An Empirical Study on the impact of GDP,Inflation,BOP & Exports on the Exchange Rate
*Dr. Amitabh Joshi
** Rashmi Sharma
*** Richa Tiwari
The economy of India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). In the 21st century, India is an emerging economic power with vast human and natural resources, and a huge knowledge base. Economists predict that by 2020.India will be among the leading economies of the world. Export supply is positively related to the domestic relative price of exports and higher domestic demand reduces export supply. The paper is focuses to study the impact of GDP.BOP & Inflation on the Exchange rate of India. The paper studied the factors that have more impact on the exchange rate of Indian economy. The data collected for the analysis is in the span of 10 years time interval. To find out the relation b/w the GDP, BOP & Inflation on the exchange rate of India the statistical measure Correlation & Multiple Correlation is used. To establish the linear relation b/w the exchange rate on the combined effect of BOP, GDP & Inflation Multiple regression has been used. The analysis states that there is significant relation b/w these factors. & there are linear relationship has been found b/w these factors.
Key Words:-GDP, purchasing power parity, BOP, Inflation, Exchange Rate
* Professor, Prestige Institute of Management, Dewas
** Lecturer, Prestige Institute of Management, Dewas
*** Lecturer, Prestige Institute of Management, Dewas
The economy of India is the eleventh largest economy in the world by nominal GDP.and the fourth largest by purchasing power parity (PPP) In the 1990s; following economic reform from the socialist-inspired economy of post-independence India, the country began to experience rapid economic growth, as markets opened for international competition and investment. In the 21st century, India is an emerging economic power with vast human and natural resources, and a huge knowledge base. Economists predict that by 2020 India will be among the leading economies of the world. Balance of Payment
A balance of payments (BOP) sheet is an accounting record of all monetary transactions between a country and the rest of the world These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers. The BOP summarizes international transactions for a specific period, usually a year, and is prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as a negative or deficit item when there is a surplus in BOP It means the nation is exporting more & when there is deficit in BOP .it means the nation is importing more. Gross Domestic Product:-
The India GDP is a combination of all the differential factors, contributing to the welfare of the India economy. India GDP gives us a combined report of the performance of the Indian economy. 'Cost factor' or 'Actual price' method - these are the two methods to calculate Indian Gross Domestic Product. The main factor that contributed to the growth of India GDP post 1990s was the opening-up of the Indian economy. When GDP is good the economy of country is strong & growing hence there will be investment in the country subject to government permission this should increase the demand of the currency & hence the currency should appreciate .while if GDP is less the money will not come to that country & There will be no demand for that currency, so the currency should depreciate. Hence the direct relation between GDP & Exchange rate.
In finance, the exchange...
Please join StudyMode to read the full document