Question

In which of the following years was the rupee cheapest with respect to the dollar?

• A. 2001
• B. 2002
• C. 2007
• D. 2010
• E. 2011

Hint:

When comparing currency strength, always look for the highest Rupees per Dollar value to find the “cheapest rupee” year. The greater the number, the weaker the rupee is.

Answer 1

The Correct Option is B

Step 1: Understanding the context.
The “cheapest rupee” compared to the dollar means the exchange rate (rupees per US dollar) was the highest. We are given a table showing Foreign Exchange Earnings in both US dollars and Indian rupees.
Step 2: Formula for exchange rate.
The effective exchange rate can be calculated as: \[ \text{Exchange Rate} = \frac{\text{Foreign Exchange Earnings (Rs. Cror(E)}}{\text{Foreign Exchange Earnings (US \$ million)}} \] But note: US \$ is in million, Rs. is in crore. We must convert to the same base.
1 crore rupees = \(10^7\) rupees,
1 million dollar = \(10^6\) dollars.
So, \[ \text{Exchange Rate (Rs/\$)} = \frac{\text{Rs. Crore} \times 10^7}{\text{US \$ million} \times 10^6} = \frac{\text{Rs. Crore} \times 10}{\text{US \$ million}} \] Step 3: Calculate for each year given in options.
- For 2001: \[ \frac{15083 \times 10}{3198} \approx 47.2 \] - For 2002: \[ \frac{15064 \times 10}{3103} \approx 48.6 \] - For 2007: \[ \frac{44360 \times 10}{10729} \approx 41.3 \] - For 2010: \[ \frac{64889 \times 10}{14193} \approx 45.7 \] - For 2011: \[ \frac{77591 \times 10}{16564} \approx 46.8 \] Step 4: Compare results.
The highest rate is in 2002 with ~48.6 Rs/\$, meaning the rupee was weakest Cheapest) in that year. Final Answer: \[ \boxed{2002} \]