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Rupee at a record low of 79/$, what’s happening?
A dummies guide in this 🧵
Do ‘re-tweet’ & help us educate more investors (1/13)
#Investing #invest #StockMarket #RupeeVsDollar #RupeeSlideDebate
A dummies guide in this 🧵
Do ‘re-tweet’ & help us educate more investors (1/13)
#Investing #invest #StockMarket #RupeeVsDollar #RupeeSlideDebate
(Q) Lets start with the basic, y does the rupee generally keep falling against $?
(Ans) Interest rate parity. Let me explain,
US interest rates r at 3% & India is at 7.5%. Isn’t it easy to borrow in the US at 3% & invest in India at 7.5% & make 4.5% risk free?
Nope ☺ (2/13)
(Ans) Interest rate parity. Let me explain,
US interest rates r at 3% & India is at 7.5%. Isn’t it easy to borrow in the US at 3% & invest in India at 7.5% & make 4.5% risk free?
Nope ☺ (2/13)
Lets assume you borrow $100 at 3% from US to invest in India & are expected to pay back $103 at the year-end. In India, $1 is 75 & hence you first convert $100 * 75 to Rs. 7,500 which is invested at 7.5% giving you 8062.5 at the year end. (3/13)
