Thursday, May 11, 2006

>Effect of US Fed rate increase

This is a dollar vs rupee chart and we see how a rate hike in US sends the dollar shooting up.
With higher interest paying dollar assets money tends to return to US assets and thus dollar tends to appreciate.

Strong dollar is generally positive for export oriented companies in India.


Sumanta said...

True for exports, but what abt imports. With rising oil prices a weak rupee will spell more trouble

Anonymous said...

Yes its good for export but how long. The USD circulation has increased to the tune of 54% in last 10 years & yet USD is becoming stronger against Euro, Yen & INR. How come.

US Govt is propping its currency by repeatedly raising its interest rates.

How long this will continue?

ADB in its recent report warned Asian countries about collapse of the USD in near future.

A devalued USD will play havoc with our exports but will raise our national wealth due to soaring Gold & silver prices