How to Exchange Euro to Indian Rupee
Euro to Rupee Exchange Rate History
The euro (EUR, €) is the world’s second most traded currency. Eleven states initially signed onto the common monetary agreement in 1999, and the eurozone has since expanded to include 19 countries, with Lithuania the most recent entrant in January 2015. The Indian government currently employs currency controls, including strict limitations on outgoing money transfers that are denominated in rupees (INR, “Rs”).
These restrictions mean that the rupee is less frequently used than the euro in international payments, but it is nonetheless used by almost one-fifth of the world’s population. Both the rupee and the euro are on floating exchange rate arrangements, and the euro-to-rupee exchange rate (EUR to INR) has fluctuated considerably in recent years.
Early Years: 1999-2002
The euro was only used in electronic transactions between its creation in 1999 and January 2002, when hard currency first entered into circulation. During that two-period, uncertainty over the euro’s success kept its value relatively low against the US dollar (USD) and the British pound sterling (GBP). However, by the late 1990s, the value of the Indian rupee had already declined sharply since independence in 1947, pushed down by high inflation, weak economic competitiveness and rising public debt.
When the euro was first introduced in 1999, it emerged at a value of Rs50. In the two-year interim period, its value traded between Rs50 and Rs40, although it dipped to a bottom of roughly Rs39.5 at two points in May and October 2000. However, the euro steadily gained value against the rupee from July 2001 onward. By December 2002, 12 months after the euro officially entered circulation, the EUR to INR exchange rate had regained the Rs50 level. It has not dipped below this level since.
Ups and Downs: 2003-2013
In the five years between January 2003 and January 2008, the EUR to INR exchange rate varied between outer limits of Rs50 and Rs60. The euro reached peaks of roughly Rs59 in December 2004 and August 2006, as European economic growth boomed and India struggled to increase its competitiveness, and bring inflation and public debt under control. Over the course of 2008 and 2009, as the subprime mortgage crisis spread into a general financial crisis in the US, the euro’s value remained relatively strong, according to data from the European Central Bank (ECB). The euro’s value shot up against the rupee in that period, hitting an initial peak of Rs67.6 in July 2008 and a then-historic high of Rs70.3 in September 2009 - the first time the Rs70 mark was surpassed.
However, as the global economic crisis spread to Europe, putting pressure on heavily-indebted states and the eurozone financial system, the euro lost value against the majority of global currencies. The euro lost 18% of its value against the rupee between November 2009 and June 2010 - the sharpest change seen in either direction - to settle at Rs56.82 by end-June.
Reversal of Fortune: 2013-2015
Economic growth has been slow to recover in the eurozone, but with the worst of the global financial crisis in the past, the euro steadily gained value against the rupee. The EUR:INR exchange rate regained its previous peak of Rs70 by December 2011, and largely traded between Rs67 and Rs72 from early 2012 until May 2013.
The United States Federal Reserve Board (“Fed”) announced in May 2013 that it would begin to reduce its programme of massive sovereign bond purchases, known as “quantitative easing”. The programme had helped to sustain the economies of several emerging market countries and made BRIC countries (Brazil, Russia, India and China) attractive hubs for foreign investment during that time. However, the news that the Fed would consider withdrawing some of its support for emerging economies caused their currencies to plummet over the course of 2013, as investors rapidly pulled out their money.
As economic growth began to return slowly to Europe and capital leaked out of India - worsening rupee inflation - the EUR to INR exchange rate shot to a historic high of Rs90 by August 2013. The Fed chose to maintain its quantitative easing programme, and as fears eased, the exchange rate settled somewhat to roughly Rs85 between September 2013 and March 2014.
The tides turned once again in late 2014. India’s newly elected government promised substantial economic reforms in the second half of the year, improving investor confidence in the economy and strengthening the rupee slightly. Meanwhile, the newly elected Greek government struggled to reach an agreement with European authorities over its debt repayment schedule in early 2015, reviving fears of a possible Greek exit from the eurozone. This instability, combined with the euro’s tip into deflation, drove down the euro’s value from Rs81.79 in August 2014 to Rs69.54 by March 2015 - a decrease of nearly 15% in just six months, and with continued expectations for a weak euro in 2015.
