Rupee at all time low against the dollar
Today’s very important
news on all business channels are that rupee has trading all time low against
dollar. Every analyst wants to know that what is the reason behind this weakness
of rupee and how would it impact on overall economy. The rupee has been falling
for five straight weeks. Right now it is at 57.92.
According to analysts,
there may be many reasons for this weakness. According to my view, the widening
trade deficit of our economy is the prime reason for this slide. However, government
is struggling to control it but has not got succeed till now.
There is overall consensus
among the masses that the UPA government is not likely to implement the reform
programme. It is unlikely for this government to generate heavy capital inflows
for reform the economy. Oil and gold imports bill are still worry factor for
deficit.
Foreign Institutional Investors
are selling index future for hedging their stock position. It is again
expectation of weakness in the stock market in near term. The main reasons
behind this slide of rupee are weak economic fundamental and widening trade
deficit.
Exporters like IT firms
will gain from this rupee weakness as these firms earn majority of revenue in
dollar term. This weakness would also give some support to falling gold prices. The gold prices has been down in rupee term 15% during 2013.
It is bad for the student
who wants to go abroad for higher education. It will increase India’s current
account deficit as oil companies will pay in dollar term. As of now, the global
prices of oil are falling so not near term threat for price hike. The companies
who import the raw material would be affected by this weakness of rupee.
For more detail about any other query related investment,
you can contact me through my email.
Regards,
Arvind Trivedi
Certified Financial Planner
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