FOREX MARKET

Participants : Common banks Interbank dealers Large corporate Hedgers & Arbitragers HNI & Retail Investors

If Rupee Appreciates $ depreciates E.g.: 45.65 45.20 USDINR. Inference:

FII inflows are high Optimism in the market Stock buying.

$ Selling in the Domestic market by Exporters.

Gains in Equity Increased capital Inflows Rupee appreciation.

Government statement that will not put any curbs on $ inflows. Global economy is recovering from Recession.

Rise in Risk Appetite: - Higher demand for Risk in Investment assets like Equity & Commodity. Growth in Exports Huge Inflow of $ Rupee appreciation against $.

Low Inflation promotes appreciation of currency.

Low Interest rates in US weakening of $ Rupee appreciation.

If Rupee Depreciates $ Appreciates E.g.: 45.25 45.70 USDINR. Inference: Increase in $ purchase by Refineries to pay for the costlier crude imports.

Poor Economic Data Negative Impact on Global Equity market Selling in equities. Risk Aversion Lower Demand for Riskier Investments due to Negative sentiments Data etc Selling or less buying in Equity. Risk in Crude concerns of higher Import bill in particular period.

Rise in Inflation.

Higher Interest rates in US Strengthening of $.