Indian Rupee and US $

The gross domestic product of India is estimated at about US$3trillion in Purchasing Power Parity terms. In conventional terms i.e. by the current rate of exchange terms, it is around US$ 1.2 billion. This indicates that Indian Rupee is undervalued to the extent of (3/1.2) times or 2.5 times. The current rate of exchange between US dollar and Rupee is Rs.50. The correct rate of exchange should be US$ 1= Rs.20 (Rupees twenty). Till recently the rate of exchange used to be around Rs.40 per US dollar. At that time the correct rate of exchange should have been Rs.16 per dollar.

A correction may be in order.

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