An Analysis of Impact of Exchange Rate Volatility on the Indian Manufacturing Exports

This paper analyses the impact of real exchange rate volatility of Indian on bilateral exports of India’s manufactured commodities. Four major commodities viz Engineering goods, Cotton yarn, fabrics made ups, etc., Chemicals & allied products, and Leather & manufactures, for the period 1999 to 2013. Five major trading partners of India i.e., USA, UK, Germany, Italy, and Hong-Kong are chosen for the panel data analysis. Result shows the statistically insignificant impact of exchange rate volatility on the exports of all commodities except for Chemicals and Allied product. Real GDP found to be positive and significant for all commodities. The real exchange rate has no significance in explaining exports of these commodities. The results support forex market efficiency with regard to exports.