AN ANALYSIS OF MACRO- ECONOMIC DETERMINANTS OF EXCHANGE RATE VOLATILITY IN INDIA
Authors/Creators
- 1. Head & Associate Professor, Department of Business Administration, PSGR Krishnammal College for Women, Coimbatore, Tamilnadu
- 2. Ph.D Research Scholar, Department of Business Administration, PSGR Krishnammal College for Women, Coimbatore, Tamilnadu
Description
The price of one currency in terms of another currency i.e., exchange rate is a very important variable for an open economy in the global market, because it affects the overall economic performance and growth of the economy. So, the relationship between the related macro-economic factor and exchange rate causing fluctuation in the value of the former carries a high degree of impact for any open economy. This paper empirically investigates the impact between macro-economic factors that affect the price of Indian currency (Rupee) and their inter-relationship with the latter. The OLS regression result indicates that Inflation, Trade balance, Current account, Money supply and Interest rate jointly affect 92.4% of dependent variable i.e., Exchange rate.
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References
- 1. Kanika Khera and Inderpal Singh (2015), Effect of Macro Economic Factors on Rupee Value, Delhi business reviews vol.16 Iss 1. 2. Anita Mirchandani (2013), Analysis of Macroeconomic Determinants of Exchange Rate Volatility in India, International Journal of Economics and Financial Issues, Vol.3 Iss.1 3. Krishna Murali and Rajesh Sharma (2014), OLS Modeling for Indian Rupee Fluctuations against US Dollar, Global Advanced Research Journal of Management and Business Studies, Vol 2 Iss 11. 4. Murari, K., & Sharma, R. (2013). OLS Modeling for Indian Rupee Fluctuations against US Dollar. Global Advanced Research Journal of Management and Business Studies (ISSN: 2315-5086) Vol, 2(12), 559-566. 5. Rossi, B. (2013). Exchange rate predictability. Journal of Economic Literature, 51(4), 1063-1119. 6. Mussa, M. (1976). The exchange rate, the balance of payments and monetary and fiscal policy under a regime of controlled floating. The Scandinavian Journal of Economics, 229-248.