Wage Goods Centred Inflation

and 1970 the par value of the rupee visa- vis the dollar was revised only twice, from Rs 4.762 per dollar to Rs 6.359 per dollar in 1986 and then to Rs 7.50 in 1967 which rate remained in force till the Smithsonian agreement which was signed in 1971. Subsequently the rupee experienced considerable instability and the rates ranged between Rs 7.501 and Rs 12.611 perdollar during 1971 through 1986. The rupee had been on a downward course throughout the period. Though this may not be warranted by trade considerations, since the rupee is pegged to the dollar, the monetary authorities are forced to revise the parity rate almost every alternate day. Illustratively, in 1985-86 (July-June) the rupees parity rate was revised 149 times and in 1986-87 141 times. It is relevant to ask whether India would have altered the rates had the US averted the collapse of Bretton Woods system.