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..........For India, a Reserve Bank of India study assessed that “productivity differential, foreign assets, terms of trade and openness are main determinants of real exchange rate.” One OECD study done in 2011 did not find any support for B-S-H based on current trade data. It is odd that contrary to available evidence based on a plethora of research on exchange rates, Bhalla takes the line that real exchange rate can be influenced by nominal (policy) exchange rate. It is difficult to categorise this book. It is not an investment analyst’s guide to recent trends in currency rates and their impact on trade and growth. It is not an economist’s study of linkages between them. Its statistical base is questionable even as its theoretical base is weak.........
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Read - The Hindu
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