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Abstract
Exchange rate plays a key role in any country’s trade levels. A country’s economy is also highly dependent on the Foreign Portfolio Investment (FPI) of that particular country. This research paper seeks to analyze the impact of forex market on import, export and FPIs of India during the period January, 2009 to December, 2018. The tools used for this study are ANNOVA, correlation and regression. ANNOVA is run between the four currencies used for this research, that is United States Dollar (USD), European Union Euro (EUR), Great Britain Pound (GBP) and Japanese YEN (YEN). The ANNOVA test shows the Year on Year (YoY) change in percentages of exchange rates of the four currencies and the results show that the fluctuations among the four currencies are similar and hence for further tests only the exchange rates of USD is taken into consideration. Correlation has been used to understand the relationship between the four currencies and it has been found that all the currencies show strong positive correlation. The USD exchange rates during the period have been compared with the import, export and FPI figures of India with the help of regression to understand the effect of the currency fluctuations on the import, export and FPIs of India. The test results have shown that the exchange rate fluctuations have a significant impact on the import and export of India but it doesn’t have any significant impact on the FPI of India during the period taken into consideration for this particular research.