So now that we understand the base year and base rate, let’s have a look at the USD vs INR exchange rate data for the last 70+ years.įor the purpose of analysis and quickly figuring out the years in which the INR was devalued the most, we’re also adding the YoY change (%) and absolute change (%). All the available records for USD vs INR exchange rate data follow the 1st theory as it assumes a practical scenario of existence of some form of trade between the involved nations at the time of India’s independence. A standard was established only after the Bretton Woods Agreement was passed in 1944. So by this logic, the value of USD vs INR in 1947 was $1 = ₹1īefore 1944, there was no standard system of comparing the world currencies. This would essentially mean that the rupee was valued at parity (equal) with all other foreign currencies including the dollar. It assumes that as India got its independence, it was a free and new nation with no foreign debt / credit on its national balance sheet. This theory is a comparatively easy and straightforward. It was only after this year that the INR was in a true sense compared to the USD on a one-to-one basis. So by this logic, the followers of theory 1 believe that the value of USD vs INR in 1947 was ₹4.76įun Fact: When the British left India in 1947, the exchange rate arrangement between pound and rupee (£1 = ₹13) was maintained until 1966. British Pound and US Dollar: £1 = $2.73īy equating the 2 above we get, $1 = ₹4.76.British Pound and Indian Rupee: £1 = ₹13.Since India was ruled by the British Empire before its independence, the INR essentially derived its value from the British Pound (£). As for the base rate there are 2 theories that go as below: Theory 1 We will consider 1947 as the base year as that is the year when India got its independence. Base Year & Rateīefore we dive into the data, we must understand the base year and the base rate. So how has rupee fared against the dollar in the last 70 years? Let’s take a look at it. Ever since India got its independence from the British Empire in 1947, the rupee has been on a long one-way journey of devaluation against the dollar. Our own currency, the Indian National Rupee (INR) is no exception when it comes to global trade. Some people might challenge USD’s dominance in the future but for now it’s here to stay. Currencies of almost all nations are pegged against the USD to decide their value in the global markets. More than 72% of international trade involves USD at some level or the other. USD is the most powerful currency in the world right now and it has been so for many decades now owing to America’s economic world dominance. Yearly Average Exchange Rates for Converting Foreign Currencies into U.S.The official currency of the United States of America, the US Dollar ($) is an universal symbol of money and is one of the most recognized symbols worldwide. dollar amount by the applicable yearly average exchange rate in the table below. dollars to foreign currency, multiply the U.S. dollars, divide the foreign currency amount by the applicable yearly average exchange rate in the table below. Yearly average currency exchange ratesįor additional exchange rates not listed below, refer to the governmental and external resources listed on the Foreign Currency and Currency Exchange Rates page or any other posted exchange rate (that is used consistently). dollars by the bank processing the payment, not the date the foreign currency payment is received by the IRS. dollars is based on the date the foreign currency is converted to U.S. tax payments in a foreign currency, the exchange rate used by the IRS to convert the foreign currency into U.S. Note: The exchange rates referenced on this page do not apply when making payments of U.S. When valuing currency of a foreign country that uses multiple exchange rates, use the rate that applies to your specific facts and circumstances. Generally, it accepts any posted exchange rate that is used consistently. The Internal Revenue Service has no official exchange rate. See section 988 of the Internal Revenue Code and the regulations thereunder. dollar, make all income determinations in the QBU's functional currency, and where appropriate, translate such income or loss at the appropriate exchange rate.Ī taxpayer may also need to recognize foreign currency gain or loss on certain foreign currency transactions. If you have a QBU with a functional currency that is not the U.S. The only exception relates to some qualified business units (QBUs), which are generally allowed to use the currency of a foreign country. In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item. dollars if you receive income or pay expenses in a foreign currency. Therefore, you must translate foreign currency into U.S. You must express the amounts you report on your U.S.
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