Indian rupee

Indian Rupee
₹
भारतीय रुपये
ISO 4217
Code INR
Number 356
Exponent 2
Denominations
Subunit
 1/100 paisa
Symbol ₹
 paisa p
Banknotes
 Freq. used ₹10, ₹20, ₹50, ₹100, ₹500, ₹2000
 Rarely used ₹1, ₹2, ₹5,
Coins
 Freq. used ₹1, ₹2, ₹5, ₹10
 Rarely used 50 paise
Demographics
Official user(s)  India
Unofficial user(s)  Bhutan[lower-alpha 1]
 Zimbabwe[lower-alpha 2][1]
Issuance
Central bank Reserve Bank of India
Printer Reserve Bank of India
 Website www.rbi.org.in
Mint India Government Mint
 Website www.spmcil.com
Valuation
Inflation 4.9%, 2015-16
 Source RBI - Annual Inflation Report
 Method CPI[2]
Pegged by Bhutanese ngultrum (at par)
Nepalese rupee (1 INR = 1.6 NPR)

The Indian rupee (sign: ₹; code: INR), is the official currency of the Republic of India. The rupee is subdivided into 100 paise (singular paisa), though as of 2011, 25 paise is no longer considered legal tender. The issuance of the currency is controlled by the Reserve Bank of India.[3] The Reserve Bank manages currency in India and derives its role in currency management on the basis of the Reserve Bank of India Act, 1934. The rupee is named after the silver coin, rupiya, first issued by Sultan Sher Shah Suri in the 16th century and later continued by the Mughal Empire.

In 2010, a new symbol '₹', was officially adopted. It was derived from the combination of the Devanagari consonant "र" (ra) and the Latin capital letter "R" without its vertical bar (similar to the R rotunda). The parallel lines at the top (with white space between them) are said to make an allusion to the tricolour Indian flag,[4] and also depict an equality sign that symbolises the nation's desire to reduce economic disparity. The first series of coins with the new rupee symbol started in circulation on 8 July 2011.

On 8 November 2016 the Government of India announced the demonetisation of ₹500 and ₹1000 banknotes[5][6] with effect from midnight of the same day, making these notes invalid.[7] A newly redesigned series of ₹500 banknote, in addition to a new denomination of ₹2000 banknote is in circulation since 10 November 2016.[8][9] The new redesigned series is also expected to be enlarged with banknotes in the denominations of ₹1000, ₹100 and ₹50 in the coming months.[10]

Etymology

The word "rupee" was derived from the Sanskrit word रूप्यकम् (rūpyakam) or rupaya (meaning "wrought silver, a coin of silver"). [11] Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya (c 340–290 BCE), mentions silver coins as rūpyarupa, other types of coins including gold coins (Suvarṇarūpa), copper coins (Tāmrarūpa) and lead coins (Sīsarūpa) are also mentioned. Rūpa means to form or shape, example, Rūpyarūpa, rūpya — wrought silver, rūpa — form.[12]

However, in the region of Bengal, the term taka has always been used to refer to currency.[13] In the 14th century, Ibn Battuta noticed that people in the Bengal Sultanate referred to gold and silver coins as taka instead of the dinar. Today, the currency of Bangladesh is officially known as taka. The word taka in Bengali is also commonly used generically to mean any money, currency, or notes. Thus, colloquially, a person speaking in Bengali may use "taka" to refer to money regardless of what currency it is denominated in. Thus, in the states of West Bengal and Tripura the Indian rupee is officially known টাকা (ṭaka). Whereas, in the states of Assam and Odisha, the Indian rupee is similarly known by names derived from the Sanskrit word ṭaṅka (meaning "money"),[14] টকা (ṭôka) in Assamese and ଟଙ୍କା (taṅkā) in Odia.

Large values of rupees are counted in terms of thousands, lakh (100 thousand),10 lakhs (1 million) and crore (10 million), 100 crores (1 billion), 1 Arab (10 billion) or 1000 crores(1 Arab).

History

Silver punch mark coin of the Maurya empire, known as Rūpyarūpa, 3rd century BCE.
Silver coins with raised writing
Rupiya issued by Sher Shah Suri, 1540–1545 CE

The history of the Indian rupee traces back to Ancient India in circa 6th century BCE, ancient India was one of the earliest issuers of coins in the world,[15] along with the Chinese wen and Lydian staters.

During his five-year rule from 1540 to 1545, Sultan Sher Shah Suri issued a coin of silver, weighing 178 grains (or 11.53 grams), which was termed the Rupiya.[16][17] During Babar's time, the brass to silver exchange ratio was roughly 50:2.[18] The silver coin remained in use during the Mughal period, Maratha era as well as in British India.[19] Among the earliest issues of paper rupees include; the Bank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–75, established by Warren Hastings), and the Bengal Bank (1784–91).

1800s

Historically, the rupee was a silver coin. This had severe consequences in the nineteenth century when the strongest economies in the world were on the gold standard. The discovery of large quantities of silver in the United States and several European colonies resulted in a decline in the value of silver relative to gold, devaluing India's standard currency. This event was known as "the fall of the rupee."

India was unaffected by the imperial order-in-council of 1825, which attempted to introduce British sterling coinage to the British colonies. British India, at that time, was controlled by the British East India Company. The silver rupee continued as the currency of India through the British Raj and beyond. In 1835, British India adopted a mono-metallic silver standard based on the rupee; this decision was influenced by a letter written by Lord Liverpool in 1805 extolling the virtues of mono-metallism.

Chart showing exchange rate of Indian silver rupee coin (blue) and the actual value of its silver content (red), against British pence. (From 1850 to 1900)

Following the Indian Mutiny in 1857, the British government took direct control of British India. Since 1851, gold sovereigns were produced en masse at the Royal Mint in Sydney, New South Wales. In an 1864 attempt to make the British gold sovereign the "imperial coin", the treasuries in Bombay and Calcutta were instructed to receive gold sovereigns; however, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the pound sterling, it realised for the same reason it could not replace the silver dollar in the Straits Settlements with the Indian rupee (as the British East India Company had desired). Since the silver crisis of 1873, a number of nations adopted the gold standard; however, India remained on the silver standard until it was replaced by a basket of commodities and currencies in the late 20th century.

India Council Bill

Around 1875, Briton started paying India for exported goods in India Council Bills (instead of silver).

"If, therefore, the India Council in London should not step in to sell bills on India, the merchants and bankers would have to send silver to make good the (trade) balances. Thus a channel for the outflow of silver was stopped, in 1875, by the India Council in London."[21]
"The great importance of these (Council) Bills, however, is the effect they have on the Market Price of Silver : and they have in fact been one of the most potent factors in recent years in causing the diminution in the Value of Silver'as compared to Gold."[22]
"The Indian and Chinese products for which silver is paid were and are, since 1873–74, very low in price, and it there fore takes less silver to purchase a larger quantity of Eastern commodities. Now, on taking the several agents into united consideration, it will certainly not seem very mysterious why silver should not only have fallen in price"[21]
“the great nations had recourse to two expedients for replenishing their exchequers, - first, loans, and, second, the more convenient forced loans of paper money۔”[21]

1900s

One-rupee banknote
Government of India-1 Rupee (1917)

Problems caused by the gold standard

At the onset of the First World War, the cost of gold was very low and therefore the pound sterling had high value. But during the First World War, the value of the pound fell alarmingly due to rising war expenses. At the conclusion of the war, the value of the pound was only a fraction of what it used to be prior to the commencement of the war. It remained low until 1925, when the then Chancellor of the Exchequer ( Finance Minister) of United Kingdom, Winston Churchill, restored it to pre-War levels. As a result, the price of gold fell rapidly. While the rest of Europe purchased large quantities of gold from the United Kingdom, there was little increase in her gold reserves. This dealt a blow to an already deteriorating British economy. The United Kingdom began to look to its possessions as India to compensate for the gold that was sold.[23]

"However, the price of gold in India, on the basis of the exchange rate of the rupee around 1S.6d., was lower than the price prevailing abroad practically throughout; the disparity in prices made the export of the metal profitable, which phenomenon continued for almost a decade. Thus, in 1931-32, there were net exports of 7.7 million ounces, valued at Rs. 57.98 crores. In the following year, both the quantity and the price rose further, net exports totaling 8.4 million ounces, valued at Rs.65.52 crores. In the ten years ended March 1941, total net exports were of the order of 43 million ounces (1337.3 Tons) valued at about Rs. 375 crores, or an average price of Rs. 32-12-4 per tola."[24]
"In the autumn of 1917 (when the silver price rose to 55 pence).... there was danger of uprisings in India (against paper currency) which would handicap seriously British participation in the World War....In-convertibility (of paper currency into coin) would lead to a run on Post Office Savings Banks. It would prevent the further expansion of (paper currency) note issues and cause a rise of prices, in paper currency, that would greatly increase the cost of obtaining war supplies for export....To have reduced the silver content of this historic (Rupee) coin might well have caused such popular distrust of the Government as to have precipitated an internal crisis, which would have been fatal to British success in the war."[25]

In 1939, Dickson H. Leavens wrote in his book SILVER MONEY: "In recent years the increased price of gold, measured in depreciated paper currencies, has attracted to the market (of London) large quantities (of gold) formerly hoarded or held in the form of ornaments in India and China".[25]

The Indian rupee replaced the Danish Indian rupee in 1845, the French Indian rupee in 1954 and the Portuguese Indian escudo in 1961. Following the independence of British India in 1947 and the accession of the princely states to the new Union, the Indian rupee replaced all the currencies of the previously autonomous states (although the Hyderabadi rupee was not demonetised until 1959).[26] Some of the states had issued rupees equal to those issued by the British (such as the Travancore rupee). Other currencies (including the Hyderabadi rupee and the Kutch kori) had different values.

The values of the subdivisions of the rupee during British rule (and in the first decade of independence) were:

In 1957, the rupee was decimalised and divided into 100 naye paise (Hindi for "new paise"); in 1964, the initial "naye" was dropped. Many still refer to 25, 50 and 75 paise as 4, 8 and 12 annas respectively, similar to the usage of "two bits" in American English for a quarter-dollar.

International use

As the Straits Settlements were originally an outpost of the British East India Company, In 1837, the Indian rupee was made the sole official currency in the Straits Settlements, as it was administered as part of British India. This attempt was resisted by the locals. However, Spanish dollars continued to circulate and 1845 saw the introduction of coinage for the Straits Settlements using a system of 100 cents = 1 dollar, with the dollar equal to the Spanish dollar or Mexican peso. In 1867, administration of the Straits Settlements was separated from India and the Straits dollar was made the standard currency, and attempts to reintroduce the rupee were finally abandoned.[27]

After the Partition of India, the Pakistani rupee came into existence, initially using Indian coins and Indian currency notes simply overstamped with "Pakistan". Previously the Indian rupee was an official currency of other countries, including Aden, Oman, Dubai, Kuwait, Bahrain, Qatar, the Trucial States, Kenya, Tanganyika, Uganda, the Seychelles and Mauritius.

The Indian government introduced the Gulf rupee – also known as the Persian Gulf rupee (XPGR) – as a replacement for the Indian rupee for circulation outside the country with the Reserve Bank of India (Amendment) Act of 1 May 1959. The creation of a separate currency was an attempt to reduce the strain on India's foreign reserves from gold smuggling. After India devalued the rupee on 6 June 1966, those countries still using it – Oman, Qatar, and the Trucial States (which became the United Arab Emirates in 1971) – replaced the Gulf rupee with their own currencies. Kuwait and Bahrain had already done so in 1961 with Kuwaiti dinar and in 1965 with Bahraini dinar, respectively.[28]

The Bhutanese ngultrum is pegged at par with the Indian rupee; both currencies are accepted in Bhutan. The Nepalese rupee is pegged at ₹0.625; the Indian rupee is accepted in Bhutan and Nepal, except ₹500 and ₹1000 banknotes, which are not legal tender in Bhutan and Nepal and are banned by their respective governments, though accepted by many retailers.[29] On 29 January 2014, Zimbabwe added the Indian rupee as a legal tender to be used.[1][30]

Coins

Pre-independence issues

1835 East India Company 2 Mohurs
Indian rupee (1862).
Obverse: Crowned bust of Queen Victoria surrounded by name. Reverse: Face value, country and date surrounded by wreath.
Coin made of 91.7% silver.
1862 India One Mohur
Regal issue minted during the reign of King/Emperor George V.
1 Indian rupee (1947) featuring George VI on obverse and Bengal tiger on reverse.
Both sides of copper-coloured coin
Indian one pice, minted in 1950
1 Indian rupee (1905) featuring Edward VII.
1 Indian rupee (1918) featuring George V.
Row of six differently-shaped aluminium coins, arranged by size
In 1964, India introduced aluminium coins for denominations up to 20p.

East India Company, 1835

The three Presidencies established by the British East India Company (Bengal, Bombay and Madras) each issued their own coinages until 1835. All three issued rupees and fractions thereof down to  1⁄8- and  1⁄16-rupee in silver. Madras also issued two-rupee coins.

Copper denominations were more varied. Bengal issued one-pie,  1⁄2-, one- and two-paise coins. Bombay issued 1-pie,  1⁄4-,  1⁄2-, 1-, 1 1⁄2-, 2- and 4-paise coins. In Madras there were copper coins for two and four pies and one, two and four paisa, with the first two denominated as  1⁄2 and one dub (or  1⁄96 and  1⁄48) rupee. Madras also issued the Madras fanam until 1815.

All three Presidencies issued gold mohurs and fractions of mohurs including  1⁄16,  1⁄2,  1⁄4 in Bengal,  1⁄15 (a gold rupee) and  1⁄3 (pancia) in Bombay and  1⁄4,  1⁄3 and  1⁄2 in Madras.

In 1835, a single coinage for the EIC was introduced. It consisted of copper  1⁄12,  1⁄4 and  1⁄2 anna, silver  1⁄4,  1⁄3 and 1 rupee and gold 1 and 2 mohurs. In 1841, silver 2 annas were added, followed by copper  1⁄2 pice in 1853. The coinage of the EIC continued to be issued until 1862, even after the Company had been taken over by the Crown.

Regal issues, 1862–1947

In 1862, coins were introduced (known as "regal issues") which bore the portrait of Queen Victoria and the designation "India". Their denominations were  1⁄12 anna,  1⁄2 pice,  1⁄4 and  1⁄2 anna (all in copper), 2 annas,  1⁄4,  1⁄2 and one rupee (silver), and five and ten rupees and one mohur (gold). The gold denominations ceased production in 1891, and no  1⁄2-anna coins were issued after 1877.

In 1906, bronze replaced copper for the lowest three denominations; in 1907, a cupro-nickel one-anna coin was introduced. In 1918–1919 cupro-nickel two-, four- and eight-annas were introduced, although the four- and eight-annas coins were only issued until 1921 and did not replace their silver equivalents. In 1918, the Bombay mint also struck gold sovereigns and 15-rupee coins identical in size to the sovereigns as an emergency measure during the First World War.

In the early 1940s, several changes were implemented. The  1⁄12 anna and  1⁄2 pice ceased production, the  1⁄4 anna was changed to a bronze, holed coin, cupro-nickel and nickel-brass  1⁄2-anna coins were introduced, nickel-brass was used to produce some one- and two-annas coins, and the silver composition was reduced from 91.7 to 50 percent. The last of the regal issues were cupro-nickel  1⁄4-,  1⁄2- and one-rupee pieces minted in 1946 and 1947, bearing the image of George VI, King and Emperor on the obverse and an Indian tiger on the reverse.

Post independence issues

Independent predecimal issues, 1950–1957

India's first coins after independence were issued in 1950 in 1 pice,  1⁄2, one and two annas,  1⁄4,  1⁄2 and one-rupee denominations. The sizes and composition were the same as the final regal issues, except for the one-pice (which was bronze, but not holed).

Independent decimal issues, 1957–present

The first decimal-coin issues in India consisted of 1, 2, 5, 10, 25 and 50 naye paise, and 1 rupee. The 1 naya paisa was bronze; the 2, 5 & 10 naye paise were cupro-nickel, and the 25 naye paise (nicknamed chawanni; 25 naye paise equals 4 annas), 50 naye paise (also called athanni; 50 naye paise equalled 8 old annas) and 1-rupee coins were nickel. In 1964, the word naya(e) was removed from all coins. Between 1957 and 1967, aluminium one-, two-, three-, five- and ten-paise coins were introduced. In 1968 nickel-brass 20-paise coins were introduced, and replaced by aluminium coins in 1982. Between 1972 and 1975, cupro-nickel replaced nickel in the 25- and 50-paise and the 1-rupee coins; in 1982, cupro-nickel two-rupee coins were introduced. In 1988 stainless steel 10-, 25- and 50-paise coins were introduced, followed by 1- and 5-rupee coins in 1992. Five-rupee coins, made from brass, are being minted by the Reserve Bank of India (RBI).

Between 2005 and 2008 new, lighter fifty-paise, one-, two- and five-rupee coins were introduced, made from ferritic stainless steel. The move was prompted by the melting-down of older coins, whose face value was less than their scrap value. The demonetisation of the 25-(chawanni) paise coin and all paise coins below it took place, and a new series of coins (50 paise – nicknamed athanni – one, two, five and ten rupees, with the new rupee symbol) were put into circulation in 2011. Coins commonly in circulation are one, two, five and ten rupees.[31][32] Although it is still legal tender, the 50-paise (athanni) coin is rarely seen in circulation.[33]

Circulating Coins [31][34]
Value Technical parameters Description Year of
Diameter Mass Composition Shape Obverse Reverse First minting Last minting
50 paise 19 mm 3.79 g Ferritic stainless steel Circular Emblem of India Value, the word "PAISE" in English and Hindi, floral motif and year of minting 2011
50 paise 22 mm 3.79 g Ferritic stainless steel Circular Emblem of India Value, hand in a fist 2008
₹1 25 mm 4.85 g Ferritic stainless steel Circular Emblem of India, value Value, two stalks of wheat 1992 2004
₹1 25 mm 4.95 g Ferritic

stainless steel

 Circular Unity from diversity,

cross dividing 4 dots

 Value, Emblem of India, Year

of minting

 2004 2007
₹1 25 mm 4.85 g Ferritic stainless steel Circular Emblem of India Value, hand showing thumb (an expression in the Bharata Natyam Dance) 2007 2011
₹1 22 mm 3.79 g Ferritic stainless steel Circular Emblem of India Value, new rupee sign, floral motif and year of minting 2011
₹2 26 mm 6 g Cupro-Nickel Eleven Sided Emblem of India, Value National integration 1982 2004
₹2 26.75mm 5.8 g Ferritic

stainless steel

 circular Unity from diversity,

cross dividing 4 dots

 Value, Emblem of India, Year

of minting

 2005 2007
₹2 27 mm 5.62 g Ferritic stainless steel Circular Emblem of India, year of minting Value, hand showing two fingers (Hasta Mudra — hand gesture from the dance Bharata Natyam) 2007 2011
₹2 25 mm 4.85 g Ferritic stainless steel Circular Emblem of India Value, new rupee sign, floral motif and year of minting 2011
₹5 23 mm 9 g Cupro-Nickel Circular Emblem of India Value 1992 2006
₹5 23 mm 6 g Ferritic stainless steel Circular Emblem of India Value, wavy lines 2007 2009
₹5 23 mm 6 g Brass Circular Emblem of India Value, wavy lines 2009 2011
₹5 23 mm 6 g Nickel- Brass Circular Emblem of India Value, new rupee sign, floral motif and year of minting 2011
₹10 27 mm 5.62 g Bimetallic Circular Emblem of India and

year of minting

Value with outward radiating pattern of 15 spokes 2006 2010
₹10 27 mm 5.62 g Bimetallic Circular Emblem of India and year of minting Value with outward radiating pattern of 10 spokes, new rupee sign 2011 present

The coins are minted at the four locations of the India Government Mint. The ₹1, ₹2, and ₹5 coins have been minted since independence. Coins minted with the "hand picture" were minted from 2005 onwards.

Minting

A postcard depicting the Mint.

The Government of India has the only right to mint the coins and one rupee note. The responsibility for coinage comes under the Coinage Act, 1906 which is amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the five India Government Mints at Mumbai, Alipore (Kolkata), Saifabad (Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP). The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act.[35]

Commemorative coins

After independence, the Government of India mint, minted coins imprinted with Indian statesmen, historical and religious figures. In the years 2010 and 2011 for the first time ever ₹75, ₹150 and ₹1000 coins were minted in India to commemorate the Platinum Jubilee of the Reserve Bank of India, the 150th birth anniversary of the birth of Rabindranath Tagore and 1000 years of the Brihadeeswarar Temple, respectively. In 2012 a ₹60 coin was also issued to commemorate 60 years of the Government of India Mint, Kolkata. ₹100 coin was also released commemorating the 100th anniversary of Mahatma Gandhi's return to India.[36] Commemorative coins of ₹125 were released on 4 September 2015 and 6 December 2015 to honour the 125th anniversary of the births of Sarvepalli Radhakrishnan and B. R. Ambedkar, respectively.[37][38]

Banknotes

Pre independence issues

Government of India-10 Rupees (1910)
Old 1 rupee note
British Indian one rupee note

In 1861, the government of India introduced its first paper money: ₹10 note in 1864, ₹5 note in 1872, ₹10,000 note in 1899, ₹100 note in 1900, ₹50 note in 1905, ₹500 note in 1907 and ₹1,000 note in 1909. In 1917, ₹1 and ₹2 1⁄2 notes were introduced. The Reserve Bank of India began banknote production in 1938, issuing ₹2, ₹5, ₹10, ₹50, ₹100, ₹1,000 and ₹10,000 notes while the government continued issuing ₹1 note but demonetized the ₹500 and ₹2 1⁄2 notes.

Post independence issues

After independence, new designs were introduced to replace the portrait of George VI. The government continued issuing the ₹1 note, while the Reserve Bank issued other denominations (including the ₹5,000 and ₹10,000 notes introduced in 1949). All pre-independence banknotes were officially demonetised with effect from 28 April 1957.[39][40]

During the 1970s, ₹20 and ₹50 notes were introduced; denominations higher than ₹100 were demonetised in 1978. In 1987, the ₹500 note was introduced, followed by the ₹1,000 note in 2000 while ₹1 and ₹2 notes were discontinued in 1995.

The design of banknotes is approved by the central government, on the recommendation of the central board of the Reserve Bank of India.[3] Currency notes are printed at the Currency Note Press in Nashik, the Bank Note Press in Dewas, the Bharatiya Reserve Bank Note Mudran (P) Ltd at Salboni and Mysore and at the Watermark Paper Manufacturing Mill in Hoshangabad. The Mahatma Gandhi Series of banknotes are issued by the Reserve Bank of India as legal tender. The series is so named because the obverse of each note features a portrait of Mahatma Gandhi. Since its introduction in 1996, this series has replaced all issued banknotes of the Lion capital series. The RBI introduced the series in 1996 with ₹10 and ₹500 banknotes. At present, the RBI issues banknotes in denominations from ₹5 to ₹2,000. The printing of ₹5 notes (which had stopped earlier) resumed in 2009.

As of January 2012, the new '₹' sign has been incorporated into banknotes of the Mahatma Gandhi Series in denominations of ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1,000.[41][42][43][44] In January 2014 RBI announced that it would be withdrawing from circulation all currency notes printed prior to 2005 by 31 March 2014. The deadline was later extended to 1 January 2015. Now further dead line was extended to 30 June 2016.[45]

There had been discussions on the necessity to withdraw notes of higher denominations such as the ₹1000 and ₹500 banknotes, considering their role in perpetuating unaccounted money. This move was taken to further curb the problem of fake currency circulation.[46][47][48] While noting that the withdrawal of high denomination notes can lead to an increase in printing costs for RBI, there was an opinion that these costs should be weighed against the misuse of high-value notes.[49] On 8 November 2016 Prime Minister Narendra Modi announced the demonetization of ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series, with a detailed step-down program. This program would stop all usage of ₹500 and ₹1,000 rupee notes by 11 November 2016.[50] Citizens with valid identification will have until 30 December 2016 to exchange the notes for lower tender at any bank or post office, and until 31 March 2017 to exchange them at designated RBI offices by filling in a declaration form.[51]

On 8 November 2016, the Reserve Bank of India (RBI) announced the issuance of new ₹500 and ₹2,000 banknotes in the Mahatma Gandhi New Series of banknotes.[52][53][54] The new ₹2,000 banknote has a magenta base colour, with a portrait of Mahatma Gandhi as well as the Ashoka Pillar Emblem on the front. The denomination also has a motif of the Mars Orbiter Mission (MOM) on the back, depicting the country's first venture into interplanetary space. The new ₹500 banknote has a stone grey base colour with an image of the Red Fort along with the Indian flag printed on the back. Both the banknotes also have the Swachh Bharat Abhiyan logo printed on the back. The banknote denominations of ₹200, ₹100 and ₹50 are also expected to be introduced in the new Mahatma Gandhi New Series, in the coming months, intended to replace all banknotes of the previous Mahatma Gandhi Series.[55] On 13 June 2017, The RBI will soon introduce new ₹500 notes, but the old ones will continue being legal tender. The design is similar to the current notes in the Mahatma Gandhi (New) Series, except they will come with an inset 'A'.

Current circulating banknotes

As of 10 November 2016, the current circulating banknotes are in denominations of ₹5, ₹10, ₹20, ₹50 and ₹100 are of the Mahatma Gandhi Series, while the denominations of ₹500 and ₹2,000 are of the new Mahatma Gandhi New Series, and the denomination of ₹1 is of the Lion Capital Series.

Current circulating banknotes
Image Value Dimensions Main colour Description Date of Issue Circulation
Obverse Reverse Obverse Reverse Watermark
₹1 97 × 63 mm Blue One-rupee coin Sagar Samrat oil rig Pillars of Ashoka 1994 / 2015[56] Limited
₹5 117 × 63 mm Green Mahatma Gandhi Tractor Mahatma Gandhi 2002 / 2009 Limited
₹10 137 × 63 mm Orange-violet Rhinoceros, elephant, tiger 1996 / 2006 Wide
₹20 147 × 63 mm Red-orange Mount Harriet, Port Blair 2001 / 2006 Wide
₹50 147 × 73 mm Violet Parliament of India 1997 / 2005 Wide
₹100 157 × 73 mm Blue-green at centre, brown-purple at 2 sides Himalaya Mountains 1996 / 2005 Wide
₹500 150 × 66 mm Stone Gray Red Fort 2016 Wide
₹2000 166 × 66 mm Magenta Mangalyaan 2016 Wide
For table standards, see the banknote specification table.

Convertibility

Most traded currencies by value
Currency distribution of global foreign exchange market turnover[57]
Rank Currency ISO 4217 code
(symbol) 		% daily share
(April 2016)
1
  United States dollar
USD ($)
 80.6%
2
  Euro
EUR (€)
 37.4%
3
  Japanese yen
JPY (¥)
 21.6%
4
  Pound sterling
GBP (£)
 12.8%
5
  Australian dollar
AUD (A$)
 6.9%
6
  Canadian dollar
CAD (C$)
 5.1%
7
  Swiss franc
CHF (Fr)
 4.8%
8
  Renminbi
CNY (元)
 4.0%
9
  Swedish krona
SEK (kr)
 2.2%
10
  New Zealand dollar
NZD (NZ$)
 2.1%
11
  Mexican peso
MXN ($)
 1.9%
12
  Singapore dollar
SGD (S$)
 1.8%
13
  Hong Kong dollar
HKD (HK$)
 1.7%
14
 Norwegian krone
NOK (kr)
 1.7%
15
 South Korean won
KRW (₩)
 1.7%
16
  Turkish lira
TRY (₺)
 1.4%
17
  Russian ruble
RUB (₽)
 1.1%
18
 Indian rupee
INR (₹)
 1.1%
19
 Brazilian real
BRL (R$)
 1.0%
20
 South African rand
ZAR (R)
 1.0%
Other 7.1%
Total[58] 200.0%

Officially, the Indian rupee has a market-determined exchange rate. However, the RBI trades actively in the USD/INR currency market to impact effective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to the US dollar is a de facto controlled exchange rate. This is sometimes called a "managed float". Other rates (such as the EUR/INR and INR/JPY) have the volatility typical of floating exchange rates, and often create persistent arbitrage opportunities against the RBI.[59] Unlike China, successive administrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to ensure low volatility in exchange rates, and not to influence the rate (or direction) of the Indian rupee in relation to other currencies.[60]

Also affecting convertibility is a series of customs regulations restricting the import and export of rupees. Legally, foreign nationals are forbidden from importing or exporting rupees; Indian nationals can import and export only up to ₹7,500 at a time, and the possession of ₹500 and ₹1,000 rupee notes in Nepal is prohibited.[61][62]

RBI also exercises a system of capital controls in addition to intervention (through active trading) in currency markets. On the current account, there are no currency-conversion restrictions hindering buying or selling foreign exchange (although trade barriers exist). On the capital account, foreign institutional investors have convertibility to bring money into and out of the country and buy securities (subject to quantitative restrictions). Local firms are able to take capital out of the country in order to expand globally. However, local households are restricted in their ability to diversify globally. Because of the expansion of the current and capital accounts, India is increasingly moving towards full de facto convertibility.

There is some confusion regarding the interchange of the currency with gold, but the system that India follows is that money cannot be exchanged for gold under any circumstances due to gold's lack of liquidity; therefore, money cannot be changed into gold by the RBI. India follows the same principle as Great Britain and the US.

Reserve Bank of India clarifies its position regarding the promissory clause printed on each banknote:

"As per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer. The Bank's obligation to pay the value of banknote does not arise out of a contract but out of statutory provisions.The promissory clause printed on the banknotes i.e., "I promise to pay the bearer an amount of X" is a statement which means that the banknote is a legal tender for X amount. The obligation on the part of the Bank is to exchange a banknote for coins of an equivalent amount." [63]

Chronology

The announcement of PM Narendra Modi on 8th November 2016 suddenly raised dollar index volume to 88.38k, highest for the year. Previous highest record was 68.45k on 21st January 2016.[69]

Exchange rates

Historic exchange rates

Graph of exchange rates of Indian rupee (INR) per 1 USD, 1 GBP, 1 EUR, 100 JPY averaged over the month, from September 1998 to May 2013. Data source: Reserve Bank of India reference rate

For almost a century since the Great Recoinage of 1816 until the outbreak of World War I, the Indian rupee sustained parity with the US dollar while pegged to the pound sterling that was exchanged at ₹4 12a 10ps (or 50 old pence per rupee). Effectively, the rupee bought 1s 4d (or ₹15 per sterling) during 1899–1914. The gold silver ratio expanded during 1870–1910. Unlike India, her colonial master Britain was on gold standard. To meet the Home Charges (i.e., expenditure in England) the colonial government had to remit a larger number of rupees and this necessitated increased taxation, unrest and nationalism.

Thereafter, both the rupee and the sterling gradually declined in worth against the US dollar due to deficits in trade, capital and budget. In 1966, the rupee was devalued and pegged to the dollar. The peg to the pound was at ₹13.33 to a pound (approx. 40 rupees to £3), and the pound itself was pegged to US$4.03. That means officially speaking the USD to INR rate would be closer to ₹4. In 1966, India changed the peg to dollar at ₹7.50.[70]

Indian rupees per currency unit averaged over the year[71][72][73]
Currency ISO code 1947 1966 1995 1996 2000 2004 2006 2007 2008 200920102013201420152016
Australian dollar AUD 27.69 26.07 33.28 34.02 34.60 36.81 38.22 42.00 56.3654.9148.2149.96
Bahraini Dinar BHD – 13.35 91.75 91.24 117.78 120.39 120.40 109.59 115.65 128.60 121.60 155.95 164.55170.6178.3
Bangladeshi taka BDT – – 0.84 0.84 0.77 0.66 0.63 0.570.71 0.66 0.68 0.80 0.88 0.84 0.85
Canadian dollar CAD 5.90 23.63 26.00 30.28 34.91 41.09 42.92 44.5952.17 44.39 56.88 49.5347.9452.32
Chinese Yuan CNY – 5.80 9.93 10.1910.15
Emirate dirham AED – – 17.4718.26
Euroa EUR – – 42.41 44.40 41.52 56.38 64.12 68.0360.5965.69 70.21 72.6075.84
Israeli shekelb ILS 13.33 21.97 11.4510.7610.8317.0816.5717.47
Japanese Yenc JPY 1015.5 1.76 32.66 32.96 41.79 41.8738.9335.0042.27 51.73 52.23 60.07 57.79 53.01 62.36
Kuwaiti Dinar KWD – 17.80 115.5 114.5 144.9 153.3 155.5 144.6 161.7 167.7 159.2 206.5214.3213.1222.4
Malaysian Ringgit MYR – 2.07 12.97 14.11 11.84 11.91 12.36 11.98 13.02 13.72 14.22 18.59 18.65 16.47 16.37
Maldivian rufiyaa MVR 1.00 1.33 2.93 2.91 4.58 4.765.01 5.23
Pakistani rupee PKR 1.00 1.33 1.08 0.95 0.80 0.77 0.75 0.67 0.61 0.59 0.53 0.570.60 0.62 0.64
Pound sterling GBP 13.33 17.76 51.14 55.38 68.11 83.06 80.63 76.3871.3383.63 70.63 91.08 100.51 98.11 92.00
Russian rubled RUB 6.60 15.00 7.56 6.69 1.57 1.05 0.99
Saudi riyal SAR 1.41 17.11 17.88
Singapore dollar SGD – – 23.13 25.16 26.07 26.83 30.93 33.6034.5141.27 33.58 46.84 45.86 46.67 48.86
Sri Lankan rupee LKR 1.33 0.63 0.64 0.58 0.47 0.46 0.45 0.46
Swiss franc CHF 1.46 27.48 43.95 66.95 66.71 66.70 68.40
U.S. dollar USD 3.30 7.50 32.45 35.44 44.20 45.34 43.95 39.50 48.76 45.33 45.00 68.80 66.07 66.73 67.19
a Before 1 January 1999, the European Currency Unit (ECU)
b Before 1980, the Israeli pound (ILP)
c 100 Japanese Yen
d Before 1993, the Soviet ruble (SUR)

Current exchange rates

Current INR exchange rates
From Google Finance: AUD CAD CHF EUR GBP HKD JPY USD RUB CNY AED
From Yahoo! Finance: AUD CAD CHF EUR GBP HKD JPY USD RUB CNY AED
From XE: AUD CAD CHF EUR GBP HKD JPY USD RUB CNY AED
From OANDA: AUD CAD CHF EUR GBP HKD JPY USD RUB CNY AED
From fxtop.com: AUD CAD CHF EUR GBP HKD JPY USD RUB CNY AED

See also

References

  1. 1 2 "Indian Rupee to be legal tender in Zimbabwe". Deccan Herald.
  2. ↑ "APPENDIX TABLE 4: INFLATION, MONEY AND CREDIT" (PDF). Reserve Bank of India. 29 August 2016.
  3. 1 2 "Reserve Bank of India FAQ — Your Guide to Money Matters". Rbi.org.in. Archived from the original on 12 January 2012. Retrieved 5 November 2014.
  4. ↑ "Indian Rupee Joins Elite Currency Club". Theworldreporter.com. 17 July 2010.
  5. ↑ Mukherjee, Amrita (14 November 2016). "How I feel super rich with Rs 100 and Rs 10 in my purse". www.atimes.com. Retrieved 16 November 2016.
  6. ↑ Asia Times, Staff (15 November 2016). "India’s demonetization takes its toll on major sectors". www.atimes.com. Retrieved 16 November 2016.
  7. ↑ Alpana Killawala (8 November 2016). "Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI Notice" (Press release). Reserve Bank of India. Retrieved 13 November 2016.
  8. ↑ Alpana Killawala (8 November 2016). "Issue of ₹500 Banknotes (Press Release)" (PDF) (Press release). Reserve Bank of India. Retrieved 8 November 2016.
  9. ↑ Alpana Killawala (8 November 2016). "Issue of ₹2000 Banknotes (Press Release)" (PDF) (Press release). Reserve Bank of India. Retrieved 8 November 2016.
  10. ↑ "RBI to issue ₹1,000, ₹100, ₹50 with new features, design in coming months". Business Line. 10 November 2016. Retrieved 10 November 2016.
  11. ↑ "Mughal Coinage". Sher Shah issued a coin of silver which was termed the Rupiya. This weighed 178 grains and was the precursor of the modern rupee. It remained largely unchanged till the early 20th Century
  12. ↑ Redy. "AIndia.htm". Worldcoincatalog.com. Retrieved 20 June 2013.
  13. ↑ electricpulp.com. "BENGAL – Encyclopaedia Iranica".
  14. ↑ Klaus Glashoff. "Meaning of टङ्क (Tanka)". Spokensanskrit.de. Retrieved 5 November 2011.
  15. ↑ Subodh Kapoor (January 2002). The Indian encyclopaedia: biographical, historical, religious ..., Volume 6. Cosmo Publications. p. 1599. ISBN 81-7755-257-0.
  16. ↑ etymonline.com (20 September 2008). "Etymology of rupee". Retrieved 20 September 2008.
  17. ↑ Mughal Coinage Archived 16 May 2008 at the Wayback Machine. at RBI Monetary Museum. Retrieved on 4 May 2008.
  18. ↑ https://archive.org/stream/TheTarikh-i-rashidi/TheTarikh-i-rashidiVer1.0_djvu.txt%7C "Chapter CXII"
  19. ↑ "Coinage — Pre-Colonial India Coinage". Rbi.org.in. Retrieved 20 June 2013.
  20. ↑ INDIAN CURRENCY PROBLEMS OF THE LAST DECADE. THE QUARTERLY JOURNAL OF ECONOMICS, AUGUST, 1901
  21. 1 2 3
  22. ↑ The Theory and Practice of Banking, By Henry Dunning Macleod, 1883
  23. ↑ Balachandran, G. (1996). John Bullion's Empire: Britain's Gold Problem and India Between the Wars. Routledge. ISBN 978-0-7007-0428-6., Pg 6
  24. ↑ Currency, Exchange and Banking Prior to 1935
  25. 1 2 Dickson H Leavens (1939). "Silver Money" (PDF). cowles.yale.edu.
  26. ↑ Rezwan Razack; Kishore Jhunjhunwalla (2012). The Revised Standard Reference Guide to Indian Paper Money. Coins & Currencies. ISBN 978-81-89752-15-6.
  27. ↑ Straits Settlements (1867 – 1946)
  28. ↑ "Internationalisation of currency: the case of the Indian rupee and Chinese renminbi" (PDF). Rib staff studies. Retrieved 1 March 2010.
  29. ↑ "Don't take 1,000 and 500 Indian rupee notes to Nepal". Rib staff studies. Retrieved 27 October 2014.
  30. ↑ "Zimbabwe’s multi-currency confusion". BBC News.
  31. 1 2 "Issue of new series of Coins". RBI. Retrieved 4 November 2011.
  32. ↑ "This numismatist lays hands on coins with Rupee symbol". Times of India. 29 August 2011. Retrieved 4 November 2011.
  33. ↑ "Coins of 25 paise and below will not be Legal Tender from June 30, 2011 : RBI appeals to Public to Exchange them upto June 29, 2011". RBI. 18 May 2011. Retrieved 23 January 2012.
  34. ↑ "Reserve Bank of India — Coins". Rbi.org.in. Retrieved 5 November 2011.
  35. ↑ Reserve Bank of India – Coins. Rbi.org.in. Retrieved on 28 July 2013.
  36. ↑ Gaikwad, Rahi (9 January 2015). "India, South Africa discuss UNSC reforms". The Hindu. Chennai, India. Retrieved 9 January 2015.
  37. ↑ "Teachers’ day: PM Narendra Modi releases Rs 125 coin in honour of Dr S Radhakrishnan". Financial Express. 4 September 2016. Retrieved 10 November 2016.
  38. ↑ "PM Narendra Modi releases Rs 10, Rs 125 commemorative coins honouring Dr Babasaheb Ambedkar". Financial Express. 6 December 2016. Retrieved 10 November 2016.
  39. ↑ "Currency Notes without Asoka Pillar Emblem to Cease to be Legal Tender" (PDF). Press Information Bureau of India - Archive.
  40. ↑ "Legal Tender of Currency and Bank Notes" (PDF). Press Information Bureau of India - Archive.
  41. ↑ "Issue of ` 10/- Banknotes with incorporation of Rupee symbol (`)". RBI. Retrieved 23 January 2012.
  42. ↑ "Issue of ` 500 Banknotes with incorporation of Rupee symbol". RBI. Retrieved 23 January 2012.
  43. ↑ "Issue of ` 1000 Banknotes with incorporation of Rupee symbol". RBI. Retrieved 23 January 2012.
  44. ↑ "Issue of `100 Banknotes with incorporation of Rupee symbol". RBI. Retrieved 23 January 2012.
  45. ↑ "Withdrawal of Currencies Issued Prior to 2005". Press Information Bureau. 25 July 2014. Retrieved 25 July 2014.
  46. ↑ ""This Fight Is Against Deep-Rooted Corruption In The System" —Baba Ramdev". 18 June 2011.
  47. ↑ Ranade, Ajit (16 February 2016). "Retiring the 1,000 rupee note".
  48. ↑ "Print :We should abolish Rs 500 and Rs 1,000 notes completely".
  49. ↑ Shashidhar, Karthik (16 March 2016). "Scrapping Rs500, Rs1000 notes a costly idea".
  50. ↑ ""PM Modi Says Rs. 500 And Rs. 1,000 Notes Being Discontinued"". "ndtv. 8 November 2016.
  51. ↑ "Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI Notice (Revised)". Reserve Bank of India. 8 November 2016. Retrieved 8 November 2016.
  52. ↑ "Issue of ₹ 2000 Banknotes". Reserve Bank of India. 8 November 2016. Retrieved 8 November 2016.
  53. ↑ "Issue of ₹ 2000 banknotes with inset letter ‘R’". Reserve Bank of India. 8 November 2016. Retrieved 8 November 2016.
  54. ↑ "Issue of ₹ 500 banknotes inset letter ‘E’ in Mahatma Gandhi (New) Series". Reserve Bank of India. 8 November 2016. Retrieved 9 November 2016.
  55. ↑ RBI to issue ₹1,000, ₹100, ₹50 with new features, design in coming months
  56. ↑ India new 1-rupee note dated 2015 confirmed BanknoteNews.com. 25 May 2015. Retrieved on 26 May 2015.
  57. ↑ "Triennial Central Bank Survey Foreign exchange turnover in April 2016" (PDF). Triennial Central Bank Survey. Basel, Switzerland: Bank for International Settlements. 11 December 2016. p. 7. Retrieved 22 March 2017.
  58. ↑ The total sum is 200% because each currency trade always involves a currency pair.
  59. ↑ "Convertibility: Patnaik, 2004" (PDF)
  60. ↑ Chandra, Shobhana (26 September 2007). "'Neither the government nor the central bank takes a view on the rupee (exchange rate movements), as long as the movement is orderly', says Indian Minister of Finance". Bloomberg.com. Retrieved 5 November 2011.
  61. ↑ "RBI Master Circular on Import of Goods and Services". Rbi.org.in. Retrieved 25 August 2013.
  62. ↑ "RBI Master Circular on Export of Goods and Services". Rbi.org.in. Retrieved 25 August 2013.
  63. ↑ Reserve bank of India Frequently Asked Questions Archived 12 January 2012 at the Wayback Machine. rbi.org.in Retrieved 27 August 2013
  64. ↑ Rituparna Kar and Nityananda Sarkar: Mean and volatility dynamics of Indian rupee/US dollar exchange rate series: an empirical investigation in Asia-Pacific Finan Markets (2006) 13:41–69, p. 48. doi:10.1007/s10690-007-9034-0 .
  65. ↑ "The "Fuller Capital Account Convertibility Report"" (PDF). 31 July 2006. Retrieved 23 January 2009.
  66. ↑ "Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI Notice (Revised)". Reserve Bank of India. 8 November 2016. Retrieved 8 November 2016.
  67. ↑ "Here is what PM Modi said about the new Rs 500, Rs 2000 notes and black money". India Today. 8 November 2016. Retrieved 9 November 2016.
  68. ↑ "Notes out of circulation". The Times of India. 8 November 2016.
  69. ↑ investing.com
  70. ↑ Saurabh Chandra (21 August 2013). "The fallacy of 'dollar = rupee' in 1947". Retrieved 22 August 2013.
  71. ↑ historical exchange rates - fxtop.com
  72. ↑ "FXHistory: historical currency exchange rates" (database). OANDA Corporation. Archived from the original on 4 April 2006. Retrieved 1 September 2009.
  73. ↑ "The fallacy of 'dollar = rupee' in 1947". DNA. Retrieved 19 August 2013.
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