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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
