How much worth is a rupee?

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by Björn Schöpe

June 21, 2012 – It seems that in India older one rupee coins are sought-after. Rumors went around that the older coins were used to be made of gold. Immediately people offered coins demanding up to 2,500 rupees for a one rupee coin. In this moment of boom probably more people offer coins hoping for profit than people are looking for them.

Actually it seems that the intrinsic value exceeds the face value which corresponds currently to about 1 US cent. But not because of a gold content but due to the copper in the alloy. However, this makes a coin worth around 2 rupees since the market value of 1 gram of copper is 0.88 US cents and the coins (weighing each ca. 4 grams) seem to be made of an alloy containing 75 % copper. This gives them a refined value of 2.64 US cents approximately.

Anyway, refining is the real problem. Nobody would refine a coin because of a couple of cents (not to speak of the legal aspect). You would need tons of one rupee coins in order to render the business making profit. This action though, would require a logistical network that would consume immediately all imaginable profit. However, India and its change seems to become a never ending story.

Other rumors pointed into another direction, why change seems to have been exported into neighboring countries causing the national administration even to change the alloy: the coins’ content of stainless steel. The coins were allegedly melted down to make razor blades. To read about this story, click here.

Indians seem to be quite imaginative about how to make money with money. When change was missing in Karachi people collected coins selling them to brokers who passed them on to bus drivers making good profit. Read two articles about this way of earning one’s crust by clicking here and here.

Here you may read an extensive article by Tim Worstall on the current problem with the value of one rupee coins.