When foreign exchange rate in a country is on the rise then the demand for foreign currencies will be low. A rise in the exchange rate i.e., $1= ₹40 to $1 = ₹50 implies that the goods of abroad become more expensive i.e, it now cost ₹50 to purchase a commodity worth $1 instead of ₹ 40 earlier. This would result in a reduction in the demand for the foreign commodities. Thus, there will be fall in imports.