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Exchange rates and student migration: Are they correlated?

By Amartya Menon

The recent past has seen a dramatic shift in the way that nations view their borders, their citizens, foreigners and other cross-border related issues. We live in an era that has taken big steps towards easing restrictions on the movement of goods, services, and to a very large extent, people as well. In light of the above, it is important that we take cognizance of and address migration as a key issue in bilateral and multilateral relations between countries.

Today, students account for a significant portion of migration between nations. Between 2008 and 2012, 168,034 Indian students acquired F-1 visas for the United States. Only China sent more students. This blog post examines the connection between exchange rate fluctuations and the movement of foreign students to the United States.

Correlation between Dollar-Rupee Exchange Rates and Number of Student Visa Holders (INDIA)

India Graph PPT


The above diagram clearly establishes a connection between the dollar-rupee exchange rate and the number of Indian F-1 visa holders. As the rupee has weakened in relation to the dollar, fewer Indian students have gone to study in the United States. Simply put, this is because it has become more expensive. However, despite there being a strong correlation, there are several other factors that determine the number of individuals studying in the United States. Demographic factors such as age, income level, location and ethnicity all play a role in deciding how many individuals migrate abroad to study.

The devaluation of currencies does not necessarily adversely affect the number of students going abroad in the rest of the world, for example, in China and Saudi Arabia.

Correlation between Dollar-Riyal Exchange Rates and Number of Student Visa Holders (SAUDI ARABIA)

Saudi Arabia Graph

Correlation between Dollar-Yuan Exchange Rates and Number of Student Visa Holders (CHINA)

China Graph

Here we have two countries whose currencies, the Saudi Riyal and the Yuan, have remained stable relative to the U.S dollar over the past five years.  The same time period has seen a steady increase in students from both countries studying in the U.S, a clear indication that factors outside of the exchange rate are in operation here. In Saudi Arabia in 2003, King Abdullah instituted a scholarship program that today fully funds more than 45,000 students in the United States. China has seen a steady rise in per capita income over the past decade with growth rates hovering between 7 and 9 percent. This has seen a dramatic rise in Chinese students emigrating to the west to pursue undergraduate studies.

Correlation between Dollar-Euro Exchange Rates and Number of Student Visa Holders (GERMANY)

Germany Graph

Germany too is an interesting case as it disproves the general rule.   In the year 2012-13, despite an unfavourable shift in the Dollar-Euro exchange rate, there was an increase in German s F-1 visa holders in the United States. This is in direct contradiction with India where an adverse shift in exchange rates led to a fall in the emigrating student population.

Correlation between Dollar-Yen Exchange Rates and Number of Student Visa Holders (JAPAN)

Japan Graph

Another pertinent example is Japan, where over the past five years, irrespective of exchange rate fluctuations, there has been a steady decrease in the number of students moving to the United States to study. This can be attributed to several factors, namely, Japan’s aging population, a surge in Indian, Chinese and South Korean student numbers, and the unique recruiting cycle of Japanese companies.

Aging population aside, for decades now, Japanese companies have followed an age old recruitment process known as Shinsotsu, shin meaning new and sotsu meaning graduates. Every April, recently graduated individuals are hired and trained en masse by Japanese companies. With job security a guarantee now, there exists little incentive for the student population to pursue further academic studies.

As evidenced by the above data, it is safe to conclude that although fluctuating exchange rates is definitely a factor affecting the migration of students to the United States, it is certainly not the only factor in play and in certain instances may not have any effect on student migration at all.

Amartya Menon is an intern at the Takshashila Institution.

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