Rupee declines against $$ crossed Rs 42 against one $ Very happy indeed it has gained 8% in the last one week. What you think where it would stop i am guessing something around 43
Rs 42.5 is a target that most analysts are predicting....a big part of the weakness is due to oil importers buying dollars...plus there is speculation that FII/FDI flow will slowdown as industrial growth is sluggish.
Well it surly a great news for Indians and market suggested that rates will now stay between 41 Rs to 42 Rs. Now we can earn 2000 Rs extra on $1000.
What's the correlation between a high rupee and international investment in India? I assume that a higher rupee may bring less investment? But maybe I'm wrong?
India's capital account surplus is currently bigger than the trade account deficit. In simple words, India imports more than it exports....this makes the INR weaker, but, the investment/remittances inflow is so huge, that the demand for INR not only compensates for the trade deficit, but it actually makes the INR stronger. if these flows slow down, the trade deficit will start to weigh on the INR. (if India's growth slows, investments are expected to slowdown too).
agreed. economics was one of my fav subjects at school but I couldn't have explained the way Sachin did! Cheers guys...
too much CNBC........ India's central bank (RBI) didn't allow the INR to appreciate beyond Rs 39 per $ to protect the exporters. this gave an artificial top to the INR at Rs 39 per $. here is the chart of the USD versus the INR. the INR has formed a classical "head and shoulders" pattern. (H = head and S = shoulder). note how the USD jumped against the INR once the trendline was violated (inset):