How does currency fluctuations effect flow of money in Indian stock market
Currency fluctuations, particularly changes in the value of the **Indian Rupee (INR)** against major global currencies like the **US Dollar (USD)**, have a significant impact on the flow of money in the Indian stock market. Here's how: --- ### 1. **Impact on Foreign Institutional Investors (FIIs)** - **Foreign Investment Inflows**: - When the INR **depreciates** (weakens) against the USD, foreign investors get more rupees for every dollar they invest. This can make Indian stocks appear cheaper and more attractive, leading to increased foreign investment inflows. - Conversely, when the INR **appreciates** (strengthens), foreign investors may find Indian stocks relatively expensive, potentially reducing their investments. - **Repatriation of Funds**: - When FIIs sell their investments and repatriate funds back to their home countries, a weaker INR means they get fewer dollars in exchange for their ...