Why USD is Stronger than INR

Why USD is Stronger than INR

It is not a novelty that foreign countries decide to use the dollar as a preferred deposit of global savings which is like salvation in times of crisis and it is also the universal money to carry out the exchange of raw materials such as oil.

According to American political economists, they claim that the dollar will be the universal currency chosen for much longer and that this gives the United States even more power over countries like India so we can have a USD to INR prediction, despite the fact of having gone through a moment of crisis, it was thought that the dollar would cease to be the world leader for another currency to take its place.

As nothing is everlasting, the United States considered the opportunity to evaluate other potential currencies such as the Chinese currency and the Euro but after a long study, it was concluded that these two currencies did not inspire confidence. As a result, the dollar continues to have weight in terms of value and is unique and irreplaceable within other global currencies.

The Federal Reserve is one of the reasons why the dollar has strength because they raised interest rates causing an even greater attraction for those investors, giving a much more attractive image to the American currency due to the increase in the return on investments made in dollars, raising the income of America.

Although President Trump has problems with several countries, it has not been an impediment for the dollar to remain the chosen one to represent international currencies.

With regard to the Indian rupee, two aspects are taken into account in its currency: the slowdown in growth and the policy of lowering the price of money, which do not convince several investors to bet on the rupee, since they are two factors that do not they favor the rupee.

In addition, the value of the rupee has much to do with the price of oil which, its increase causes an imbalance in the Indian currency. We must not lose sight of the fact that the country imports more oil than it needs and, since the payment of oil is linked to the dollar, the increase in the price of oil tends to strengthen the dollar as well affecting the Indian Rupee so that the USD to INR prediction can take place.

Dollar to Rupee Value in 1947

India celebrates 72 years of independence in 2019 and even its citizens still have a myth about the dollar: believe that since 1947 the Indian rupee has devalued to the point of believing that the change in 1947 from 1 USD to INR was exactly 1 Rupee But, unfortunately, this is not true.

In 1947 India was free and at that time, the country had no outstanding credits to keep the rupee on par with the American dollar. In this year, India was still under the stable value of the British Pound, so from 1927 to 1966, 1 Pound had a value of 13 INR. In this same year, that is, in 1966, the rupee presented its first devaluation.

After independence, India was linked to the US dollar for a value of 7.5 INR to 1 USD, a value that remained until 1971. And how is this value calculated? Because, as we mentioned before, although India obtained its independence in 1947, even so, the currency was still linked to the Pound and its value was 1 INR for 1 shilling and 6 pence and the value of 1 Pound was equivalent to 4 dollars, it is said that 1 USD to INR prediction had around 3 INR.

When Will Indian Rupee Value Increase Against Dollar?

The red line set by the US Treasury to be included in the list of possible currency handlers is set at 2% and although India has not exceeded this limit, Indian purchases have risen to 1.8% of GDP. A warning that may curtail the initiatives of the central bank to try to stop the revaluation of the national currency.

Not being able to intervene beyond this limit can further increase the value of the rupee and an overvalued currency is synonymous with expensive exports that obviously harm competitiveness. But entering the Treasury list has other drawbacks.

The USA can trigger sanctions if the country meets these three criteria at the same time: persistently intervene in currency markets, have a significant trade surplus with the USA and have a large current account surplus.

Why is USD Getting Stronger Against INR?

So far this year, the Indian rupee does not exceed 70 rupees the dollar and this may be due to low industrial production. On the other hand, the dollar gained strength after the inflation suffered by the country, with the result that India obtained an increase in interest rates.

Another reason is that due to the withdrawals of the 500 and 1000 rupee notes, it will have consequences on the country’s economic demand along with the loss of value in real estate and other sectors, which will cause a weakening of the rupee and in the end, we can have a USD to INR prediction.

In this way, it is very likely that the dollar will take on strength and overcome the Indian rupee, causing an increase in the remittance of funds in the country.

Although only two decades ago, India had been listed as one of the poorest countries in the world, marginalized for a long time on the international stage, from now on it is considered a brilliant and immense power, to such an extent that the US banking group expects it to take third place in the global economy by 2025.

Is that, India achieves a growth rate that ranks among the strongest in the world since 2000, the second most significant among the G20 members. This dynamism brought with it the development of the services sector (especially computing) and a more recent boom in the industrial sector (steel, automotive, pharmaceutical, oil products) that benefits the growth of the domestic market, but also oriented to export.

Perhaps, in the not too distant future, the Indian rupee will also take on strength and surpass or equal the dollar.

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