• S.Janani
• Mr.B.Karthikeyan

The inflows of foreign direct investment (FDI) are important for a country's economic development, but the world market for FDI has become more competitive. A clear case to acknowledge that a decline in value of currency of one country amplifies the foreign direct investment flows into that particular country. By the year of 2005, an increase in inflows of FDI roughly around the world ascend to $916 billion, with actual more than half of these flows actually received by businesses within the developing countries. An important factor persuading on FDI activity is actual behavior of exchange rates, which can influence both the total amount of foreign direct investment that seizes up to a place & the actual allocation of this speculation of investment being actually spended across a assortment of range of countries. This manuscript inspects the brunt in form of impact of foreign exchange rates on foreign direct investment (FDI) inflows that actually allows for the interdependence of FDI over a period of time. Interdependence is actually a representation with a double side of Markov process where the two states can actually be deduce to be interpreted as either a favorable or an unfavorable environment for FDI in any particular industry. An unbalanced industry - level panel data from the comprehensive wholesale trade sector which are being used for the analysis & has actually yield 2 main results. First, the paper finds evidence that FDI is being interdependent over time. Second, under a favorable FDI environment, the exchange rate will have a positive & significant effect on the standard average rate of FDI inflows. This paper actually finds substantiation that foreign direct investment (FDI) is being interdependent over time & the exchange rate prefers to have a positive & significant effect on the average rate of FDI inflows under a favorable FDI environment.

Financial Innovation, Foreign Direct Investment (FDI), Exchange Rate, Correlation

"Impact of FDI on Indian Exchange Market", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.6, Issue 3, page no.501-508, March-2019, Available :http://www.jetir.org/papers/JETIR1903569.pdf

"Impact of FDI on Indian Exchange Market", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.6, Issue 3, page no. pp501-508, March-2019, Available at : http://www.jetir.org/papers/JETIR1903569.pdf