Factors Influencing Exchange Rates in India

Factors Influencing Exchange Rates in India

1. Inflation and Interest Rates – Higher inflation and lower interest rates typically weaken the Indian rupee exchange rate.
2. Trade Balance – A higher import bill than exports leads to rupee depreciation.
3. Foreign Investment (FDI & FPI) – Higher foreign direct investment (FDI) inflows strengthen the rupee forex rate, while outflows weaken it.
4. RBI Forex Interventions – The central bank forex policies include buying or selling foreign currency in India to stabilize exchange rates.

Global Economic Conditions – Economic instability, geopolitical risks, and global forex market trends impact India’s forex reserves and exchange rates.

Read More:

1. Introduction to Forex

2. Regulatory Framework

3. Exchange Rate System in India

4. Factors Influencing Exchange Rates in India

5. Foreign Exchange Transactions in India

6. Transactions through Authorised Dealer (AD) Category II

7. Documents Required for Forex Transactions

8. Role of FEMA in Forex Management

9. Liberalized Remittance Scheme (LRS) in India

10. TCS on Foreign Remittances

11. Challenges in Forex Transactions in India

12. Resolutions for a Smooth Forex Experience