The rupee is symbolised by ₹ and has a currency code of INR. There is currently 24 trillion in circulation. The rupee is the 20th most traded currency worldwide with a volume of approximately US$53 billion is traded daily in spot and futures trade. The currency is regulated by the Reserve Bank of India.
The currency has banknotes of ₹5, ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1000, and they feature images of Mahatma Gandhi on one side and Indian Infrastructure, civic and natural features on the other.1)Retrieved 1 November 2015 https://www.rbi.org.in/
The History Of The Indian Rupee: From Ancient Civilization To The Modern State
The Indian sub-continent has been inhabited since prehistoric times and it is recognised as one of the oldest inhabited regions on earth, with signs of hominid presence in the area dating back 250,000 years. Civilization in the Indus Valley in Northern India has been dated to the 6th millennium BC, with evidence of cotton cultivation and human settlements in the region.
Although ancient coins have been found in the Indus Valley region, it is not clear whether their use dates back to the evolution of that civilization.
By the 2nd millennium BC, the Vedic culture arose, which was the precursor to the present-day Hindu society in the region. From 500 BC the region came under domination by Persia and later Greece. In the 4th century BC the region came under control of a succession of local rulers, until the year 712, when it was conquered by Arab rulers.
Arab rule persisted intermittently until the 17th century. By the 18th century, the British had established a presence in India via the British East India Company. After putting down a rebellion among Indian soldiers in the British army, the British in 1858 declared India a colony of the British empire. India gained its independence from Britain in 1947.
Rupa, Rupiya, Rupee
The earliest reference to currency on record in India was made in the 6th century BC in a grammar text called the Ashtadhyayi, which refers to punch-marked coins with symbols, or “rupa.”
Texts from the reign of the emperor Chandragupta Maurya in the 4th century BC refer to “rupyarupa,” or silver-wrought coins with symbols. Some ten centuries later, in 1540, the Islamic ruler in the region, Sultan Sher Shah Suri, issued a silver coin with a standardised weight called a “rupiya.” The original coin weighed 11 grams and was issued with sub-currency units of 16 “annas,” 64 “paise,” and 192 “pies.”
This coin remained in usage into the British occupation in the 1700s. It was in this period, with the establishment of banks such as the Bank of Hindustan and the Bengal Bank, that paper currency denominated in rupees was first issued. The rupee, from its first minting more than 300 years earlier, had been issued and backed by silver. The discovery of large quantities of silver in the U.S. and elsewhere around the world, however, had a dampening effect on the value of the currency. In 1898, India adopted the gold standard, fixing the rupee to the British pound at a rate of 15 to 1.
In 1861, the government passed the “Paper Currency Act,” which gave the government a monopoly on issuance of the rupee throughout the entire territory of the country. In 1935, the country established a central bank, the Reserve Bank of India, located in Calcutta and that had the responsibility of issuing banknotes.
The notes, which featured the image of Britain’s King George VI, were initially issued in 1938 in denominations between 10 and 10,000. During World War II, the bank began issuing a one-rupee note. In 1949, India gained independence from Britain and the government started issuing notes with India’s native language, Hindi, and an image of leader Mahatma Gandhi. This was followed by the government issuing sub-units of the currency called Naya Paisa, or Paise, at 100 per rupee in 1957.2)Retrieved 1 November 2015 http://www.srjis.com/srjis_new/images/articles/Jan-Feb2015/2%20Dr.%20R.%20B.%20Kokatanur.pdf
Monetary policy in India is determined by the Reserve Bank of India. The country’s short-term interest rate, known as the repo rate, is set by the bank’s governor under recommendation from a monetary policy technical advisory committee. The bank announces its interest rate decisions six times times per year at intervals of around 60 days.
The bank has set a monetary policy objective of maintaining price stability in the economy, while also considering the impact of the rate on economic growth. To measure price stability, it uses an annual target based on the country’s combined consumer price index. As of November 2015, the government is studying the establishment of a seven-member monetary policy committee (or MPC) at the bank that would include representatives from the government as well as representatives from the Reserve Bank.3)Retrieved 1 November 2015 http://www.firstpost.com/business/govt-rbi-on-same-page-on-monetary-policy-committee-structure-rajan-2496414.html
Economy Of India
India is the fourth-largest global economy ranked according to its gross domestic product. It has one of the largest populations among nations, with more than 1 billion inhabitants. The country has been recognised as an open emerging market economy that has made an effort to liberalise its policies with fewer controls on investment and foreign trade, privatisation of state companies and less regulation of industry. Top industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software and pharmaceuticals.
The country has a diversified economy based on industry and both large-scale and small-scale farming that has posted growth rates in the last decade of more than 5% annually. About half the population works in activities related to the farming sector, but the nation’s economy has increasingly benefited from growth of the service sector, especially in information technology services, business outsourcing services and software. Services currently account for about 60% of the nation’s economic growth.
Growth has weakened over recent years in response to a slower global economy and investor uncertainties over the country’s fiscal and current account deficits. The country has further been challenged by an overburdened educational system, rural migration to cities, and a deficient infrastructure and power generation network.
The country’s growth outlook has been recognised as positive due to a youthful population, strong savings and investment rates, and growing integration into the global economy. India’s top trade partners include the U.S., the United Arab Emirates, Hong Kong, China, Saudi Arabia, Singapore, United Kingdom, Sri Lanka and Vietnam.4)Retrieved 1 November 2015 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
Foreign exchange and financial trading in India are regulated by the Reserve Bank of India (or RBI) and by the Securities and Exchange Board of India (or SEBI). The directors of both institutions are appointed by the Indian government.5)Retrieved 1 November 2015 http://www.sebi.gov.in/sebiweb/
Major Indian Rupee Currency Pairs
The Indian rupee is commonly traded with the USD, EUR, GBP and JPY. It can also be traded in synthetic currency pairs. The rupee is the 20th-most-traded currency globally.6)Retrieved 1 November 2015 http://www.bis.org/publ/rpfx13fx.pdf
Rupee Bills And Coins
Since its introduction, the rupee has been issued as coins, paper money and plastic polymer money. India’s currency is printed at plants in the cities of Nashik, Dewas, Mysore and Salboni under the authority of the RBI. Some of the popular nicknames for the rupee include Taaka, Rupayya, Rubai and Athanni. TheRBI issues coins of a value of as small as 1/100th of a rupee (0.01 rupee), denominated a “paise.” The coins come in values of 10 paise, 20 paise, 25 paise, 50 paise, ₹1, ₹2 and ₹5. Coins are minted under authority of the RBI at the Indian government mints in Mumbai, Alipore, Saifabad, Cherlapally and Noida.7)Retrieved 1 November 2015 https://www.rbi.org.in/scripts/FAQView.aspx?Id=39
The Rupee Around The World
India’s government maintains a US$100 billion currency reserve pool agreement with members of the BRICS group of nations, Brazil, Russia, China and South Africa. The agreement allows member states to provide mutual financial support if one of the States has problems with dollar liquidity. India has also signed a US$1.5 billion currency swap agreement with neighboring Sri Lanka to help provide liquidity support for that country.8)Retrieved 1 November 2015 http://www.newindianexpress.com/business/BRICS-Central-Banks-Sign-Operating-Agreement-on-Currency-Reserve-Pool/2015/07/07/article2907520.ece
Where Is The Rupee Today?
The rupee reached a multi-year low of ₹69 to the USD in 2013 amid investor risk aversion in reaction to the Greek debt crisis and shifting signals on global interest rates. The currency strengthened subsequently, however, rising to ₹58 per USD with alterations to Indian economic policy and the impact of falling global oil prices.
More recently, the rupee weakened, enduring the impact of China’s devaluation of its currency and the U.S. Federal Reserve’s signals that it could consider raising interest rates by 2016. High Fed interest rates tend to attract investment away from emerging market countries like India as investors seek rising returns in the U.S.
The outlook for a stable rupee ahead appears to be good amid a narrowing current account deficit in the country and the benign effects of tame commodity prices for India’s economy.9)Retrieved 1 November 2015 http://www.thehindu.com/business/markets/rupee-likely-to-remain-weak-despite-better-economic-indicators/article7544533.ece
References [ + ]
|1.||↑||Retrieved 1 November 2015 https://www.rbi.org.in/|
|2.||↑||Retrieved 1 November 2015 http://www.srjis.com/srjis_new/images/articles/Jan-Feb2015/2%20Dr.%20R.%20B.%20Kokatanur.pdf|
|3.||↑||Retrieved 1 November 2015 http://www.firstpost.com/business/govt-rbi-on-same-page-on-monetary-policy-committee-structure-rajan-2496414.html|
|4.||↑||Retrieved 1 November 2015 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html|
|5.||↑||Retrieved 1 November 2015 http://www.sebi.gov.in/sebiweb/|
|6.||↑||Retrieved 1 November 2015 http://www.bis.org/publ/rpfx13fx.pdf|
|7.||↑||Retrieved 1 November 2015 https://www.rbi.org.in/scripts/FAQView.aspx?Id=39|
|8.||↑||Retrieved 1 November 2015 http://www.newindianexpress.com/business/BRICS-Central-Banks-Sign-Operating-Agreement-on-Currency-Reserve-Pool/2015/07/07/article2907520.ece|
|9.||↑||Retrieved 1 November 2015 http://www.thehindu.com/business/markets/rupee-likely-to-remain-weak-despite-better-economic-indicators/article7544533.ece|