Why Rs 9 became Rs 96

Summary: The rupee has weakened from around Rs 9 to nearly Rs 96 against the dollar over four decades, but that isn't necessarily a sign of economic failure. This story explains why the decline happens, who benefits and loses from it, and what long-term investors should do instead of worrying about short-term currency moves.

Summary: The rupee has weakened from around Rs 9 to nearly Rs 96 against the dollar over four decades, but that isn't necessarily a sign of economic failure. This story explains why the decline happens, who benefits and loses from it, and what long-term investors should do instead of worrying about short-term currency moves. In the early 1980s, one US dollar bought around Rs 9. Today it costs roughly Rs 96. Over one working lifetime, the rupee has lost more than 90 per cent of its value against the dollar, yet most Indian investors have never spent a single evening asking why. This is surprising because the rupee is not just another number flashing on your screen. It influences what you pay for petrol, what a foreign education costs, which sectors outperform in the stock market and ultimately how wealthy you are in global terms. Understanding it is not about predicting tomorrow’s rate. It is about understanding one of the biggest forces quietly shaping Indian investing. Why the rupee keeps weakening Over long periods, the rupee has weakened against the dollar by roughly 3-4 per cent per year. That is not a sign that something is constantly going wrong. It is largely the result of the way the Indian economy is structured. Inflation does most of the work. India has generally lived with inflation of around 4 to 6 per cent, while the US has usually been closer to 2 to 3 per cent. When prices in one country rise faster than in another year after year, its currency has to gradually lose value against the other, because otherwise its exports would become steadily more expensive for the rest of the world and would eventually stop selling. Economists call this ‘purchasing power parity’, though the idea needs no jargon at all. T

This article was originally published on August 01, 2026.