Post-independence, the rupee’s value gradually weakened:

• 1947: 1 USD = ₹3.3
• 1950: 1 USD = ₹4.76
• 1966: 1 USD = ₹7.5
• 1990: 1 USD = ₹17.5
• 2000: 1 USD = ₹44.94
• 2020: 1 USD = ₹76.38

The pace of depreciation has accelerated recently, with the rupee moving from ₹85 to ₹91 in just 13 days, highlighting mounting pressure on the currency.

Why the Rupee is Weak:
Finance Minister of State Pankaj Chaudhary cited rising trade deficits and delays in India-US trade deals as primary reasons for the rupee’s weakness. This year, foreign investors have pulled out over $17 billion from India. Additionally, India imports over 85% of its crude oil, meaning a weaker rupee increases costs for fuel, fertilizers, and other imported goods, potentially impacting government subsidies and inflation.

Who Gains and Who Loses:

• Winners: Indian exporters and overseas NRIs benefit as their earnings in dollars convert to more rupees. Sectors like IT and pharmaceuticals, which earn in dollars, see higher domestic income.
• Losers: Import-dependent industries, airlines, electric vehicle manufacturers, and consumers of imported goods face higher costs. International education and foreign debt repayments also become more expensive.

Global Currency Comparison:
The US dollar remains the world’s dominant currency, widely used in global trade and held extensively in central bank reserves. However, some currencies surpass the dollar in strength, including:

• Kuwaiti Dinar: $3.25 per dinar
• Bahraini Dinar: $2.65 per dinar
• Omani Rial: $2.60 per rial
• Other strong currencies include the Jordanian Dinar, British Pound Sterling, Swiss Franc, Euro, and select Caribbean currencies.

Outlook:
While the rupee’s weakness poses challenges for importers and domestic costs, it offers a boost to exports and dollar-earning sectors. Analysts suggest that managing foreign investment flows, trade agreements, and strategic reserves will be critical to stabilizing the rupee in the near future.