Impact of Selected Foreign Currency Exchange Rate Movements on Indian Rupee Value--An Empirical Analysis

Abstract

This project provides an empirical investigation into the impact of major global currency movements on the valuation of the Indian Rupee (INR) over the decade from 2015 to 2025. Utilizing quantitative methodologies, including Pearson correlation analysis and multiple regression modeling, the study examines the relationship between the INR and five key global currencies: the US Dollar (USD), Euro (EUR), British Pound (GBP), Japanese Yen (JPY), and Chinese Yuan (CNY). The findings indicate a consistent, long-term depreciating trend of the Rupee, with the JPY/INR pair exhibiting the highest relative instability. Statistical analysis reveals a perfect positive correlation among global currencies relative to the INR, highlighting the systematic nature of external pressure on India’s exchange rate regime. Furthermore, the study identifies that macroeconomic factors, such as interest rate differentials, global crude oil prices, and capital flows, serve as primary drivers of these fluctuations. The research concludes by emphasizing the need for robust corporate hedging strategies, diversified trade invoicing, and proactive monetary management by the Reserve Bank of India to navigate global financial volatility and safeguard economic stability.