Page 43 - DCICAI SOUVENIR 2018

they pull out their invested able to retain power at centre
money. But they demand the
most respected currency or
easily accepted money i.e.
dollar and so, the demand of
dollar increases which further
increases its price.
Foreign Portfolio Investors
(FPIs) have pulled out nearly
Rs. 48,000 crore from Indian
capital markets in the first six
months of 2018, making it the
fastest outflow in a decade.
FPIs withdrew a net sum of
Rs. 6,430 crore from equities
besides Rs. 41,433 crore
from the debt markets during
January-June period of the
year, taking the total outflow
to Rs 47,836 crore.
4. Political Uncertainty:
This is a tricky situation
where popularity of the
current government seems to
be fading and thus creating
an atmosphere of uncertainty
among foreign investors (as
per recent surveys by media
houses). The uncertainty
looms big time whether the
current government will be
43 | DCICAI - 5th INTERNATIONAL CONFERENCE
19 items on September 27,
or not. If not, and a new
government comes in the
power they may change the
FDI or other policies, money
of investors may be trapped.
In addition, Government is
set to increase spending on
populist measures ahead of
May 2019 elections, which are
also making foreign investors
nervous. I think these are
the major reasons foreign
investors have started pulling
out their money at least until
next year elections, to invest
in those world markets that
can provide them stability
and secured return.
I believe that due to the
combined impact of above
factors, the exchange rate
between Dollar and India
Rupee is touching its lowest
point.
In a move at curbing import
of certain items to rein in
the current account deficit
and save precious Dollars,
Government of India
increased import duty on
including duty on several
telecom equipment such
as printed circuit boards
thereby likely to yield about
Rs 4,000 crore in revenue to
the government. The hike in
duty is expected to decrease
demand and lowering their
imports while also helping
local manufacturers of these
items. How deep this move
help India in containing
Rupee depreciation is yet to
be seen.
However, my personal
opinion is that further fall is
highly unlikely unless there
are other unknown factors
sighted into the playoff.
I do hope that RBI and
Government of India would
continue their combined
efforts in this direction to
curb depreciation trend in the
Indian currency...for a long-
term solution!
Source:
- www.XE.com
- https://www.jagranjosh.com
- https://economictimes.
indiatimes.com