Initially the exchange rate between rupee and dollar was ₹170 = 2 US dollars. The new exchange rate is ₹ 82=1 $. This means that:

Indian rupee is appreciating

The correct answer is Option (1) → Indian rupee is appreciating

To determine the change in exchange rates between the initial and new scenarios:

Initial exchange rate: ₹170 = 2 $

i.e. 1 $ = 85

New exchange rate: ₹82 = 1 $

This means that the rupee has now appreciated.