The Study on the Impact of Exchange Rate Fluctuations on the Profitability of Export-Oriented Firms in India
Guide: Dr. Manita D Shah
Professor, Faculty of Management Studies, Jain (deemed-to-be University), Bangalore
Preethi S 1, Roopa G.P2, Meghana V3
Student, Faculty of Management Studies, Jain (deemed-to-be University), Bangalore
ABSTRACT
This study examines at the way exchange rate changes affect the profitability of businesses focused on exports in India, a rising market where exports are essential to GDP development. Exchange rate fluctuations impact pricing strategies, profit margins, and competitiveness overseas for Indian businesses that are more exposed to international markets. Understanding how these swings affect financial performance, assisting Indian businesses in creating efficient hedging plans, and educating policymakers on macroeconomic frameworks that are conducive to growth are the main goals of the research. Using a quantitative methodology, the paper examines the relationship between total exports from 2013 to 2023 and the USD/INR exchange rate using regression analysis and sector-specific case studies. The investigation looks at how cost structures, profit margins, and the export industry's overall financial stability are affected by exchange rate fluctuation. The findings show that increased export volumes and a declining INR are positively correlated since a weaker currency increases competitiveness. Using trend analysis, correlation, and regression to quantify this link, the study concludes that changes in exchange rates account for roughly 46% of the variation in exports throughout the examined period.
Sectoral differences in sensitivity to currency fluctuations are also identified by the study. For instance, despite the substantial currency risks faced by companies with a high export intensity, the IT sector seems resilient because of structural features like steady demand and contract- based revenue. In order to guide policies that promote India's economic resilience in global markets and to establish risk management techniques in a volatile currency environment, the study's conclusions are crucial.
Keywords:
Hedging Techniques, India, Export-Oriented Businesses, Exchange Rate Variability, USD/INR,
