Exchange Rate Volatility & its Impact on Macro Economic Factors with Respect to Indian Economy
International Journal of Social Science & Management, Vol. 4, Issue 6, 2015
21 Pages Posted: 23 Apr 2016
Date Written: November 20, 2015
The main purpose of the study is to investigate the impact of macreconomic variables of India which includes Inflation, Interest rate, GDP and Foreign Direct Investment (Inflows) and its impact on exchange rate against USD by using annual data over the period of 1996 to 2014. These variables have been taken as Independent variable and exchange rate volatility is taken as dependent variable. This study has been conducted to investigate whether uncertainty or fluctuations in exchange rate affect the macroeconomic variables in India. Linear Regression technique has been used to investigate the relationship between dependent and independent variables. From the result of regression analysis, the inflation and GDP rate have negative and insignificant association with exchange rate whereas Interest rate has negative and significant association Whereas Foreign Direct Investment shows positive and insignificant relationship with exchange rate.
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