OIDA International Journal of Sustainable Development
Open-access peer-reviewed journal
https://doi.org/10.64211/oidaijsd190806
Macroeconomic Variation Factors Influencing Indian Rupee Volatility: A Multiple Regression Approach to Exchange Rate Dynamics
Venugopal G.1,*, Shashidhar R. 2
1 Institute of Management Studies, Davanagere University, Davanagere, India.
2 Department of Commerce and Management, Institute of Management Studies, Davanagere University, Davanagere, India.
* Corresponding authour: venughpt@gmail.com
Volume 19, Issue 08, Pg. 97-106, 2026
Abstract: The Indian rupee experienced heightened volatility during 2023–2024 amid global monetary tightening and post-pandemic macroeconomic adjustments. This study examines how selected domestic macroeconomic indicators influenced short-term exchange rate movements during this period. Monthly data from January 2023 to December 2024 are analysed using a multiple regression framework to capture high-frequency dynamics. The analysis focuses on inflation, policy interest rate changes, current account balance, and public debt as potential drivers of exchange rate variation. The results indicate that inflationary pressures and external imbalances exerted the strongest influence on rupee depreciation during the tightening cycle. Policy interest rate adjustments and rising public debt display weaker but positive associations with exchange rate movements. The model explains a substantial share of monthly exchange rate variation and satisfies standard diagnostic conditions. The findings highlight the importance of inflation control and external sector stability for managing currency pressures in periods of global financial stress. By employing recent monthly data from the tightening phase, the study provides timely evidence relevant for macroeconomic policy design and currency risk assessment.
Keywords: Exchange Rate Volatility, Macroeconomic Indicators, Indian Rupee Depreciation, Current Account Deficit (CAD), Inflation and Public Debt
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