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An Empirical Analysis of FII Movement and Currency Value in India

An Empirical Analysis of FII Movement and Currency Value in India
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Author(s): Saurabh Sen (Sunbeam College for Women, India)and Ruchi L. Sen (Sunbeam College for Women, India)
Copyright: 2015
Pages: 11
Source title: Strategic Infrastructure Development for Economic Growth and Social Change
Source Author(s)/Editor(s): Nilanjan Ray (Royal Thimphu College, Bhutan), Dillip Kumar Das (Sikkim Central University, India), Somnath Chaudhuri (Royal Thimphu College, Bhutan)and Arindam Ghosh (Royal Thimphu College, Bhutan)
DOI: 10.4018/978-1-4666-7470-7.ch014

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Abstract

India opened its stock market to foreign investors in September 1992 and has received portfolio investment from foreigners in the form of foreign institutional investment in equities and other markets including derivatives. It has emerged as one of the most influential groups to play a critical role in the overall performance of the Indian economy. The liberalization of FII flows into the Indian capital market since 1993 has had a significant impact on the economy. With increased volatility in exchange rate and to mitigate the risk arising out of excess volatility, currency futures were introduced in India in 2008, which is considered a second important structural change. This chapter examines the impact of the Foreign Institutional Investors (FIIs) on the exchange rate and analyzes the relationship between FII and Indian Rupee-US Dollar exchange rates.

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