A study an factors affecting

foreign exchange markets of

india
 Objectives
 To find out the impact of inflation rate changes
on Indian foreign exchange markets.
 To find out the impact of interest rate on
Indian foreign exchange markets.
 To find out the impact of balance of payment
on Indian foreign exchange markets.
simple regression
Interpretation
 Balance of payment/USD
Interpretation
 Y=Dependent variable=USD=BP
 X=Independent variable=Balance of payments
 H0=There is no relationship between balance of payments and USD
 H1= There is a relationship between balance of payments and USD
 The correlation-coefficient between balance of payments and USD
is=0.4914
 24.15% variation in USD is explained by balance of payment
 Since the P value is 0.001486 is less than 0.05, the null hypothesis is
rejected. There is significant relationship between the exchange rate of
USD and Balance of Payments
 Regression equation between the exchange rate of USD and Balance of
payments is
 USD=33.02291375+9.09918*BP
 Balance of payment/GBP
interpretation
 Y=Dependent variable=GBP=BP
 X=Independent variable=Balance of payments=BP
 H0=There is no relationship between balance of payments and GBP
 H1= There is a relationship between balance of payments and GBP
 The correlation-coefficient between balance of payments and GBP
is=0.5070
 25.71% variation in the exchange rate of GBP is explained by balance
of payment
 Since the P value is 0.00098608is less than 0.05, the null hypothesis is
rejected. There is significant relationship between the exchange rate of
GBP and Balance of Payments
 Regression equation between the exchange rate of GBP and Balance of
payments is
 GBP=52.34031781+0.000138399*BP
 Balance of payment/JPY
Interpretation
 Y=Dependent variable=JPY=BP
 X=Independent variable=Balance of payments
 H0=There is no relationship between balance of payments and JPY
 H1= There is a relationship between balance of payments and JPY
 The correlation-coefficient between balance of payments and JPY
is=0.3679
 13.59% variation in JPY is explained by balance of payment
 Since the P value is 0.021197 is less than 0.05, the null hypothesis is
rejected. There is significant relationship between the exchange rate
of JPY and Balance of Payments
 Regression equation between the exchange rate of JPY and Balance
of payments is
 JPY=30.45563851+7.27028*BP
  
 Balance of payment/EURO
Interpretation
 Y=Dependent variable=EURO=BP
 X=Independent variable=Balance of payments
 H0=There is no relationship between balance of payments and EURO
 H1= There is a relationship between balance of payments and EURO
 The correlation-coefficient between balance of payments and EURO
is=0.5067
 25.68% variation in EURO is explained by balance of payment
 Since the P value is 0.000993769is less than 0.05, the null hypothesis is
rejected. There is significant relationship between the exchange rate of
EURO and Balance of Payments
 Regression equation between the exchange rate of EURO and Balance
of payments is
 EURO=31.71794604+0.0001376048*BP
 Inflation/USD
Interpretation
 Y=Dependent variable=USD=Inflation
 X=Independent variable=Inflation
 H0=There is no relationship between Inflation and USD
 H1= There is a relationship between Inflation and USD
 The correlation-coefficient between Inflation and USD is=0.4669
 21.80% variation in USD is explained by Inflation
 Since the P value is 0.002726802
 Regression equation
 Y=a+b*X
 USD= 59.58593141+ -280.6491541* -280.6491541=78823.5336285
  
 Inflation/GBP
Interpretation
 Y=Dependent variable=GBP
 X=Independent variable=Inflation
 H0=There is no relationship between Inflation and GBP
 H1= There is a relationship between Inflation and GBP
 The correlation-coefficient between Inflation and GBP is=0.4383
 19.21% variation in GBP is explained by Inflation
 Since the P value is 0.005253448
 Regression equation
 Y=a+b*X
 GBP= 89.77818873+ -388.3611791* -
388.3611791=150914.183621
 
 Inflation/JPY
Interpretation

 Y=Dependent variable=JPY=Inflation
 X=Independent variable=Inflation
 H0=There is no relationship between Inflation and JPY
 H1= There is a relationship between Inflation and JPY
 The correlation-coefficient between Inflation and JPY is=0.3676
 13.51% variation in JBY is explained by Inflation
 Since the P value is 0.005253448is less than 0.05, the null
hypothesis is rejected. There is significant relationship between
the exchange rate of JPY and Inflation
 Regression equation between the exchange rate of JPY and
inflation is
 JPY=52.57041429+-235.8108068*inflation
  
 Inflation/EURO
Interpretation
 Y=Dependent variable=EURO=Inflation
 X=Independent variable=Inflation
 H0=There is no relationship between Inflation and EURO
 H1= There is a relationship between Inflation and EURO
 The correlation-coefficient between Inflation and EURO
is=0.4459
 19.88% variation in EURO is explained by Inflation
 Since the P value is 0.00444065is less than 0.05, the null
hypothesis is rejected. There is significant relationship between
the exchange rate of EURO and Inflation
 Regression equation between the exchange rate of EURO and
inflation is
 EURO=69.47193608+-393.0297109*Inflation
 Interestrate/USD
Interpretation
 Y=Dependent variable=USD=IR
 X=Independent variable=Interest rate
 H0=There is no relationship between Interest rate and USD
 H1= There is a relationship between Interest rate and USD
 The correlation-coefficient between Interest rate and USD
is=0.6368
 40.56% variation in USD is explained by Interest rate
 Since the P value is 1.30593E-05is less than 0.05, the null
hypothesis is rejected. There is significant relationship between
the exchange rate of USD and Interest rate
 Regression equation between the exchange rate of USD and
Interest rate is
 USD=86.71488353+-5.691803635*Interest rate
  
 Interestrate/GBP
Interpretation
 Y=Dependent variable=GBP=IR
 X=Independent variable=Interest rate
 H0=There is no relationship between Interest rate and GBP
 H1= There is a relationship between Interest rate and GBP
 The correlation-coefficient between Interest rate and GBP
is=0.6546
 42.85% variation in GBP is explained by Interest rate
 Since the P value is 6.1626E-06is less than 0.05, the null
hypothesis is rejected. There is significant relationship
between the exchange rate of GBP and Interest rate
 Regression equation between the exchange rate of GBP and
Interest rate is
 GBP=133.7262034+-8.624578355*IR
 Interestrate/JPY
Interpretation
 Y=Dependent variable=JPY=IR
 X=Independent variable=Interest rate
 H0=There is no relationship between Interest rate and JPY
 H1= There is a relationship between Interest rate and JPY
 The correlation-coefficient between Interest rate and JPY
is=0.6138
 37.68% variation in JPY is explained by Interest rate
 Since the P value is 3.24038E-05is less than 0.05, the null
hypothesis is rejected. There is significant relationship
between the exchange rate of JPY and Interest rate
 Regression equation between the exchange rate of JPY and
Interest rate is
 JPY=84.5502933+-5.855186988*IR
 Interestrate /EURO
Interpretation
 Y=Dependent variable=EURO=IR
 X=Independent variable=Interest rate
 H0=There is no relationship between Interest rate and EURO
 H1= There is a relationship between Interest rate and EURO
 The correlation-coefficient between Interest rate and EURO
is=0.7318
 53.56% variation in EURO is explained by Interest rate
 Since the P value is1.19588E-07is less than 0.05, the null
hypothesis is rejected. There is significant relationship
between the exchange rate sof EURO and Interest rate
 Regression equation between the exchange rate of EURO and
Interest rate is
 EURO=121.3513974+-9.592868914*IR
Multiple regression
Interpretation
 USD
Balance of payment,Inflation,Interest rate
 Y=Dependent variable=USD
 X=Independent variable
1.Balance of payment=BOP
2.Interestrate=IR
3.Inflation=IF
 46.91% variation in USD is explained by
BOP,Inflation,IR
 Regression equation between the exchange rate of
USD and BOP,Inflation,IR is
 USD=76.30793389+4.56918*BOP-59.7861555 *IR-
4.229506629*IF
 GBP
Balance of payment,Inflation,Interest rate
 Y=Dependent variable=GBP
 X=Independent variable
1.Balance of payment=BOP
2.Interestrate=IR
3.Inflation=IF
 49.08% variation in GBP is explained by BOP,Inflation,IR
 Regression equation between the exchange rate of GBP and
BOP,Inflation,IR is
 GBP=116.7822491+7.31569E *BOP-33.16646989*IR-
6.812902521
 JPY
Balance of payment,Inflation,Interest rate
 Y=Dependent variable=JPY
 X=Independent variable
1.Balance of payment=BOP
2.Interestrate=IR
3.Inflation=IF
 38.95% variation in JPY is explained by
BOP,Inflation,IR
 Regression equation between the exchange rate of JPY
and BOP,Inflation,IR is
 JPY= 78.74819237+2.48185E-05
*BOP+0.719264915*IR-5.341920588
 EURO
Balance of payment,Inflation,Interest
rate
 Y=Dependent variable=EURO
 X=Independent variable
1. Balance of payment=BOP
2. Inflation=IF=
3. Interestrate=IR
57.99% variation in EURO is explained by
BOP,Inflation,IR
 Regression equation between the exchange rate of
EURO and BOP,Inflation,IR is
 EURO= 106.4031299+6.3822-05
*BOP+8.02739321*IR-8.325271834
Thank you