IDEAS home Printed from https://ideas.repec.org/a/sae/smppub/v14y2025i2p175-203.html
   My bibliography  Save this article

Factors in the Determination of India’s Nominal Exchange Rate Behaviour

Author

Listed:
  • Suman Das
  • Saikat Sinha Roy

Abstract

This article investigates into the factors that determine the rupee–US dollar spot exchange rate particularly after the global financial crisis in 2008. In particular, the role of market fundamentals is looked into. To achieve this, an eclectic empirical model is estimated not paying heed to any particular theoretical framework. As empirical strategy, the Autoregressive Distributed Lag (ARDL) and Error Correction (ECM) models are estimated using monthly data ranging from 2008:04 to 2023:03. The model suits the data well. Cointegration and error correction are found to exist. The empirical results suggest the presence of a long-run relationship between the exchange rate and the macroeconomic variables. The results further emphasize that in the event of any short-run disequilibrium, the errors correct to reach the long-run equilibrium exchange value. The empirical results, so obtained, have policy implications in an episode of misalignment in the exchange rate leading to sharp appreciation or depreciation. JEL Classification: F31, F41, C32

Suggested Citation

  • Suman Das & Saikat Sinha Roy, 2025. "Factors in the Determination of India’s Nominal Exchange Rate Behaviour," South Asian Journal of Macroeconomics and Public Finance, , vol. 14(2), pages 175-203, December.
    • Handle: RePEc:sae:smppub:v:14:y:2025:i:2:p:175-203
    DOI: 10.1177/22779787241312498
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/22779787241312498
    Download Restriction: no
    File URL: https://libkey.io/10.1177/22779787241312498?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:smppub:v:14:y:2025:i:2:p:175-203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.