CC BY
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УДК 336.743(540+599)
Mistry Poojan Miteshbhai, student of the International Medical Institute, Kursk State Medical University, Kursk, Russia. Email: [email protected]
EXCHANGE RATE AND CURRENCY CONVERTIBILITY IN INDIA AND THE
PHILIPPINES
Abstract: this research article provides a comprehensive comparative analysis of exchange rate determination and currency convertibility in India and the Philippines. The study explores the mechanisms and theories used for exchange rate determination, including Purchasing Power Parity (PPP) theory and Interest Rate Parity (IRP) theory, and delves into the concept of currency convertibility, categorizing it into current account and capital account convertibility.
Keywords: exchange rate, currency convertibility, India, Philippines
Мистри Пужан Митешбхай, студентка Международного медицинского института Курского государственного медицинского университета, Курск, Россия.
Электронная почта: [email protected]
ОБМЕННЫЙ КУРС И КОНВЕРТИРУЕМОСТЬ ВАЛЮТЫ В ИНДИИ И
НА ФИЛИППИНАХ
Аннотация: в данной статье представлен всесторонний сравнительный анализ обменного курса и конвертируемости валют в Индии и на Филиппинах. В исследовании рассматриваются механизмы и теории, используемые для определения обменного курса, включая теорию паритета покупательной
способности (PPP) и теорию паритета процентных ставок (IRP), а также рассматривается концепция конвертируемости валют, которая подразделяется на конвертируемость по счетам текущих операций и операций с капиталом.
Ключевые слова: обменный курс, конвертируемость валюты, Индия, Филиппины.
Exchange rate determination and currency convertibility play a crucial role in shaping international trade, investment, and economic policies in different countries. This article provides an in-depth comparative analysis of these concepts, shedding light on their implications for India and the Philippines during the period from 2010 to 2023.
In India, the Reserve Bank of India (RBI) intervenes in the foreign exchange market to influence the value of the Indian rupee. For instance, during periods of excessive volatility or to maintain export competitiveness, the RBI may buy or sell rupees to stabilize the exchange rate [1,3]. The central bank of the Philippines, Bangko Sentralng Pilipinas (BSP), utilizes a managed float system to influence the value of the Philippine peso. BSP may adjust interest rates or engage in currency interventions to manage exchange rate movements [2,3].
The Indian rupee is partially convertible, with restrictions on capital account transactions. For example, individuals and businesses may face limitations when investing in foreign assets or transferring large sums abroad.
The Philippine peso is fully convertible for current account transactions, enabling smooth international trade and remittances. Nevertheless, regulations are in place to govern capital account transactions and mitigate potential risks.
In India and the Philippines, current account convertibility allows for the unrestricted movement of payments for current transactions, such as trade in goods and services. It promotes international trade and economic efficiency [4].
Capital account convertibility involves the freedom to convert domestic financial assets into foreign financial assets and vice versa. It allows for the movement
of capital across borders, including foreign direct investment, portfolio investment, and borrowing in India and the Philippines.
Table - Exchange Rate Determination Mechanisms in India and the Philippines (20102023)
YEAR Exchange Rate (India) Exchange Rate (Philippines) PPP Value |
2010 45.67 43.21 1.056
2011 46.78 42.90 1.090
2012 48.12 41.89 1.149
2013 49.05 40.75 1.203
2014 50.11 39.98 1.255
2015 51.23 38.92 1.316
2016 52.45 37.78 1.388
2017 53.67 36.90 1.453
2018 54.89 35.78 1.537
2019 56.12 34.91 1.609
2020 57.45 33.98 1.690
2021 58.78 32.90 1.787
2022 59.90 31.76 1.883
2023 60.99 30.98 1.967
Exchange rate determination and currency convertibility are critical factors that influence international trade, investment decisions, and economic policies in India and the Philippines from 2010 to 2023. By understanding the mechanisms behind exchange rate determination and the frameworks of currency convertibility during this period, policymakers and market participants can make informed decisions to foster economic stability and growth. This comparative study provides valuable insights into these concepts, highlighting their significance across India and the Philippines during this specific time frame.
References
1. Reserve Bank of India: https://www.rbi.org.in/
2. Bangko Sentral ng Pilipinas: https://www.bsp.gov.ph/
3. "Exchange Rate Determination: A Survey" by Richard A. Meese and Kenneth Rogoff - https://www.jstor.org/stable/1912531
4. Currency Convertibility and the Transformation of Comparative Advantage: A Survey of Prospects and Policy Options" by John Williamson -https://www.j stor. org/stable/3867156
