Determinants of Foreign Exchange Rate : An Empirical Study

The value of a currency depends on various that affect the economy such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, macroeconomic policies, commodity prices and geopolitical conditions. The study reviews the relevant factors and applied multiple regression analysis to determine the most significant variables those theoretically affect foreign exchange rates. Findings of the study indicated that government debt and unemployment rate are significant predictors of the INR/USD Exchange rate. Further, the correlation between the Gold and Crude with INR/USD Exchange rate was checked. As per the findings, there gold and the exchange rate were correlated