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The Recent Exchange Rate Fluctuations

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  • Kumarjit Mandal

Abstract

The recent exchange rate fluctuations in India have been a matter of concern for the policymakers and general public. The current exchange rate regime in India, known as managed float, has evolved through a long process of searching for an appropriate policy regime for India. Since exchange rates are relative prices of two currencies it is generally affected by the relative productivity differential and real wage rates in the long-run. However, the bubbles arising out of speculation plays a major role in determining the exchange rates in the short-run. The present scenario about the exchange rate fluctuations in India has been caused to a large extent by the deteriorating current account balance and the adverse expectations associated with it. However, the question of intervention by the government in the exchange rate market should be decided on the basis of the impact of such exchange rate fluctuations on the real effective exchange rate and the possible effects on the employment situation in the country.

Suggested Citation

  • Kumarjit Mandal, 2013. "The Recent Exchange Rate Fluctuations," Foreign Trade Review, , vol. 48(1), pages 137-142, February.
    • Handle: RePEc:sae:fortra:v:48:y:2013:i:1:p:137-142
    DOI: 10.1177/001573251204800107
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    References listed on IDEAS

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    4. William H. Branson, 1981. "Macroeconomic Determinants of Real Exchange Rates," NBER Working Papers 0801, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Exchange Rate; Current Account Adjustments; Asset pricing; Monetary arrangements.; F31; F32;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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