Volatility in Exchange Rate of Indian Rupee in Pre and Post Market-Determined Exchange Rate Regime

The Indian exchange rate system has matured from the earlier versions of a managed float system to a floating exchange rate system. India has followed the system of market determined foreign exchange rate since 1993 by replacing the dual exchange rate system or LERMS (Liberalized Exchange Rate Management System). Therefore, the behavior of volatility in exchange rate of Indian Rupee as against U.S. Dollar (before the implementation of market- determined exchange rate regime and after the implementation of market- determined exchange rate regime) has been empirically analyzed under the study to compare the volatility of Indian foreign exchange rate (high) in pre market- determined regime with that of the post market- determined regime period. The study revealed that the volatility of Indian foreign exchange rate remained high in the post market- determined regime than that in the pre market- determined regime.