Shree Chanakya Education Society’s

Indira Institute of Management, Pune

Master of Business Administration,

Semester – II Batch: 2022-2024

Course Name & Code: SE5C206FN – FOREX AND TREASURY MANAGEMENT

CCA I

Topic – CURRENCY FLACTUATION

Group – 8

Sr no Name Roll no
1 Swarali Paranjape 56
2 Tanmay Potphode 57
3 Vijay Wagh 58
4 Yash Pawar 62
5 Yashaswi Chourasia 63
 Exchange rate fluctuation Rupee v/s Dollar

Exchange Rate Fluctuation means all possible changes in the values of currencies quoted
in the Tender relative to each other, arising because of market forces, formal devaluation, or
revaluation of those currencies or from any cause howsoever arising.
The below chart is the exchange rate fluctuation from 01 Jan 2023- 15 Jan 2023.

DATE USD USD TO INR

01-01-2023 1 82.743
02-01-2023 1 82.686
03-01-2023 1 82.776
04-01-2023 1 82.661
05-01-2023 1 82.644
06-01-2023 1 82.274
07-01-2023 1 82.274
08-01-2023 1 82.262
09-01-2023 1 82.143
10-01-2023 1 81.64
11-01-2023 1 81.709
12-01-2023 1 81.09
13-01-2023 1 81.285
14-01-2023 1 81.285
15-01-2023 1 81.282

USD TO INR
83

82.5

82

81.5

81

80.5

80
 Reasons for exchange rate fluctuation

From 1st to 15th Jan 2023, we observe a gradual decrease in the

exchange rate from 82.743 to 81.282. This indicates that during this period, the US
dollar loose strength relative to the Indian rupee.

On 1st Jan we can see that the exchange rate is Rs 82.743 against 1
USD and on 2nd of Jan it goes to Rs 82.686. Because Global growth is projected to
fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023.

From 3rd Jan 2023 the exchange rate from INR to USD goes down
decreasing gradually and the reasons was the increasing unemployment rate, rising
interest rates and many more. Exchange rates can be influenced by a country's
economic fundamentals such as interest rates, inflation rates, GDP growth, and
government debt. Changes in these indicators can affect market sentiment and lead
to fluctuations in currency values.

Central banks play a crucial role in determining interest rates and

implementing monetary policies. If a central bank raises interest rates or tightens
monetary policy, it can attract foreign investment and strengthen the currency.
Conversely, if a central bank lowers interest rates or adopts expansionary monetary
policy, it can weaken the currency.

The rise in central bank rates to fight inflation and Russia’s war in Ukraine
continue to weigh on economic activity. The rapid spread of COVID-19 in China
dampened growth in 2022, but the recent reopening has paved the way for a faster-
than-expected recovery.

A country's trade balance and current account deficit or surplus can

affect its exchange rate. If a country has a large trade deficit, it may lead to a
depreciation of its currency. Conversely, a trade surplus can strengthen the
currency. Currency markets are influenced by traders and investors who speculate
on future exchange rate movements. Their actions and expectations can drive short-
term fluctuations in exchange rates.
 U.S. stocks closed out 2022 lower on Friday, capping a year of sharp
losses driven by aggressive interest rate hikes to curb inflation, recession fears, the
Russia-Ukraine war, and rising concerns over COVID cases in China.

Economic developments in major economies can have spill over effects

on other currencies. Factors like changes in global growth prospects, trade tensions,
commodity prices, or geopolitical events can impact exchange rates across multiple
countries.

Overall, this data indicates short-term fluctuations in the exchange rate

between the US dollar and the Indian rupee. The reason was the increasing inflation
rate, increasing unemployment rate, Russia Ukraine war, Covid 19, political
instability, central bank’s changing policies, affect of economy on US stock market,
interest rate fluctuation and so on.