Vol. 3, Issue 9, Part H (2017)

Abstract
In today’s world, large Foreign Exchange Reserves and its strengthened balance of payments symbolizes the country’s strength and worth, as it indicates the strong backing the currency of the country has. There are many Macroeconomic variables attracting the Foreign Exchange Reserves for a nation. The study is an attempt in such nature of analysing the impact of the Foreign Exchange Reserve holdings on Inflation (both consumer price index and wholesale price index) in India. The variables taken for analysis are on the basis of earlier studies of various nations including IMF. Conclusion based on results shows the better influence posed by the Foreign Exchange Reserves on inflation.