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  • Category: Stock Market

    What the reason of rupee fall and what are its adverse effect on share market?

    Are you wondering about the adverse effects of the fall of the rupee on the stock market? Get information in this thread on the effects of the rupees slide on the shares market.

    Last week Rupee value went down to its lowest ever rate, that is around 59Rs/Dollar. It has some negative effects on share market too. What is the reason behind this rupee fall? What are its adverse effect on share market? How can this rupee fall be stopped?
  • #106343
    Last week rupee hit almost lifetime low of 59.93 against a dollar. This is really a negative news for Indian economy. There are so many reasons for this weak rupee or fall of rupee against dollar. One of the main reason is dollar is very much in these days and thus almost all other currencies from various countries fell down very badly. So not only rupee, but also other global currencies like Japanese Yen and other currencies like Euro, pound all were fell down.

    The other reason of rupee fall is many foreign institutional investors (FIIs) have sold their positions in the Indian bond market, and because of huge selling pressure in the bond market, rupee falls. The sentiment is more negative and thus outflow also have started from the equity market. FIIs are selling their positions from equity or cash market also. Because of these overall activities, rupee as well as our Share market under tremendous pressure.

    However RBI has intervened many times to support of further fall of the rupee. RBI does various measures to try to stop rupee further falling. One of such process is RBI sells dollar currency through PSU banks. Again RBI and finance ministry has initiated various guidelines on import of Gold. Because of increase in gold import, it affects our currency rupee as well as country's current account deficit also increases.

    With Best Regards,

  • #106376
    In an open global economy it is difficult to check the falling value of currency and if temporary measures are taken then the real situation will bounce with a bang. Any country's currency can become hard currency, a currency in demand in which most of the countries may like to have foreign trade and remittances. Indian Rupee is not a hard currency and most of the countries have to pay for their imports through US dollars, British Pound, Euro currencies. Acceptance of any currency the world over makes it strong. Now India has bilateral ties with many Asian and other countries where settlements of payment are made through rupees accounts.

    Basically the credit worthiness of any country's currency is the benchmark for its fall or rise. If an individual who pays for his bill by cheque, another form of paper currency, and the cheques issued by the individual bounce then no body will accept the cheques. Similar is the case with currencies and if a currency can not buy the necessities of a nation then that currency is devalued. Currencies can go up if the GDP and NP (Gross Domestic Product and National Product) increase in reality that is quantitatively by increase in agricultural production and industrial product and selling of technical know how internationally to encash the human resources.

    Impact on share market will be mixed as the companies who depend upon imports will have to pay much reducing their margins and companies exporting their products will get more rupees resulting into increase in their margins in India whereas in the international market, their products may remain competitive in terms of dollars.

    Ashok Goyal

  • #106378
    At present time the main reason of rupees fall is that there is the most top demand of dollar for payment at the end of the month. The second reason for this issue is that the foreign institutions are withdrawing their money from our Indian share market. The third reason of this great fall of Indian rupees is that it is the indication of fed reserve on withdraw of encouraging package in America. The effect of this is clearly seen on share market. Sensex fell 77 digit and closed 18552.
    Thanks & Regards
    Ekta Raikwar

    Make each day your masterpiece.

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