What Could Possibly Happen If USD Comes At Par With INR TE-292

Have you pondered what would come of it if USD equaled the Indian Rupee? Denying is out of the question for USD, being one of the strongest currencies on Earth.

Having a copious and diverse history, the United States Dollar was developed in 1792 via the Coinage Act. In addition to being a firmly established currency, the US Dollar is used in nearly all foreign-exchange transactions worldwide.

The value of exchange rates is ever-changing; however, it necessarily doesn’t equate to a strong economic performance. Trade balances, investment returns, and other significant economic factors play an important role in evaluating the growth of a country.

Due to regular fluctuations, the idea that the Indian Rupee can be equivalent to the US Dollar arises. Astonishingly, at the birth of India’s freedom in 1947, INR and USD were near-equal in worth.

Though, this was quite dissimilar to today’s context. In the course of time, due to unfavorable inflation rates, Rupee’s buying power has experienced an unwanted decrease.

It is interesting to consider the potential advantages and drawbacks that would arise should the Indian Rupee somehow manage to equal the US Dollar, as it did in certain Middle Eastern countries up until 1960.

Table of Contents

if the US imports it from India.
with the progress of technology and innovation. As technology and innovation advance, global travel will become more affordable.
if they feel their country offers them a competitive environment. The finest talents will stay in their homeland if they find it a competitive environment to thrive in.
after the new tariff laws are enacted. Once the new tariff laws are put into action, the cost of imports will decrease drastically.
if the demand decreases. If the demand for crude oil goes down, its price will decline.
Drawbacks of the Indian Rupee being on par with the US Dollar include a decrease in foreign investments, a drastic reduction in exports, leading corporations to move away from India, and an alarming rise in unemployment.
The decline in foreign investments
Major reduction in exports
if the government does not change tax regulations. If the government doesn’t revise its tax regulations, major businesses will leave India.
Unemployment levels will skyrocket
Takeaway

Pros of INR becoming equal to USD

The advantages of having the Indian Rupee (INR) equal to US Dollars (USD) are as follows.

1. International travel will become cheaper

For many Indians, traveling abroad to beautiful holiday spots is a dream; however, not having enough money to be able to do this can be an obstacle. All the hard work involved in saving up and creating a budget can make foreign trips seem less enjoyable.

Once the Indian Rupee equals the US Dollar, international travel will become more affordable, with flight ticket prices dropping significantly. You’ll be able to experience all the luxurious amenities of an international destination without breaking the bank.

You no longer need to spend a lot to enjoy the luxuries of international travel, such as staying in a 5-star hotel, savoring foreign cuisine, and booking an extravagant resort.

2. The best talents will not migrate abroad

Numerous well-trained and capable persons often migrate to overseas lands in pursuit of more rewarding career opportunities and superior medical care. Foreign locales guarantee an improved living standard and afford people the opportunity to broaden their horizons.

When Indian natives invest their abilities abroad, they are rewarded with attractive compensation packages. Besides a considerable wage, jobs abroad involve various advantages such as safety nets, compensated vacations, tuition comps, etc.

Regrettably, the scarcity of capable personnel significantly hinders the nation’s progress. However, a swift alteration will take place when the Indian rupee is equivalent to the US dollar.

When natives will get the same remuneration in India, they will be spurred to give service to their homeland as opposed to traveling abroad. This way our country won’t be deprived of its shrewdest individuals only due to inadequate salary plans.

3. Import costs will come down significantly

Due to the Indian Rupee’s equivalence with the USD, imports such as mineral oils, precious metals, and electrical equipment can be acquired at a significantly lower price. Logistics costs also decrease from this exchange rate, making imports much more affordable overall.

India’s growth would significantly benefit from lower import costs because this would allow it to acquire goods from abroad without stretching its financial resources.

4. Crude oil prices will fall

India receives a great deal of crude oil from places like Iraq and Saudi Arabia yearly. In addition to being used for vehicle fuel, it has many other applications in the production of kitchenware, plastic, etc. As India’s import costs drop, so too will crude oil prices.

Hence, daily travel expenses will be drastically decreased.

Cons of INR becoming equal to USD

Now that you are aware of the advantages, let’s briefly explore the potential drawbacks of this situation occurring.

1. Decline in foreign investments

It is a recognized fact that affluent countries invest in developing nations as a result of reduced funding costs and the capability to obtain substantial financial rewards.

Numerous individuals might speculate that the Indian Rupee being equal in value to the American Dollar would give a remarkable rise in capital investments from prominent countries.

However, this presumption is totally incorrect. The instant Indian Rupee equals the US Dollar, and India will encounter an immediate decline in all types of alien investments.

India will no longer be seen as an attractive destination for investments, leading to the downfall of industries that are dependent on foreign capital.

2. Major reduction in exports

India’s export market for commodities such as iron, spices, tobacco, jewelry, and rice will suffer a large drop due to the equalization of the US Dollar and Indian Rupee. As this makes the commodities more expensive to other countries, imports will no longer be attractive due to higher prices.

3. Leading firms will move out of India

International businesses perform their activities in India to benefit from tax allowances and comparatively lower wages. They transfer their work to India to gain agility and reduce expenses.

Major corporations would opt to pull out of India if the value of INR and USD became equalized. They wouldn’t wish to take on the burden of giving employees high salaries.

Companies prefer to hire an equally qualified workforce outside of India because the wages are lower.

4. Unemployment levels will skyrocket

The coronavirus pandemic has caused a severe economic crisis and resulted in record levels of unemployment. Should the Indian Rupee ever reach parity with the US Dollar, the impacts on India’s labor market will be devastating.

Even if firms hire workers from India, they are likely to pay them much lower wages. This would also affect banks, as customers would struggle to make payments on their loans.

If allowed to persist, this could lead to an economic slowdown and potentially serious long-term consequences for the nation.

The Indian Rupee has a long history of being bound to the US Dollar; however, it is highly unlikely that these currencies will reach parity. India, unlike the US, is still underdeveloped and needs constant foreign capital injections to keep its economy running.

If the Indian Rupee actually rises to an equivalent of the US Dollar, it will be negative for our country. When conquering Covid difficulties in 2020, the INR decreased to a record-breaking ₹76.92 per Dollar.

Thankfully, its worth rebounded quickly. As of February 2022, 1 US Dollar is valued at 74.70 Indian Rupee. Tap here to review the real-time USD to INR prices.