Impact of real exchange rate movements: on selected Indian industrial exports

Abstract

This paper reports some findings from an econometric investigation for the period 1974-87 of the impact upon Indian export performance, in terms of product- and destination-specific market shares, of movements in the real external value of the rupee vis-a-vis currencies of competing exporters. Findings for three industrial exports are reported in this paper: cut diamonds (SITC 66729), carpets (SITC 659) and hand/machine tools (SITC 695). Sensitivity of market share to real exchange rate fluctuations varies by product category and destination. These variations permit of a consistent explanation.