Rupee Analysis

The Indian rupee hasn’t been a strong form of currency. The rupee is a solid medium of exchange and unit of account but in the store of value component that is issue for the rupee. Inflation has highly affected the rupee and so the Indian people have been skeptical if the rupee will continue to survive in India. The rupee is fiat money because it was established by the Indian government in 1947 after independence. India does have a central bank; it is the Reserve of India. Their main role is to issue currency, manage the foreign exchange, regulate the financial system and they are the monetary authority. There isn’t much difference between the Reserve of India and the Federal Reserve for the United States. India’s rupee has been experiencing a large percentage of inflation in the last ten years. The current inflation rate for the rupee is 8.3%. The pound (£) which is the currency of the United Kingdom experienced a inflation rate of only 1.5%.(National Statistics) This has made the reserve of India’s job hard because they have to inspire confidence in a currency that has been shaky lately. (RBI)

“Reserve Bank of India. Reserve Bank of India, n.d. Web. 2 Dec. 2009. http://www.rbi.org.in/home.aspx.

"Inflation." Office of National Statistics. N.p., 17 Nov. 2009. Web. 9 Dec. 2009. http://www.statistics.gov.uk/cci/nugget.asp?ID=19.

"India." CIA World Fact Book. Central Intelligence Agency, 11 Nov. 2009. Web. 22 Nov. 2009. .