A Study on Impact in Exchange Rate of Indian Rupee versus US Dollar with Special Reference to Indian Capital Market

Foreign Exchange Rate is the largest financial market function is converting any foreign currency into another currency. A market based exchange rate will change whenever the values of either of the two component currencies change. A currency will tend to become more valuable whenever demand for it is greater than the available supply. Increased demand for a currency is due to either an increased transaction demand for money, or increased speculative demand for money. The transaction demand for money is highly correlated to the countries level of business activity, Gross Domestic Product (GDP), and employment levels. Most of the peoples are unemployed, the less the public as a whole will spend on goods and services. Central banks typically have little difficulty in adjusting the available money supply to accommodate changes in the demand for money due to business transactions. Such fluctuations in exchange rate have its impact on the economic growth of the economy. Hence the present study aims at finding out the Impact in the exchange rate and stock market.