The Effects of Exchange Rate Volatility on Indian Exports: An ARDL Approach
Published: 2025
Author(s) Name: Tejesh H. R., Khajabee M. |
Author(s) Affiliation: SUBN Theosophical Women College, Hosapete, Vijayanagara (Dist.), Karnataka, India.
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Abstract
The purpose of this article is to examine the effect of exchange rate instabilities on the performance of Indian exports, using yearly data from 1999 to 2023. The data was obtained from the World Bank’s Indicators (WDI) open dataset. We chose WDI data to assure accuracy and transparency in our research. This time span was selected based on the extensive accessibility of pertinent figures within the chosen timeframe. The empirical results display that exports (EXPs) are cointegrated with the exchange rate (ER), gross capital formation (GCF), inflation (INF) and interest rate (IR). However, it is found that only the ER, INF and IR have long-term effects on India’s EXP performance. The error correction model (ECM) results suggest a noteworthy adjustment process towards achieving long-term equilibrium in the association between ER and EXPs. These findings highlight the importance of implementing policies that enhance ER stability and promote a stable and sustainable ER policy.
Keywords: Exchange Rate, Exports, Gross Capital Formation, Inflation, Interest Rate
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