Tuesday, May 20, 2008
The depreciating Rupee w.r.t $
According to the classical theory the rupee value should have increased due to higher interst rates.But due to soaring crude oil there is pressure on rupee as billing is done in dollar and rupee has depreciated.This is good for the export industries esp. IT and textiles which will leverage their sales and make higher revenue.But the trend will see reversal as indian economy will tend to grow in longer term and will attract FDIs.so we can expect the rupee will remain on the 48 vs dollar in longer perspective.
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2 comments:
Yes,it is right that the rupee weakened after the oil prices went-up.But is this not a concern of slowing Indian economy?What will happen if rupee further falls in panic of slowing of the economy.
Current fall of rupee is definetely not a cause of worry.The fundamentals of Indian economy are strong.And we see no reason for the rupee to fall beyond the 45/$.definitely from end of the year when the U.S recession will ease of we will see a lot of investments in form of FDIs and FIIs.
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