Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT RATES :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: TDS :: ACCOUNTING STANDARD :: form 3cd :: VAT Audit :: list of goods taxed at 4%
Latest Circulars »
 RBI-Framework for imposing monetary penalty on Authorised Payment Systems Operators / banks under Payment and Settlement Systems Act, 2007
 RBI-Sovereign Gold Bonds 2016-17 Series III – Operational Guidelines
  Registrations open for NCFE’s NFLAT (National Financial Literacy Assessment Test)
 Sovereign Gold Bond Scheme 2016 -17 – Series III
 Minutes of the Monetary Policy Committee Meeting October 3-4, 2016
 Registrations open for NCFE’s NFLAT (National Financial Literacy Assessment Test)
 Auction for Sale (Re-issue) of 7.35 per cent Government Stock 2024
 Auction of Government of India Dated Securities October 17, 2016
  Setting The Priorities Right (Shri S. S. Mundra, Deputy Governor – September 28, 2016 – at the 3rd SBI Banking and Economics Conclave in Mumbai)
  Financial Stability in a Weak Global Environment (Shri S. S. Mundra, Deputy Governor - September 22, 2016 - at the 7th SEACEN High Level Seminar for Deputy Governors in–charge of Financial Stability and Supervision, Mumbai)
 RBI issues Directions to United India Co-operative Bank Ltd., Nagina, Bijnor, Uttar Pradesh – Withdrawal of Directions

RBI Working Paper Series No. 4: Is Exchange Rate the Dominant Factor Influencing Corporate Profitability in India?
August, 18th 2015

The Reserve Bank of India today placed on its website, a Working Paper* titled “Is Exchange Rate the dominant factor influencing Corporate Profitability in India?” The paper is written jointly by Shaoni Nandi, Debasish Majumder and Anujit Mitra of the Department of Statistics and Information Management, Reserve Bank of India.

Indian corporate sector has witnessed a significant growth over last two decades and has become an integral as well as key strategic part of the economy. In this paper, corporate performance has been analysed to assess the significance of firm specific and macroeconomic factors on corporate profitability under two distinct regimes.

With the rapid development of the corporate sector since 2001, factors influencing profitability have altered. During 2002-2007, corporate profitability was mostly influenced by firm-specific indicators such as firm size, leverage, liquidity etc. However, since 2009, the domestic economy became more integrated with global economy and also more sensitive to external shocks. The importance of macroeconomic factors namely exchange rate, interest rate and the WPI inflation rate to determine corporate profitability has also amplified. Among the macroeconomic indicators, the importance of exchange rate of USD/INR has increased manifold in the recent times.When the rupee appreciates, corporate profitability is likely to get a short-term boost, though the long-term impact would depend on import and export elasticities. In the post crisis period, many large private non-financial corporates in India have also been behaving like financial intermediaries to take advantage of the easy liquidity abroad. This has amplified the impact of exchange rate volatility on their profitability. Thus, when forex market is under stress, it is observed that the exchange rate becomes the only critical factor to determine corporate profitability, dominating all other factors. In other words, in a scenario of persistent large depreciation of domestic currency, the performance of the corporate sector is expected to be impacted negatively, which may in turn affect the banking sector.


The Reserve Bank of India introduced the RBI Working Papers series in March 2011. These papers present research in progress of the staff members of the Reserve Bank and are disseminated to elicit comments and further debate. The views expressed in these papers are those of authors and not of the Reserve Bank of India. Comments and observations may kindly be forwarded to authors. Citation and use of such papers should take into account its provisional character.

Alpana Killawala
Principal Chief General Manager

Press Release : 2015-2016/421

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions