WHY 1 USD IS NOT EQUAL TO 1 INR?
Hello me Vivek here hoping that all of you ae fine and doing well. We all know that each country has it’s own currency and it’s not equal everywhere, it differs from place to place. As we all know 1 US Dollars is equal to 75.31 Indian Rupees. But why and how? Today’s topic is all about this.
Have you ever thought what may happen if 1USD becomes 1INR? How can it affect the country and it’s people? One of the main reasons for this is, when there is a fluctuation in the supply and demand, even the currency’s value fluctuates. There are many other reasons for this too
1. Unemployment rate
2.GDP of the country
3.What does the country produce and manufacturing rate
4.Imports and Exports
You will be surprised to know that before the 1970’s currency’s rate were fixed and even in India it was the same. When India got independence 1 USD was actually 1INR, but why its so much decreased? In the 1950’s India’s government spent a lot of money for the country’s development and even took loans from many other countries and there was less money left for paying the loans and this was the first time when the government devaluated INR.
But how does that work? I will explain it with a simple example, think that I take 1000 loan from you and spend most of the money and only 250 Rupees is left with me, so what I do is start printing lots and lots of money which makes the currency’s value fall. Now my old 1 rupee is now 10 rupees, so that 250 becomes 2,500 and I pay you the loan and I am still left with 1,500 rupees.
In the 1960’s and 1970’s India fought many wars and it was a total loss and once again the government took loans from other countries. India also wanted to boost its economy but this happens when foreigners come and invest in India and why do they come? If something is cheap so, once again the value got devaluated, by the time it was 1USD=7INR.
In 1973, there was a oil crisis and oil which India imported became costlier so once again the currency went down. In 1984 Indira Ghandhi was assassinated which made the confidence of the foreigners on the Indian economy shattered. By now 1USD was equal to 17INR. In 1991 India faced a fiscal deficit(when the government spends more than it earns) so it kept devaluating and on the other hand USD was getting more stronger.
What is 1USD was 1INR even today? We would have got everything in a very cheap rate, everything would be cheap but no foreign investors would invest in India as both the currencies are same and all the labor cost would be the same, many companies will not be able to manage this and many employees would be unemployed which can lead to a economy crisis.
That’s it for today hope you all enjoyed. I am satisfied with what we’ve got. Comment down your thoughts, thank you for reading, clapping, sharing, commenting, following and subscribing. Be safe and take care meet you all in the next blog, till then peace out!!! (: