The objective of this analysis is to measure the impact on Import/Export
value due to change in various factors like GDP, Exchange rate (currency
inflation), inflation, trade policies, foreign currency reserves,
demand, trade deficit, countries current account, quality, productivity
& labor cost.
Out of all variables we have taken the below variables for which we have
- Exchange rate
- Trade deficit
- Foreign currency reserve
Date source for this analysis
The values are in various sub-pages of the above-mentioned websites and
we have manually copied the values of below said data variables into a
*.CSV file. This file can be downloaded from
This analysis was done in R Programming and the complete source code for re-producing the charts can
be found in R Program - Import/Export
Data for this analysis has below variables
- Year - End of financial year - Example the year 1998 represents the
financial year of 1997-98
- Import.INR.lacs. - Total import value in “lacs INR”
- Import.USD.millions. - Total import value in “million USD”
- Export.INR.lacs. - Total Export value in “lacs INR”
- Export.USD.millions. - Total export value in “million USD”
- Exchange.rate - Exchange rate (Calculated based on export INR & USD
- Trade.deficit.INR.lacs. - Import less export in “lacs INR”
(Calculated as import less export)
- Trade.deficit.USD.millions. - Import less export in “million USD”
(Calculated as import less export)
- FC.Reserve.INR.lacs. - Foreign currency reserve in “lacs INR”
- FC.Reserve.USD.millions. - Foreign currency reserve in “million USD”
All above USD & INR values are reported values in current price.
Analysis 1: Representation of Import, Export & Trade Deficit
The below chart is a representation of import, export & trade deficit in
a single line chart. We have a separate chart for INR & USD values. The
percentage values are the “positive growth”/“negative growth” from the
previous year’s value.
- The change in Import and Export values are directly proportional.
- But the trade deficit increases or decreases along with
- Except for a few instances, the change in “positive
growth”/“negative growth” is always higher in USD, when compared to
INR. It tells the USD is more sensitive than INR.
- The first drop occurred after 2009 and it was recovered within one
- The second drop occurred around 2013 and it started recovering
- Also there was a stagnation of import & export from the year 2013
- INR plot shows a growth in the year 2018 & 2019, where it is not there in USD plot.
Analysis 2: Import & Export against Exchange rate
The below chart shows the import & export in USD & INR against the
exchange rate. All other variables affecting import & export were
assumed unchanged. Practically this situation is not feasible.
- Since the data points are scattered, we have added a linear
regression model to each chart.
- The linear model line clearly shows that the import & export are
directly proportional to the exchange rate.
Analysis 3: Import, Export & Foreign Currency Reserve
The below chart shows the import, export & foreign curremcy reserve in
USD & INR against the year. All other variables affecting import &
export were assumed unchanged.
- The “positive/negative growth” is USD is mostly higher than INR.
- The INR chart shows a growth for the year 2012, 2013 & 2014, which is flat
in USD chart. Currency inflation could be a reason for this.
- Also there was a stagnation of foreign currency reserve from the
year 2012 and it started recovering from the year 2017.
Analysis 4: Year on Year (YoY) Percentage growth of Import, Export, Trade deficit & Foreign currency reserve
The below chart shows positive/negative growth of import, export, trade
deficit & foreign currency reserve in USD & INR.
Even though both INR & USD charts look the same, the below findings
arrived from the USD chart.
- When import grows more than export, then the sensitivity of the
increase in trade deficit is more. Similarly when the import drops
more than export, then the sensitivity of the decrease in trade
deficit is more.
- All variable were having negative/positive growth together for 7
years out of 19 years (from 2001 to 2019).
- Always import & export drops when foreign currency reserve drops in
the previous year, except 2011 & 2012, 2017 & 2018. But this
exception may be due to the huge fall in 2010, 2013 & 2019.