Jul 6, 2008

Dollar Going Up- Benefits And Loss

Dollar has gone up from 39.xx to 43.xx currently. FII (Foreign Institutional Investor) is pulling their money from Indian market. In 6 months they have pulled out more than six billion dollar. It is the biggest outflow since 1993. In 1993 Foreign Institutional Investor was allowed to put money into Indian market. In 2007, FII invested more than $ 20 billion in equity and debt.
The stronger dollar is good for exporter. It is bad for importer or who consumes imported products. Industries who depend on imported products heavily for raw material will face higher input costs.
Currently government has extra worries with the weakening rupee. Weaker rupee mean govt. has to give more rupee for each dollar for oil purchase and whatever Oil companies get relief from June price hike in petroleum product will be wiped out.