Explain the effects of foreign investment in India in exchange rate

Dear Student, When foreign exchange comes to India than it brings foreign currency. It means that supply of foreign exchange will increase in India. And when supply increases with demand curve being static than Indian currency will appreciates and foreign exchange rate will fall. In addition, an increase in a country's currency will lead to an improvement in its terms of trade, which are the ratio of export to import prices. It is also happens that an increase in FDI leads to higher growth rates in financially developed countries compared to rates observed in financially poor countries. Local conditions, such as the development of financial markets and the educational level of a country, affect the impact of FDI on economic growth. Regards,