The rate at which the currency of one country can be converted into currency of another country is called exchange rate, e.g., $ 1 = ₹ 65 means to buy $ 1 of US, an Indian resident must pay ₹ 65.
- A rise in the exchange rate for India means the value of Indian currency has declined in the international market.
- A fall in the exchange rate for India means the value of Indian currency has increased in the international market.
- If the exchange rate rises for India, then imports by India tends to decline and India’s exports tend to rise.
