Comments on: connection between rate of foreign currency & indices of stock market of a country ? http://www.stockpickins.com/stock-indices/connection-between-rate-of-foreign-currency-indices-of-stock-market-of-a-country/ Cherry Picking The Diamonds From The Stock Market Sat, 03 Apr 2010 23:38:59 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: The Guru® http://www.stockpickins.com/stock-indices/connection-between-rate-of-foreign-currency-indices-of-stock-market-of-a-country/comment-page-1/#comment-2691 The Guru® Wed, 01 Jul 2009 06:50:59 +0000 http://www.stockpickins.com/stock-indices/connection-between-rate-of-foreign-currency-indices-of-stock-market-of-a-country#comment-2691 You may have made a good observation but there is little empirical evidence to correlate the fall in the rupee and the stock markets.. Having said that, the reason for the fall can be largely associated with the selling by FII, now u must know that when FII sell their stocks they sell rupees and convert them to dollars, that being their primary currency , This huge sell off of rupees drives the demand for dollars ultimately pushing the dollar price up against the rupee, unless the RBI intervenes and starts buying rupees to suck the excess liquidity in the system the slide in the rupee is going to continue. Hope that partly answers ur question!<br><b>References : </b><br>The Guru You may have made a good observation but there is little empirical evidence to correlate the fall in the rupee and the stock markets..

Having said that, the reason for the fall can be largely associated with the selling by FII, now u must know that when FII sell their stocks they sell rupees and convert them to dollars, that being their primary currency ,

This huge sell off of rupees drives the demand for dollars ultimately pushing the dollar price up against the rupee, unless the RBI intervenes and starts buying rupees to suck the excess liquidity in the system the slide in the rupee is going to continue.

Hope that partly answers ur question!
References :
The Guru

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