Impact of Exchange Rate on Trade and Gdp for India a Study of last Four Decade

This paper empirically investigates the impact of exchange rate volatility on the real exports and Imports in India. Using annual time series data, the empirical analyses has been carried out for the period 1970 to 2011. The study results confirm that real exports and imports are cointegrated with exchange rate volatility, real exchange rate, gross domestic product and foreign economic activity. Our results are implies that the exchange rate has significant negative impact on real exports imports, implying that higher exchange rate fluctuation tends to reduce real exports in India. The empirical results reveal that GDP has a positive and significant impact on India s real exports in the long-run, but the impact turns out to be insignificant in the short-run.