Chapter 9, Problem 12MESP

Summary Introduction

To Determine:

The factors responsible for stability or volatility in the exchange rate between the Indian and the United State’s Currency.

Introduction:

The country selected for the Market Entry Strategy Project (MESP) is India. India is one of the fastest growing economies in the world. India is also one of the leading countries in the financial sector as it has several banks with the international presence and one the most attracting investment market.

An exchange rate is a rate at which one currency is exchanged for another currency. For example the exchange rate between the U.S. Dollar and Indian Rupee. The exchange rates between the currencies of two nations depend upon various factors like Inflation rates, Interest rates, current accounts, terms of trade, government debt, and Political Stability & Performance.