The exchange rate plays an important role in a country’s trade and affects the performance. It can be determined by exogenous shocks or by policy, the relative valuations of currencies and their volatility often have important repercussions on international trade, the balance of payments and overall economic performance of the country. This Research paper investigates the issues related to exchange rates on international trade by analyzing the impact that exchange rate volatility and misalignment have on trade and then by exploring whether exchange rate misalignments affect governments’ decisions regarding trade policies. The methodology consists of estimating fixed effects models on a detailed based on secondary data. The findings of this study are generally based on literature in supporting the issues of exchange rate misalignment while disregarding that of exchange rate volatility. This paper also shows evidence supporting the argument that trade policy is used to compensate for some of the consequences of an overvalued currency, especially with regard to anti-dumping interventions and comparison report of latest import export differences of India.