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RUPEE (In news (The Govt. announced a set of five
measures aimed at…
RUPEE
In news
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Govt has even said it will review certain FPI restrictions such as
-FPls' investments in a single corporate
entity cannot exceed 20% of its corporate bond portfolio
-condition that the FPls' cannot
invest more than 50% of an issue of corporate bonds will also be reviewed
-Govt. has exempted all rnasala bond
issues, until March 31, 2019 from the withholding tax requirements
-Govt has also said it will remove restrictions on Indian banks on market making for such bonds
Rupee depreciation
Long term reasons
India exports> imports; India unable to promote exports due to protracted stagnation of the competetiveness
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Short term reasons
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Corporate Taxes reduced in USA-->bOOMING economu
Interest rates raised in USA--> Higher returns expected in USA, hence FPI outflows from India occuring
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Exporters delay in taking the dollar payments,Importers purchasing the dollars in advance.
If one looks at the returns in the stock market, the
returns for FPls are lesser for those of the domesticinvestors, because of lesser Dollex in comparison to
Sensex.
What is Dollex?
It is the index, which translates the rupee
returns on the BSE Sensex basket into dollars based on prevailing exchange
rates.
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Depreciation
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Losers
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Companies have outstanding debt in foreign currency, without hedging will be affected