What happens if Rupee equals Dollar | Pros and Cons

What happens if 1 Rupee = 1 USD – Pros and Cons

As it is always a race in currency exchange market, 1 USD vs INR, every Indian wish is that Why cant be 1 Rupee = 1 US Dollar? This is the question quite similar to “Why cant we just print money to pay all the debt?”

Pros and Cons of Dollar equals Rupee

Pros and Cons of Dollar equals Rupee

There are some pros and cons to this situation. But lets see what happens if overnight or in very short period of time Dollar equals to Rupee.

First of all the high value of currency does not mean that the economy of the country is stronger. If that was the case then Bangladesh would have a stronger economy than Japan. Because 1 BDT = 1.4 Yen.

1 Rupee = 1 Dollar – Pros

Now Pros of the situation.

1. Buying Goods will be cheaper for Indians in the International Market. Because this will make imports cheaper which is good for a developing country.

2. Buying luxurious goods will be cheaper. For example, an iphone will cost just INR 650 which is cheaper than the current market rate.

3. As import prices are cheaper, then petrol prices will be cheaper resulting in cheaper transportation cost of goods around the country.

These looks like quite a good scenario. But this will not last long for the situation. Because other side of the story is completely different.

1 Rupee = 1 USD – Cons

Now Cons of the Situation

1. Exports will be expensive if value of Indian rupee and dollar are the same. Because Indian products will be expensive compared to other competing nations. Indian exports have been booming well in recent years. If it is expensive, why would any country buy from India when other competitors can offer the same at cheaper price.

2. There would be no foreign Investment if Rupee equals dollar. The primary reason for a foreign investment in India is the cheapest labour cost. Foreign companies will not be investing in India when the cost of labour is higher compared to other countries.

3. Service sector contributes almost 60% in GDP and give 27% employment in India. Investment in IT Sector and Service Sector which contributes huge amount for the Indian Economy will be gone if 1 Dollar is equal to 1 Rupee. Now as 1USD= 1INR why any company will pay to an employee USD 75,000 or Rs.75,000 per month if they can hire someone outside who will do the same work for USD 3000 or Rs.3000. Eventually people will loose job which will increase unemployment.

4. When money does not come into India, it will result in complete economic slowdown.

5. Outsourcing of job in India will be stopped.

6. Companies which are presently in India will start to move out as it will not be profitable for them. Similar situation happened in India during 2007-08 when dollar was strong around Rs.40, the imports were good. But the BPO and IT Sectors suffered a lot.


The situation of 1 Rupee = 1 USD is just not affordable for a growing or developing country.

Leave a Reply

Recent Posts

Related pages

wager defdisadvantages of internet shoppingsole trader benefitsgearing ratio analysiswhat is securitization with exampleaccount payable turnover daysinterpretation of common size balance sheetdefinition of capitaliststotal preventive maintenance tpmautocratic organizationadvantages and disadvantages of budgetary controlpay back period methodadvantages and disadvantages of cluster sampling methodwhat are the advantages and disadvantages of decentralizationzero balance budgetinggat agreementhow to calculate payables turnoverrelationship between gatt and wtomarginal costing meaningcentralization & decentralizationbounties meaningwhat is the relationship between gatt and wtousefulness of variance analysisformalities of a valid contractdefine caveatsinductive and deductive methodemployee indisciplineregister of joint stock companiesdisseminator role of managerexplain the doctrine of privity of contractsole tradingwhat are the roles of imfdebt securitisation processwhat are debenture bondslabour efficiencyconsumable goods meaningdefinition of socialization processcapital rationing definitionmanagerial vs financial accountingessential elements of a chequestock speculatorexplain autocracycompetitive parity budgetingmeaning of forward contractadvantages and disadvantages of commodity exchangemeaning of petty cash bookexamples of factory overheadscall in arrears and call in advancestandardisation in marketingdisadvantage of systematic samplingcompulsory winding updisadvantages of budgetary controldirect and absorption costingtypes of mergers and acquisitions pptwhat is doctrine of ultra virescompany requisitesbills receivable discountedaverage payable period ratiodefinition of irdaabout icici bank historyindirect marketing advantagesspecific voyage policysdr definitionwhat is the difference between financial accounting and managerial accountingcompute payback periodveil of incorporation definitionmerits of management accountingsimilarities between shares and debentureselasticities of demandquota sampling techniquethe advantages of a sole traderadvantages of leasing equipmentadvantages and disadvantages of operating a franchiseultra vires law definition