Journey of Rupee

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Information about Journey of Rupee
Finance

Published on March 10, 2014

Author: mansoorali143

Source: slideshare.net

Description

Its all about Rupee. Design, History, Minting and printing, Security features, Trend analysis, Fall of rupee, Measures and control.

` Presented by- Team ‘Introspects’

Contents           Introduction History Minting and Printing Soiled and Mutilated Bank notes Security Features Valuation of Rupee in Forex Market Trend analysis Fall of rupee Controls/Measures adapted to control the fall Conclusion

Introduction  “Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country”  Indian Currency- Indian Rupee (INR)  Origin of the word "rupee" is found in the Sanskrit word rūp or rūpā, which means "silver“

Introduction Design  Udaya Kumar-The designer  The design resembles both the Devanagari letter “र" (ra) and the Latin capital letter "R", with a double horizontal line at the top. र

Introduction  Rupee- Mauritius, Nepal, Pakistan, Seychelles, and Sri      Lanka. The Indian Rupee- India. The original Rūpaya was a silver coin weighing 178gm. Controller- Reserve Bank of India. The ISO 4217 code for the India Rupee is INR. In India- Rupee, Rupaye, Rubai and Taka.

History What was before 'Money'? Barter System!!! To barter is to exchange goods without involving money.

History Barter System

History

History Drawbacks of the Barter System  No double coincidence of wants  No specific unit of value  No specific unit of measurement  Inability of divisibility of goods  Inability to transport goods

History Stages of Evolution of Money  Commodity Money  Metallic Money  Paper Money  Notes and Coins  Electronic Money

History

History Entry of Rupee During 3rd century BC under the rule of Mauryan Empire there is a mention of:  Silver coins - Rupyarupa  Gold coins - Suvarnarupa  Copper coins - Tamararupa  Lead coins - Sisarupa

History  During 1540-1545 Afghan king Sher Shah Suri issued a coin of silver, weighing 178 grains  The silver coin remained in use during the Mughal period, Maratha era as well as in British India.

History  Princely states of pre colonial India minted their own coins resembling silver coins but with regional distinctions

History British Age  Early English coins had 3 broad strands in Bombay, Madras,     Calcutta. Coinage Act-1835: Uniform coinage issued. Coinage Act-1906: Governed the Mint establishments, Standards to be maintained (Rupee 180 grains, Silver 916.66 standard; Half Rupee 90 grains). World War-I: Due to acute shortage of silver, paper currency was introduced. RBI-1935: Established to respond to economic troubles after world war II.

History The values of the subdivisions of the rupee during British rule (and in the first decade of independence) were:         1 rupee = 16 anna (later 100 naye paise) 1 artharupee = 8 anna, or 1/2 rupee (later 50 naye paise) 1 pavala = 4 anna, or 1/4 rupee (later 25 naye paise) 1 beda = 2 anna, or 1/8 rupee (later equivalent to 12.5 naye paise) 1 anna = 1/16 rupee (later equivalent to 6.25 naye paise) 1 paraka = 1/2 anna (later equivalent to 3.125 naye paise) 1 kani (pice) = 1/4 anna (later equivalent to 1.5625 naye paise) 1 damidi (pie) = 1/12 anna (later equivalent to 0.520833 naye paise)

History  In 1957, the rupee was decimalised and divided into 100 naye paise.  In 1964, the initial "naye" was dropped.  Many still refer to 25, 50 and 75 paise as 4, 8 and 12 annas respectively.

History Banknotes since Independence  Ashoka Pillar Banknotes  Mahatma Gandhi (MG) Series

History

Minting Coins are minted at the five India Government Mints at Mumbai, Alipore (Kolkata), Saifabad (Hyderabad), Cherlapally (Hyderabad) and Noida (UP).

Minting Denominations  Presently being issued - 50 paise, one rupee, two rupees, five rupees and ten rupees.  Small coins- Coins upto 50 paise.  Rupee coins- Coins of 1 Rupee and above.  The coins issued under the authority of Section 6 of The Coinage Act, 2011.

Minting Distribution  Coin Dispensing Machines.  Dedicated Single window counters - issuing coins of different denominations.  Mobile counters - soiled notes can be exchanged for coins.

Minting Measures to improve the supply of coins  Mints in the country have been modernised and upgraded.  Imported coins to augment the indigenous production.  Notes in denomination of Rs.5 have been reintroduced to supplement the supply of coins.

Appeal to the Public “Members of public are requested to avoid holding on to coins and instead, use them freely for transactions to ensure that there is a smooth circulation of coins”

Printing  Denominations Printed ` 10, ` 20, `50, ` 100 ` 500, and `1000  Old denominations still in use- ` 1, ` 2 and ` 5  Issued by RBI and Guaranteed by Central Government subject to provisions of sub-section (2) Section 26 of RBI Act, 1934.

Printing Cost of Printing of currency notes Denomination Cost of Production (in `) 5 0.47 10 0.96 20 1.46 50 1.81 100 1.79 500 3.58 1000 4.06

Minting & Printing Currency Management  Role of the Reserve Bank of India?  Role of Government of India?  Who decides on the figure to be printed on a new note?  What happens to the old design notes when a new design is introduced?  Are old notes issued by the Reserve Bank of India worthless?  What was the highest denomination note ever printed?

Minting & Printing Currency Management  What is the role of RBI in issue of coins?  Who is responsible for changing the design of coins from     time to time? What is currency paper made of? Who decides on the volume and value of banknotes to be printed and on what basis? Who decides on the quantity of coins to be minted? How does the Reserve Bank estimate the demand for banknotes?

Minting & Printing Currency Management  Where are notes and coins produced?  How does the Reserve Bank reach the currency to     people? What is a currency chest? What is a small coin depot? What happens when the banknotes and coins return from circulation? From where can the general public obtain banknotes and coins?

Soiled and Mutilated Banknotes  Soiled note: Dirty, two piece pasted together

Soiled and Mutilated Banknotes  Mutilated banknote: Portion is missing

Soiled and Mutilated Banknotes  Imperfect banknote: Wholly or partially shrunk, washed, altered or indecipherable

Soiled and Mutilated Banknotes  Can soiled and mutilated banknotes be exchanged for     value? Where are soiled/mutilated banknotes accepted for exchange? How much value would one get in exchange of soiled banknotes? How much value would one get in exchange of mutilated banknotes? How much value would one get in exchange of imperfect banknotes?

Soiled and Mutilated Banknotes  What types of banknotes are not eligible for payment under the Note Refund Rules?  Is the serial number used when assessing the value of a damaged banknotes?  What if a banknote is found to be non-payable?

Security Features  To facilitate the detection of genuine notes vis-à-vis forgeries.

Security Features Watermark  The Mahatma Gandhi Series of banknotes contain the Mahatma Gandhi watermark with a light and shade effect and multi-directional lines in the watermark window.

Security Features Security Thread  When held against the light, the security thread on Rs.1000, Rs.500 and Rs.100 can be seen as one continuous line.  The Rs.5, Rs.10, Rs.20 and Rs.50 notes contain a readable, fully embedded windowed security thread with the inscription ‘Bharat’ (in Hindi), and ‘RBI’.

Security Features Latent Image  A vertical band contains a latent image showing the respective denominational value in numeral.  The latent image is visible only when the note is held horizontally at eye level.

Security Features Microlettering  Appears between the vertical band and Mahatma Gandhi portrait.

Security Features Intaglio Printing  The portrait of Mahatma Gandhi, the Reserve Bank seal, guarantee and promise clause, Ashoka Pillar Emblem on the left, RBI, Governor's signature are printed in intaglio i.e. in raised prints, which can be felt by touch, in Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000 notes.

Security Features Identification Mark  This feature is in different shapes for various denominations (Rs. 20-Vertical Rectangle, Rs.50-Square, Rs.100-Triangle, Rs.500-Circle, Rs.1000-Diamond)  Helps the visually impaired to identify the denomination.

Security Features Fluorescence  Number panels of the notes are printed in fluorescent ink. The notes also have optical fibres. Both can be seen when the notes are exposed to ultra-violet lamp.

Security Features Optically Variable Ink  Incorporated in the Rs.1000 and Rs.500 notes.  The colour of the numeral 1000/500 appears green when the note is held flat but would change to blue when the note is held at an angle.

Security Features See through Register  The design will appear as floral design when seen against the light.  Printed both on the front (hollow) and back (filled up) of the note

Security Features  Does possession of a forged note attract the punishment of fine or imprisonment?  What are the actions taken by the Reserve Bank of India to train general public to distinguish genuine banknotes from forged notes?

Valuation of Rupee In Forex Market Today’s rate: 1$ = 61.88 INR Exchange rate is the rate at which the one currency is exchanged for another How is the price of the Currency Determined ? The change in the demand and supply of the currencies has a direct influence on the exchange rate.

Valuation of Rupee In Forex Market Factors Influencing demand and supply of currency  Expected Inflation Difference Between the two countries  Interest Rate Factor  RBI Intervention  Market sentiments  Speculation  Imports and Exports  Public Debt/Fiscal policy

Valuation of Rupee In Forex Market S Foreign Exchange Rate (Rupee price of Dollars) D S1 1$=Rs60 1$=Rs55 D S S1 Quantity of Dollars

Trend analysis Rupee- 1947-2013  1947:      1 ` =1 Sterling 1948-1966: 1 US$= ` 4.79 1966: 1 US $= ` 7.50 Aug 1971: Rupee's link with Sterling broken; tied to US Dollar directly Dec 1971 : Dollar devalued, Rupee tied to Sterling again. 1975: 1$ = ` 8.39

Trend analysis Rupee- 1947-2012  1985:        1$ = ` 12 1991: 1$ = ` 17.90 1993: 1$ = ` 31.37 Early 2000-2005: 1$= ` 44-45 2006-2007: 1$ = ` 39 2008-09 : 1$ = ` 49-50 2010-12 : 1$ = ` 50-Rs.56 2012-13 : 1$ = ` 54.4

“THE INDIA OF 2013 IS NOT THE INDIA OF 1947”

Fall of rupee  In 2013 the rupee slumped to a record low near 69 to the dollar  Since June, FIIs have pulled out $8.7 billion from the debt market, but only $3 billion from the equity segment  GDP had touched 4.8% to its lowest in the last decade

Fall of rupee Other factors  Current account deficit  Strengthening of dollar in US economy  Inflation  High Imports  Ineffective economic policies  Insufficient inflow and outflow of funds  Did the Indian government deliberately allow the rupee to fall?

Fall of Rupee Result Q. The fall in the rupee's value against the US dollar is because of 1. Global economic slowdown: 19.9 per cent 2. Incompetence of Indian authorities: 39.3 per cent 3. Both: 40.7 per cent

Fall of Rupee Impacts of fall of rupee  Triggers inflation  Hits investor sentiment  Creates burdens for organization with high exposure to foreign debt.  Importers/Exporters  Imported goods  Fuel price

Fall of Rupee Impacts of fall of rupee  RBI’s monetary policy  Students studying abroad  Tourism  Overseas Indians  Country’s fiscal health

Video

“We Invented money and we use it, yet we cannot understand its laws or control its actions. It has a life of its own.” -Lionel Trilling.

Controls/Measures adapted to control the fall of Rupee  Liberalisation of Bank Deposit Schemes.  Reduction in Import of Gold, Silver and Oil.  Tightened Liquidity of rupee in Banking System.  Increase of Capital Inflows to the Country.  Promotion of Exports.  Increase of Interest Rates of Banks to its Customers.  Ban of Duty free import of flat screen Telephones.  Selling of Infrastructure Bonds.

Conclusion  The Indian Rupee has depreciated significantly against the US Dollar marking a new risk for Indian economy. Grim global economic outlook along with high inflation, widening current account deficit and FII outflows have contributed to this fall. RBI has responded with timely interventions by selling dollars intermittently. But in times of global uncertainty, investors prefer USD as a safe haven. To attract investments, RBI can ease capital controls by increasing the FII limit on investment in government and corporate debt instruments and introduce higher ceilings in ECB’s. Government can create a stable political and economic environment. However, a lot depends on the Global economic outlook and the future of Eurozone which will determine the future of INR.

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