The fixed exchange rate has both positive and negative effects.
If we talk about the positive effect example if India fix the rupee against the dollar at a minimal rate then its as a result, India's export will increase because other countries consumer will find India's products cheaper than other countries and India's production capacity will increase the effects of which would be to increase its forex.
By this example, we also understand the negative impact. If India fixes the rupee from the dollar to the minimum rate, then the rupee will fall in value and the dollar will strengthen against the rupee, so India's imports will become expensive. But if we think about it for a long time and India wants to reduce its imports and it has the technical capability that its domestic producers will produce the things that people are not consuming because of the expensive imports, It can be encouraged and the indian producers and imports can be reduced for a long time, but if technical capability is not then it will be occur a negative impact on India.
If India fixes the rupee against the dollar at the minimum rate then it will need to keep more reserves for the trade, which is its negative effect.
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