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agrawal0503's avatar

What is the relationship among Exchange rate, Trade balance, FII & FDI investments and stock market returns?

Asked by agrawal0503 (4points) May 4th, 2015

How these items interrelated?
Please suggest me reference links for further study.
Thanks in advance

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1 Answer

zenvelo's avatar

Anyone investing in a foreign economy needs to anticipate change in currency exchange rate when trying to determine an expected rate of return. If one predicts a market will return 10%, but the exchange rate will decline by 15%, the return will be negative.

Trade balance does not have a direct impact on exchange rate or stock market returns, but has an influential impact.

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