The article discusses how exchange rate expectations in India are influenced by factors like trade balance, capital movements, and inflation. The researchers used the Covered Interest Parity model to analyze the relationship between capital flows and forward exchange rates. They found that this model is more accurate in predicting future exchange rate movements compared to the Uncovered Interest Parity model. This suggests that monitoring exchange rates and capital movements in India using the Covered Interest Parity model can help forecast future exchange rate changes more effectively.