ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Exchange Rate and Balance of Trade

Exchange Rate and Balance of Trade Prabirjit Sarkar SUBSTANTIAL devaluation of national currency (nominal and real) is one essential part of the therapy of the IMF/World Bank for curing balance of payments deficit of a country. Accordingly India devalued twice in 1991. Before this devaluation, there was a slow but steady depreciation of Indian rupee during 1971-91 under the RBI- 'managed' float. Now the question is: is there any meaningful relationship between exchange rate and balance of trade?

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