This article investigates into the factors that determine the rupee–US dollar spot exchange rate particularly after the global financial crisis in 2008. In particular, the role of market fundamentals is looked into. To achieve this, an eclectic empirical model is estimated not paying heed to any particular theoretical framework. As empirical strategy, the Autoregressive Distributed Lag (ARDL) and Error Correction (ECM) models are estimated using monthly data ranging from 2008:04 to 2023:03. The model suits the data well. Cointegration and error correction are found to exist. The empirical results suggest the presence of a long-run relationship between the exchange rate and the macroeconomic variables. The results further emphasize that in the event of any short-run disequilibrium, the errors correct to reach the long-run equilibrium exchange value. The empirical results, so obtained, have policy implications in an episode of misalignment in the exchange rate leading to sharp appreciation or depreciation.
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