A Study on the Impact of Volatility In Exchange Rate of Indian Rupee Versus US Dollar on Indian Capital Market

Abstract

FOREX (Foreign Exchange market), refers to an international exchange market where currencies are bought and sold. The Foreign Exchange Market began in the 1970, when free exchange rates and floating currencies were introduced. In such an environment only participants in the market determine the price of one currency against another, based upon supply and demand for that currency. The foreign exchange market is most often called the forex market, or simply the FX market is the most traded financial market in the world. The forex market is the crossroads for international capital, the intersection through which global commercial and investment flows have to move. International trade flows, such as when a Swiss electronics company purchases Japanese-made components, were the original basis for the development of the forex markets. Today, however, global financial and investment flows dominate trade as the primary non-speculative source of forex market volume. Whether its an Australian pension fund investing in U.S. Treasury bonds, or a British insurer allocating assets to the Japanese equity market, or a German conglomerate purchasing a Canadian manufacturing facility, each cross-border transaction passes through the forex market at some stage.

Keywords: N.A.

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