McDonalds is another international business that has been set-up in the India retail-market. In addition to those, many other retail traders are forming their business and setting up in the Indian Market. Since the government of India is opening up their doors and allowing US business to come into India to do business, this is the perfect time for Kohl's Corporation to come to India and start their business.
Track the currency exchange rate for the past 24 months, explain what has occurred, and identify the economic variables that have most influenced these exchange rate movements.
US Dollars and India Rupees.
Exchange rate affects trading relationships between two nations. Some of the principal factors that cause fluctuations in exchange rate between two countries are inflation, interest rates, current account deficits, public debt, trading terms, political stability and economic performance. Lower inflation leads to a rising currency value and higher inflation sees depreciation of currency. Higher interest rates attract foreign capital and cause the exchange rate to rise and lower interest rates decrease exchange rates. Current account deficit shows the country is spending more on foreign trade than it is earning and there is an excess demand for foreign currency, which lowers the country's exchange rate. A large public debt encourages inflation, which in turn will affect exchange rate. Increasing terms of trade i.e. the price of a country's exports rises by a greater rate than its imports, increases the currency's value. Political instability and weak economic performance cause loss of confidence in a currency and hence its devaluation. (Subhanker, 2013).
The exchange rate for the U.S. dollar and India rupee over the past 24 months has fluctuated over time. Since September 9, 2011 the U.S. dollar has been getting stronger and stronger over India rupees. Many factors contribute to the exchange rate fluctuations for both currencies.
