Dynamics of the Exchange Rate in India

Exchange rate is act as the main role in the integral part of the economic development. India is also facing this issue like other Asian countries impact of increase exchange rate on the growth of the economy. It is source of the external funds and act as the channel between risk and investment. In this research, we have taken the data from 1998 to 2008 and applied the ADF test, normality test and Jarqu e-Bera statistics test for taking the proper results about the impact of exchange rate on the development of India. Normality test explains the nature of the data. Our results are showing that increase exchange rate has negative impact on the stock exchange of India. Our suggested that Government should focus about the exchange rate policy. Citation: Najaf R, Najaf K (2017) Dynamics of the Exchange Rate in India. J Account Mark 6: 207. doi:10.4172/2168-9601.1000207


Introduction
In simple words, exchange rate volatility is also known as the name of risk and uncertainty. Most of the studies have shown that volatility in prices has two types 1) upwards 2) downward both are showing that exchange rate can be appreciate and can be depreciate. Exchange rate depends upon the supply and demand. Stock market return is considered the most important metric for the shareholders of the organization. Why the share prices are flocking it is most interesting topic for every researchers. Fr enhancing the economic condition stock market is come on most of sensitive assets which makes the causal association between macroeconomic variables and stock prices. This topic did not take the attention of policy makers also take the attention of economists. Shaock prices are best way for policy makers to predict about the upcoming policies.
In the modern area, globalization has created the different links for the development of financial market.

Impact of exchange rate volatility on the growth of the stock exchange
Robust of the studies have been observed that there is causal association between stock market and exchange rate. Exchange rate is crucial element for analysis the performance of the stock exchange. Stock prices have the main tool through which investors can take proper decision about the future investments. For the better investment public must be aware about the stock market prices. It is also act as the risk seeker. There are no of variables, which have influenced on the stock market performance. Exchange rate is such the shock that can block the stock market. Therefore most of the researchers take it for analysis the performance of the stock market. Exchange rate is also affected on the industries production. This thing has proved that there is negative association between increase exchange rate and stock market.

Overview of Bombay stock exchange
Bombay stock exchange is the oldest stock exchange of India. It is most faster stock exchange regarding to trade. It was organized in 1876. It has the 11 th no in the world. Near about 5700 companies listed in it. Large capitalization is the reason that huge no of investors want to invest their money in it. According to rules and regulation of securities act, Bombay stock exchange was known as the recognized stock exchange. It is also famous with the name of derivate market. In the Bombay stock exchange the operation system is electronic. In this way; investors can invest their money throughout the world and at any time.

Objectives
1) The prime objective of this paper is to find out the impact of exchange rate of Indian stock exchange 2) Impact of stock exchange from the last few years.
3) In this paper, we have also shown the capitalization of Bombay stock exchange.

Problem statement
Impact of exchange rate on the Bombay stock exchange is shown in Figure 1.

Literature Review
Rabia najaf, khakan najaf, explored the impact of exchange rate on the stock market of Malaysia. For this purpose, they had taken the data from year 1998 to 2008 and applies the VAR model. Their results are showing that there is negative association between exchange rate volatility and stock market. This study suggested that policy makers should work in the case of decrease the exchange rate [1]. This study suggested that policy makers should work in the case of decrease the exchange rate [9].
Parkinson examined the impact of exchange rate on the stock market of Malaysia. For this purpose, they had taken the data from year 1997 to 2007 and applies the ECM model. Their results are showing that there is negative association between exchange rate volatility and stock market. This study suggested that policy makers should work in the case of decrease the exchange rate [10,11]. 1) In the prior studies nobody had discussed about the impact of exchange rate on the other variables.

Gaps in literature
2) From the last few decades, nobody has viewed both increase and decrease impact on the Bombay stock exchange.
3) Impact of stock exchange on the monetary policy of India.

Theoretical framework
Theoretical framework is shown in Figure 2.

Methodology
In the paper, we are viewing the linkage between Indian stock rate movements and volatility. For these proper results, we have used the daily data (Tables 1 and 2).

Empirical analysis
In methodology, there are four main steps1) normality test 2) jarqu e-bera statistics 3) ADF. The purpose of normality test to determine the nature of the data and Jarqu e-bera statistics for the disturbing purpose. Rs/$ $/euro Global Exchange rates movement

Conclusion
The prime objective of our study to find out the association exchange rate and stock maker; According to William there is long run association between stock exchange and stock market. For this purpose, they have applied the latest models to find out the better results. According to pettron there is inverse relationship between stock market and exchange rate.

Policy recommendation
1) There is need of proper polices for the investment in stock exchange in the condition of decreasing exchange rate.
2) Government should give attention towards the issue of high stock exchange.
3) There should make polices about the controlling exchange rate, it is best way to increase the investors.