Exchange rate pass-through by Indian and Chinese exporters
How much does a change in the value of the rupee or the yuan affect the prices of exports from India and China?
The extent to which exchange-rate fluctuations affect international prices—so-called ‘exchange-rate pass-through’—has been extensively studied, first for high-income countries and, in the last decade, also for emerging markets such as India and China. Exporters absorb exchange rate changes in their profit mark-up, depending on the degree of competition they face in a destination market which in turn will determine the extent of pass-through of exchange rate ranges into buyers’ (importers’) prices.
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