This was remained unchanged till June 1966, when the rupee was devalued by 36.5% to Rs. In terms of currencies, the exchange rate was pegged to pound sterling at Rs. On 15th August 1947 the exchange rate between Indian rupee and US Dollar was equal to one (i.e., 1 $= 1 Indian Rupee). dollar.Īfter gaining independence, India followed the par value system of the IMF. Par Value System: Under this system (1947-1971), each member of IMF undertook to maintain the par value of its currency in terms of gold or the U.S. So in this system exchange rate is neither fixed nor free. Managed Exchange Rate: In this kind of system exchange rate is partially allowed to fluctuate, government don’t allows fluctuation more than 1 to 3 percent. Floating Exchange Rate: The system of exchange rate in which the value of a currency is allowed to adjust freely or to float as determined by demand for and supply of foreign exchange.įixed Exchange Rate: If the exchange rate is being determined by the government not by the demand and supply forces, it is called fixed exchange rate.
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