External fund flows into in any country plays always plays a key role in foreign exchange reserves, which is essential for the developing economies like India. We cannot deny that the exchange rates are of vital importance and are usually looked upon before making any investment decision abroad by foreign investors. This paper has focused on the external fund flows and its allied economic factors for the 2001 to 2015. Bi-variate Correlation is applied on the FDI, FII and Rs vs. Dollar rate and observed that Variables have strong positive correlation among them. Regression analysis is implemented on Rs vs. Dollar, FDI and FII it was observed that exchange rate fluctuation has impact on FII and FDI. Granger causality test was applied on FII, FDI and fx reserve and it was found that FII has impact on FX Reserve but FDI don’t have the impact on fx reserve. This study is useful to the Indian investor’s fraternity such as HNI’s, QIB, Indian Mutual Funds and retail investors.