Tuesday, August 20, 2013

Why is Indian Rupee falling against Dollar

- Chellamuthu Kuppusamy

If you are a software professional deputed to an onsite assignment anywhere around the globe, you are happiest person in the world today. One GBP is almost equal to Rs 100 now. Anyone who is making money abroad or in the business of exports have reasons to cheer. But for others the situation is gloomy, as the media projects it.

Firstly the RBI and the union government of India are the most concerned parties - that too at a time when the country is preparing herself for the next general elections. Money exists India at a faster pace especially from the debt market. To quote from capital market: “Since June 2013 till 7 August 2013, FIIs have sold debt worth US$ 8.4 billion. Between January 2013 and May 2013, they had invested US$ 7.7 billion in the debt market. “

India is the worst affected country due to increase in the lending rates from the United States. Debt investors have been taking their cash back to inject into the greenback for it provided safety and cofort feeling. Despite India offers higher returns, exchange rate risk and other political cum policy risks are to be discounted. In order to keep foreign money intact in India, rates should be kept high which directly affects our already bleeding economy. Many sector will feel the heat.

On the stock market, it is unlikely to see hot and quick money to get be pumped in because risk free return from the banks seem more attractive than the uncertainties associated with the stock market. Many scripts trading on Indian bourses are expected to languish. Perhaps it may be a bad time for Indian Rupee and Indian economy. But for seasoned stock market investors many stocks are available at reasonable price. It is perhaps a good time to hit some boundaries as prescribed by Rahul Dravid school of investment as articulated in the Stock of Science Market Investment.

1 comment:

Siva Ank said...

I agree with you Kuppu....