Effect of macro economic factors on rupee value

The price of one currency in terms of another currency (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 exchange rate and the related macro-economic factors causing variability in the value of the former carries a high degree ofsignificance for any open economy. The present paper aims to identify those macro-economic factors that affect the price of Indian currency (Rupee) and their inter-relationship with the latter. Also, the study includes the fluctuations of Indian currency against the Dollar (INR/USD) post globalization and suggests measures to control the devaluation of the Indian rupee.

To analyze the effect of select macro-economic factors influencing the Indian Rupee value against US Dollar post-globalization.

The nature of research is Exploratory & Analytical that generates a posteriori hypothesis by analyzing a data-set and looking for potential relations between variables.

Exchange rate is highly dependent on the five select independent variables taken up for this study.

A strong relation between the dependent & independent variables suggests that steps taken to compress imports and promote FDI in explored & unexplored sectors can helpimprove the current rupee value.