The US dollar and trade balance: New findings from the international trade of India with the European Union

The US dollar is the most prevalent currency to settle internationally traded merchandise. A few existing studies demonstrate that can significantly impact a country’s trade balance with non-US partner. Nevertheless, current literature indicates remarkable deficiency of empirical results for case India despite vital importance in its international trade. Recognizing European Union (EU) as largest trading partner over 2000Q1–2022Q2 period, this study first explore how influences India’s EU by employing Nonlinear Autoregressive Distributed Lag (NARDL) method. show that, no matter if employed, depreciation rupee cannot facilitate balance, and appreciation has negative effect. Therefore, devaluation an ineffectual policy supporting EU.