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The real exchange rate in India: determinants and targeting

Author

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  • Patel, U.
  • Srivastava, P.

Abstract

This paper studies the behaviour of the real exchange rate (RER) in India. The first part investigates the role of important macroeconomic (behaviour and policy) variables in explaining the movement of the RER. It is found that the investment-gdp ratio, the overall fiscal deficit of the public sector and the nominal exchange rates are important explanatory variables. The second part of the paper seeks to determine whether real exchange rate targeting has been used in India as a tool in enhancing the competitiveness of the tradable sector. It is found that this is indeed the case, and moreover, the correlation between inflation and nominal devaluations is found to be small.

Suggested Citation

  • Patel, U. & Srivastava, P., 1997. "The real exchange rate in India: determinants and targeting," LSE Research Online Documents on Economics 20360, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20360
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    File URL: http://eprints.lse.ac.uk/20360/
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    Cited by:

    1. Al-mulali, Usama & Che Sab, Normee, 2009. "The Impact of Oil Prices on the Real Exchange Rate of the Dirham: a Case Study of the United Arab Emirates," MPRA Paper 23493, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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