Title: Determinants of the Indian rupee/US dollar exchange rate and policy implications

Authors: Yu Hsing

Addresses: Department of Management and Business Administration – SLU 10813, College of Business, Southeastern Louisiana University, Hammond, LA 70402, USA

Abstract: Based on a simultaneous-equation model of demand and supply, this paper finds that the Indian rupee/US dollar (INR/USD) exchange rate is positively associated with the US real government bond yield, Indian real GDP, the US real stock price and the expected INR/USD exchange rate and is negatively affected by the Indian real interest rate, US real GDP and the Indian real stock price. The finding that a higher Indian real interest rate would cause the Indian rupee to appreciate against the US dollar is consistent with the traditional view.

Keywords: exchange rates; interest rates; real GDP; stock prices; EGARCH; India; USA; United States; Indian rupee; US dollar; INR-USD exchange rate; government bond yield.

DOI: 10.1504/IJEBR.2015.070977

International Journal of Economics and Business Research, 2015 Vol.10 No.2, pp.105 - 111

Received: 12 Jan 2015
Accepted: 26 Feb 2015
Published online: 04 Aug 2015 *

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