Inflation Tendency Iin IIndia Iwith ISpecial Reference Ito Indian ICurrency IAgainst Ius IDollar

Abstract

Foreign Exchange Risk management is technique of mini mising the risk due to fluctuation in value of currency in concern. If we talk of Indian Rupees against US Dollars. It could be without difficulty observed that US dollar look Like to be valued against the value of Indian Rupee with way of time. Although it is tough to comment on any single reason for such sort of appreciation or depreciation of currencies. As there are so many factors at Micro and Macro level like Inflation, Interest Rates, Export-Import, Balance of Payment, Trade Deficit, Currency in Usage, Economic Policies of Nation or Union, Holding Tendency of Forex Traders/ Speculators, Circulation. Although its hard to comment that what accurate currency policy should be accepted so that economy would have sustainable development. The Objective of Research Paper is to study the relationship between Inflation of India and US with alter with value of Rupee against US Dollar. Even if inflation is not separate factor to decide currency price but still imperative factor in formative currency value, as inflation impacts investment, import and exports too. To check the impact of Rupee value in context of US dollars, the data of 30 Years of Consumer Price Index of United States and India along with 1USD=X Rupees value annual has been take and Multiple Correlation/ Regression analysis iSPSS has been applied. Forex Rate is composite variable that depends on a number of macroeconomic variables like Level of Forex Reserve-Low forex reserve is one more reason for currency fall. India‟s forex reserves have declined in recent past. So India has to import these at upper price. When the rupee value gets depreciated -Dollar acquiring strength against other currencies- Dollar acquiring strength against other currencies is another reason as in today‟s world Cross Currency exchange rate also exists due to arbitrage and ease in Global Financial Transactions. Another reason for reduction of currency is: there is no clarity on policy reforms and non clarity on guiding principle in reforms. This research had to find out the relationship between Inflation (Consumer Price Index India, United States) and is gnificant economical factors and got some useful results linked to this. Multiple Correlation/ Regression study has been used to do the analysis based on annual basis.