EMPIRICAL ANALYSIS OF LONG RUN EQUILIBRIUM BETWEEN EXCHANGE RATE AND FOREIGN EXCHANGE RESERVE – AN INDIAN PERSPECTIVE

The present study makes an effort to find the long run equilibrium between Exchange Rate and Foreign Exchange Reserve. Fifteen years data of these variables has been extracted from the official website of Reserve Bank of India and has been analyzed by devising statistical software E – Views. Regression analysis has been applied through SPSS to evaluate the relationship between foreign exchange reserve and exchange rate. The statistical output of present research supports the previous research documents and shows the existence of long run equilibrium between these foreign exchange reserve and exchange rate. It also supports the influence of foreign exchange reserve on the exchange rate of country.