Introduction to INR (Indian Rupee)
The Indian Rupee is India's official currency; ₹ is the Indian currency symbol. The Indian rupee's currency code is INR.
Understanding INR (Indian Rupee) In Detail
- The word rupiya finds its origin in Sanskrit.
- But the word ‘Rupaya’ was used for the first time during the reign of Sher Shah Sur, the founder of Sur Empire, in medieval India.
- The Indian Rupee was put into circulation post the partition of India in the year 1947. The smaller denominations of INR were annas back then.
- The Rupee was later decimalized in the year 1961 – one Rupee was made equal to 100 paise.
- The currency of India follows the managed float system currently and is not pegged to the US Dollar or any other currency.
Banknotes
Paper currency will be issued in units of 5, 10, 20, 50, 100, 200, 500, and 2,000 rupees. On the paper rupee's reverse side, denominations are written in 15 languages, while denominations are written in English and Hindi on the front side.
Banknotes are regularly updated with new designs, including variations from the old Mahatma Gandhi banknotes series to new notes of the same name. The remarks cover various themes of the rich heritage of India.
Coins:
Coins in India are released in denominations of 10, 20, 25, and 50 paises, and 1, 2, and 5 rupees. A paise will be equal to 1/100th of a rupee. Coins valued 50 paise or less are known as small coins, while coins valued equal to or greater than one rupee is called as rupee coins.
India has a cash-based economy, which has led to the counterfeit currency being circulated by those involved in illegal behaviour. Over the years, the Reserve Bank of India has had to change and update rupee notes with new security features multiple times.
Over the years, the rupee has been subject to numerous capital controls and limits on convertibility. For example, it is not legal for foreign nationals to either import or export rupees, and only small amounts of rupees can be imported and exported by Indian nationals.
The current account, consisting of savings and investment flows of the country, has no currency conversion restrictions (apart from barriers to trade).
Factors Impacting the Value of a Rupee
Several factors are capable of having an effect on the Indian rupee's exchange rate, including trade flows, oil prices, and investment flows.
Economic Prospects of the Indian Currency
- The economic prospect of the INR is currently bullish.
- BofA Securities India has estimated that India could emerge as the third largest economy in the world by 2028. It is already the third largest in terms of Purchasing Power Parity.
- It is believed that with the stronger foreign exchange reserves that the Government of India holds, the increasing FDI into the economy, and softer real lending rates, the INR will become a stronger currency in the future devoid of the risks that it is faced with currently.
