|
|
 Email |  Discuss | Get latest news on your desktop
Why the rupee is falling against the dollar
September 23, 2008
What happens if the rupee keeps on falling?
As the rupee falls, foreign investors will want bigger returns for their money to compensate for the higher risk. This means that the Indian government, companies and individuals will have to pay more for the money they borrow: in other words, higher interest rates.
A major problem with a falling rupee is that it will increase the Indian government's burden of repaying and servicing foreign debt.
Another problem is that it might discourage foreign institutional investment from pouring funds into the Indian markets.
Indian companies which could borrow from the overseas markets at cheaper rates to finance their import and export needs will be badly affected.
Image: An Indian bank employee counts rupee currency notes in Mumbai. | Photograph: Indranil Mukherjee/AFP/Getty Images
Also read: The top 10 email scams
|
|
|
Advertisement
