There was an era of immediate post-independence when 1 Rs was equivalent to $1. Rupees has been devalued to a great extent as dollar slumped to it’s all time high record of 57.37 Rs for $1. What causes fluctuations in currency rates or exchange rate that a $10 in can buy you a cup of coffee in one country, while luxury 5 star dinner in another. Supply and demand define one currency’s value in comparison to another. Basically fluctuation is caused by demand and supply of the currency. The demand and supply generally affected by country’s trade and its macroeconomic policies. A currency will tend to become more valuable when its demand is higher than supply. A currency will tend to become less valuable when its demand is less than supply. It is the basic theory. We need to understand in the global economy terms, when the currency will have more demand and when it will have less demand. Remember that exchange rates are expressed as a comparison of two currencies. It is always rel...