The document discusses factors that influence currency exchange rates, including inflation rates, interest rates, balance of trade, government debt, economic conditions, and demand. A country's currency will appreciate if it has lower inflation or raises interest rates. Higher government debt or a recession can lead to currency depreciation. Exchange rates also depend on demand from foreign investors and international economic and political uncertainties. Models for predicting exchange rates incorporate factors like spot rates, forward rates, and demand and supply trends.

1. By:- CA Abhinav Jain

2.  Value of one country’s currency in terms of
other currency.
e.g.
1$ = 63.71 INR
It may fluctuate daily.

5.  A country with a lower inflation rate than
another's will see an appreciation in the value
of its currency.
 higher inflation typically sees depreciation
and is usually accompanied by higher interest
rates

6.  Increases in interest rates cause a country's
currency to appreciate
 Higher interest rates provide higher rates to
lenders, Attracting more foreign capital,
which causes a rise in exchange rates
 Forex rates, interest rates, and inflation are
all correlated.

7.  Balance of trade and earnings on foreign
investment.
 Total number of transactions including its
exports, imports, debt, etc.
 Spending more on importing products than it
sale of exports causes depreciation.

8.  Public debt or national debt owned by the
central government.
 A country with government debt is less likely
to acquire foreign capital, leading to inflation.
 Foreign investors will sell their bonds in the
open market
 As a result, a decrease in the value of its
exchange rate will follow.

9.  Recession
 Political stability
 Terms of trade

11.  Weighted average of Time series model,
Regression mode, sensitivity analysis, spot rates,
forward rates.
 Demand & Supply
Demand of the currency increase – Appreciate currency
& vice versa

12.  FIIs Demand increase.
 Greece Insolvency Uncertainty in market
 Make in India Demand increases
 Gold, Crude oil (investment)

13. CA Abhinav Jain