DEMONETIZATION OF INDIAN RUPEE AGAINST US $: A HISTORICAL PERSPECTIVE

The Indian Rupee exchange rate depreciated 5.71 percent against the US dollar during the month of November. During the last 12 months, the Indian rupee exchange rate depreciated 14.27 percent against the US dollar. Historically, from 1973 until 2011 the USD / INR exchange averaged 30.32 reaching an historical high of 52.84 in December of 2011 and a record low of 7.19 in March of 1973.India may face its worst financial crisis in decades if it fails to stem a slide in the rupee, leaving the central bank with a difficult choice over how to make the best use of its limited reserves to maintain the confidence of foreign investors. The fall in the value of Indian rupee has several consequences which could have mixed effects on Indian economy. This paper tries to study the reasons for Demonetize of pre liberalization era and post liberalization that is of the year 2011. It also attempts to study the real implications of the depreciation of the rupee on the Indian economy and shows that in the long run, the Indian economy has more to lose and less to gain with weaker rupee. In this paper effort has been made to highlight on the importance of central bank intervention to control this situation. I. OBJECTIVES OFTHE STUDY 1) To know about the trend of Indian Rupee and it exchange rate against us $ historically. 2) To understand the concept of Demonetize. 3) To understand the causes and the steps taken by government on the major Demonetizes that took place in India. 4) To study the real implications of the depreciation of the rupee on the Indian economy. II