Rupee Vs. Markets: Decoding Nifty 50’s Currency Connection in a Volatile Global Era

Abstract

This research paper investigates the dynamic and causal relationship between the Indian Rupee (INR) exchange rate fluctuations against the US Dollar (USD) and the performance of the Indian equity market. Utilizing daily closing data from the National Stock Exchange (NSE) and the Reserve Bank of India (RBI) over a three-year period, the study employs Regression analysis to identify Indian Currency fluctuations and its impact on the Economy. The depreciation of the Indian Rupee has emerged as a critical concern in the context of heightened global financial volatility, geopolitical tensions, and changing monetary policies in advanced economies. This study examines the relationship between the Closing Price of NIFTY 50 and the USD–INR exchange rate, and evaluates the impact of global economic conditions on the value of the Indian Rupee. Employing a descriptive research design, secondary data were collected for three years from the NSE and the Reserve Bank of India, and analyzed using simple linear regression. The findings highlight the varying sensitivity of Indian equity markets to currency movements across different years.