alexa The Indian Foreign Exchange Market and the Equilibrium Real Exchange Rate of the Rupee
Business & Management

Business & Management

Journal of Stock & Forex Trading

Author(s): Peter Pauly

Abstract Share this page

This article seeks to analyze changes in the forex market in India and to explain the behaviour of the rupee in the nineties when India moved from a fixed to a f loating exchange rate. The analysis attempts to identify the underlying economic forces that are submerged under an interventionist market structure. The exchange rate is determined in the more slowly adjusting output markets in the long run and in volatile asset markets in the short run. The long run equilibrium exchange rate is seen to be determined by a version of the purchasing power parity condition. In the short run, the real exchange rate deviates from that determined by real interest parity due to risk. As long as pressures are not extreme, the Reserve Bank of India (RBI) is able to intervene effectively to influence the exchange rate. Its policy of 'keeping the rupee in line with fundamentals' has usually amounted to preventing a nominal appreciation of the rupee so that it does not effectively turn into a real appreciation. Other than attempting to keep exports competitive, the Reserve Bank has intervened to reduce volatility in forex markets. More recently, indirect intervention using interest rates has also played an increasingly important role in the RBI's foreign exchange policy.

  • To read the full article Visit
  • Subscription
This article was published in Global Business review and referenced in Journal of Stock & Forex Trading

Relevant Expert PPTs

Relevant Topics

Peer Reviewed Journals
 
Make the best use of Scientific Research and information from our 700 + peer reviewed, Open Access Journals
International Conferences 2017-18
 
Meet Inspiring Speakers and Experts at our 3000+ Global Annual Meetings

Contact Us

Agri, Food, Aqua and Veterinary Science Journals

Dr. Krish

[email protected]

1-702-714-7001 Extn: 9040

Clinical and Biochemistry Journals

Datta A

[email protected]

1-702-714-7001Extn: 9037

Business & Management Journals

Ronald

[email protected]

1-702-714-7001Extn: 9042

Chemical Engineering and Chemistry Journals

Gabriel Shaw

[email protected]

1-702-714-7001 Extn: 9040

Earth & Environmental Sciences

Katie Wilson

[email protected]

1-702-714-7001Extn: 9042

Engineering Journals

James Franklin

[email protected]

1-702-714-7001Extn: 9042

General Science and Health care Journals

Andrea Jason

[email protected]

1-702-714-7001Extn: 9043

Genetics and Molecular Biology Journals

Anna Melissa

[email protected]

1-702-714-7001 Extn: 9006

Immunology & Microbiology Journals

David Gorantl

[email protected]

1-702-714-7001Extn: 9014

Informatics Journals

Stephanie Skinner

[email protected]

1-702-714-7001Extn: 9039

Material Sciences Journals

Rachle Green

[email protected]

1-702-714-7001Extn: 9039

Mathematics and Physics Journals

Jim Willison

[email protected]

1-702-714-7001 Extn: 9042

Medical Journals

Nimmi Anna

[email protected]

1-702-714-7001 Extn: 9038

Neuroscience & Psychology Journals

Nathan T

[email protected]

1-702-714-7001Extn: 9041

Pharmaceutical Sciences Journals

John Behannon

[email protected]

1-702-714-7001Extn: 9007

Social & Political Science Journals

Steve Harry

[email protected]

1-702-714-7001 Extn: 9042

 
© 2008-2017 OMICS International - Open Access Publisher. Best viewed in Mozilla Firefox | Google Chrome | Above IE 7.0 version
adwords