Vaibhav Shah

• Topic: Prepare a PPT showing volatility of various currencies during the last five years and that of INR with causes there for. Arrive at conclusion of stability or volatility of INR based on there (You can use data as available from public sources). In addition, please explain in detail the factors contributing to fix the exchange rate of the country.

• Batch : 38

• Location : Bandra Kurla Complex, Mumbai

• Membership number : ---

Index

Sr. No Particulars Slide1 Currency volatility 2011-

20153-7

2 Reasons for Volatility in INR 83 Currency forecast 94 Factors contributing to fix

the exchange rate of the country

10

5 Conclusion 116 References 12

Currency Volatility

INR/USDYear

Average rates

Min Max

2011 46.6770 44.0747 53.9352

2012 53.4342 48.8047 57.1520

2013 58.6385 53.1351 68.9780

2014 61.0226 58.4599 63.9880

2015 64.1780 61.3842 67.1450

Currency Volatility

INR/EURYear

Average rates

Min Max

2011 64.8849 58.48 70.89

2012 68.5973 63.978 72.913

2013 77.9299 69.541 92.065

2014 81.0406 75.901 86.184

2015 71.1956 65.871 76.7681

Currency Volatility

INR/GBPYear

Average rates

Min Max

2011 74.7877 69.1737 83.5256

2012 84.6613 77.009 89.3502

2013 91.8054 80.7223 106.655

2014 100.5123 96.6662 104.459

2015 98.1159 90.9856 105.133

Currency Volatility

INR/JPYYear

Average rates

Min Max

2011 0.586 0.5168 0.6908

2012 0.670 0.5985 0.7186

2013 0.6007 0.5335 0.7076

2014 0.5779 0.5112 0.6192

2015 0.5302 0.5108 0.5599

Currency Volatility

SUMMARY

CURRENCY(INR/XXX) CHANGE (%)

01 JANUARY 2011

31 DECEMBER 2015

US dollar 47.9208 44.72235 66.15367

Euro 20.5219 59.758 72.0215

Pound sterling 41.3438 69.4255 98.12862

Japanese yen -0.0094 0.550005 0.549489

Reasons for volatility of INR

• The Euro Zone crisis – Investment in USD increases.

• The rise in current account deficit or CAD – More dollars needed to pay import bills.

• Economic stimulus measures by US Federal Reserve - lowering interest rates

• Purposeful Devaluation of Yen - To increase exports

CURRENCY FORECAST

INR/USD Actual Q3/16 Q4/16 Q1/17 Q2/17 2020

Currency 66.76 67.86 68.53 69.21 69.88 80.63

• Calculated using ARIMA model (Autoregressive integrated Moving Average)

http://www.forecastingsolutions.com/arima.html

• Differentials in inflation

• Differentials in interest rates

• Current account deficits (CAD)

• Public debt

• Terms of Trade

• Political, stability and economic performance.

Factors contributing to fix the exchange rate of the country.

Conclusion

• Government initiatives taken to boost the economy.

• RBI participating in key aspects relating to foreign exchange rates.

• Recent significant FDIs announced in India

References

• www.fxtop.com

• www.Xe.com

• www.investopedia.com

• www.quora.com

• www.civilserviceindia.com