Question

‘Many large Multinational Corporations (MNCs) have recently shifted their investments from China and have started their production in India, thereby boosting the Make in India plans of the Government’.
Presuming other factors being constant, discuss the effects of the given statement on Foreign Exchange rates with reference to the Indian Economy.

Answer 1

Answer:

As more and more multinational corporations (MNCs) are shifting from China to India, there will be a boost in the economy.

The high-currency rate in India will make the exports more expensive and imports less expensive.

It will also increase the demand for Indian products.  A reduced exchange rate will improve the balance of trade and ultimately will generate more revenue.