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Asian Journal of Research in Banking and Finance
Year : 2018, Volume : 8, Issue : 1
First page : ( 18) Last page : ( 25)
Online ISSN : 2249-7323.
Article DOI : 10.5958/2249-7323.2018.00002.0

The Dynamic Linkage between Exchange Rates and Gold Values: The Case of India

Dr. Manu K S

Assistant Professor, Department of Management Studies, Christ University, Bengaluru, India. manu.ks@christuniversity.in

Online published on 12 January, 2018.

Abstract

International market participants would not have much fascinated if gold had not traded in the international economy. The gold always place a vital role in the world economy. The value of the gold has been witnessing many phases from the last century with respect to changes in exchange rates. This paper investigates the relationship between gold and the exchange rates (USD/INR. GBP/INR. EUR/INR and YEN/INR) for the duration of 42 years from 1976 to 2016. The study used Multiple Linear Regression and Granger Casualty test to examine the relationship between exchange rates and gold. The findings support the international market participants can consider better speculative and investment decisions based on changes in USD/INR exchange rates in short term and long term respectfully. Further the study found inverse relationship between gold and USD/INR returns suggesting USD/INR returns provide vital information on value of the gold.

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Keywords

Exchange Rates, Granger Casualty, International market participants, Multiple Linear Regression.

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