What is Rupee Appreciation or Rupee Depreciation ?

Every country has its own currency (except in Europe where a group of countries have a common currency- Euro). Conversion rate is the rate at which we convert one currency into another currency of two Countries. The conversion of Indian Rupee into US $ or any other currency is done by Authorised Dealers or Banks dealing in Foreign Exchange Business. The conversion takes place on the respective date of dealing.  Buying of currency or Exchange of currency takes place in the Foreign exchange market.  The conversion rate changes on daily basis depending on the demand and supply of each currency.  

Almost daily we read in the news paper that the Rupee has depreciated or appreciated on a particular day and creates a confusion when we see that value of Rupee has moved from Rs. 62.00 to 62.95 or vice versa which gives a reverse impression . Hence it is essential to understand what is appreciation and depreciation refers to when we read such news on daily basis.  

What is meant by Rupee Depreciation and Rupee Appreciation?

Assuming that we wish to purchase US$100,and the selling rate being Rs. 65/- per US$ we will need to pay Rs. 6500/-for that day.  After few days we find that the selling rate becomes Rs.66.10 and we are required to pay Rs. 6610/- for same value of US $.  This means you have pay more to receive the same amount of US $ and hence the local currency has depreciated. This will be known as Depreciation of Indian Rupee. 

On the other hand, if the rate quoted by bank on second occasion becomes Rs. 63.80 per US$ ie total value for 100 US$ will be Rs. 6380/- as against Rs 6500/-.   It will be considered as appreciation of INR as this time one has to pay less amount to buy the same amount of US$.

Appreciation: Appreciating Rupee means that now the Dollar is now cheaper than what it used to be earlier in other words you can buy more from the international market spending the same amount of Rupees.

Depreciation:  When there is a fall in the value of a currency in a floating exchange rate. This is not due to a government’s decision, but due to supply and demand side factors. (Although if the government sold a lot of their currency they could help cause a depreciation.)
Depreciation of the currency happens when the country follows a flexible exchange rate. Flexible interest rate means that the value of the currency is determined by the demand and supply and the central bank doesn’t intervene in it.

Monthly Average Price for American Dollar Vs Indian Rs.

The table below displays Monthly Average exchange rates between the Indian Rupee (INR) and the American Dollar (USD) or Indian Rupees vs American Dollar or INRUSD or American Dollar vs Indian Rs or INR vs USD.To chose information for particular month, Select Month name from given list.
Month Monthly Avg
Jan-2016 66.9068
Dec-2015 66.5172
Nov-2015 66.1301
Oct-2015 65.0201
Sep-2015 66.2141
Aug-2015 65.1255
Jul-2015 63.6377
Jun-2015 63.8119
May-2015 63.7127
Apr-2015 62.6649
Mar-2015 62.4575
Feb-2015 62.0242
Jan-2015 62.1712
Dec-2014 62.8237
Nov-2014 61.6868
Oct-2014 61.3482
Sep-2014 60.885
Aug-2014 60.8191
Jul-2014 60.0633
Jun-2014 59.7535
May-2014 59.2897
Apr-2014 60.3409
Mar-2014 60.9919
Feb-2014 62.1601
Jan-2014 62.0574
Dec-2013 61.8518
Nov-2013 62.6098
Oct-2013 61.5852
Sep-2013 63.8937
Aug-2013 62.7836
Jul-2013 59.7968
Impact of Depreciation and Appreciation of Rupee on Indian living in India.  Assuming that initially the exchange rate of US$-INR is Rs.62.02 (Feb.15 Refer Table above) : 
 

Effect on

  

If Rupee DEPRECIATES

 (For example, when US$-INR moved from Rs.62.02 in Feb 15 to Rs/66.90 as of Jan 16)

 If Rupee APPRECIATES

 (For example, when US$-INR moves from Rs 62.02 to Rs 59.29)

Importers Imports became costly since Feb 15 as for each USD we have to pay Rs. 4.88 more.

IMPORTS BECOME COSTLIER

Imports become cheaper as for each USD we have to pay Rs 2.73 less.

IMPORTS BECOME CHEAPER

Exporters Exporters will have higher revenue.  For exports of each Dollar, the exporter will get Rs 4.88 higher 

EXPORTERS EARN MORE

Exporters will earn lower revenue.  For exports of each dollar, now the exporter will get Rs 2.73 less.

EXPORTERS EARN LESS

Indian Who Wish to Go on Holidays Abroad For each dollar taken abroad for spending, the traveller has to pay Rs 4.88 more and thus his trip will become costlier 

TRIP IS COSTLIER

For each dollar he intends to take abroad for spending, the traveller has to pay Rs 2.73 less and thus his trip will become cheaper.

TRIP IS CHEAPER