IMPACTS OF EXCHANGE RATE IN STOCK MARKET

COLLEGE CODE: MARUTHI

PRESENTED BY :-

ANU SEBASTIAN

SREEJITH .PR

BEFORE MT.EVEREST WAS DISCOVERED, WHAT WAS THE HIGHEST MOUNTAIN IN THE WORLD?

EXCHANGE RATE

Rupee is again near its lows against dollar. In recent past rupee movement has been quite volatile and this volatility can be attributed to factors like Government Policies, Interest Rate Scenario and demand and supply imbalance. Although as an individual stock market investor we cannot control volatility but we can definitely device some strategies which will enhance our returns. 

EXCHANGE RATE MEANS HOW MUCH ONE CURRENCY IS WORTH IN TERMS OF ANOTHER CURRENCY. 

For example, If we can buy $ 1 with Rs. 67, the exchange rate of the two currencies would be $1 = Rs. 67.

The two types of exchange rate are:• FIXED EXCHANGE RATE- CONSTANT CURRENCY VALUE FIXED BY GVT• FLOATING EXCHANGE RATE-DETERMINED BY MARKET FORCE(DD,SPLY)

STOCK MARKET

The stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. Regulated by the Security and Exchange Board of India (SEBI)

The stock market can be split into two main sections:

1. The primary market  is where new issues are first sold by way of IPO,PRIVATE PLACEMENT,BOOKBULIDING ETC.

2. The secondary market is where previously issued financial instruments are bought and sold .

By knowing foreign exchange volatility we can analyze the financial position of any developing and under developing country.

REAL ECONOMY of country is affected by EXCHANGE RATE VOLATILITY.

devaluation of currency have influenced on both importers and exporters. These results are also supportive for prediction of future trends.

foreign exchange rate volatility influences the value of the firm since the future cash flows of the firm change with the fluctuations in the foreign exchange rates.

LETS SEE HOW EXCHANGE RATE INFLUENCE STOCK MARKET

EXAMPLE

The rupee appreciation against US dollar of year 2006-08, from Rs.45.02 to Rs. 39.07

The period when the Indian stock market was on BullRun against the other specific industries like IT industry on bear run.

Exchange rate changes directly influence the international competitiveness of firms, given their impact on input and output price“Indian companies can be divided into two groups based on the impact of currency fluctuation on their stock price and profitability”NET EXPORTER

1. When the Exchange rate appreciates, since exporters will lose their competitiveness in international market, the sales and profits of exporters will shrink and the stock prices will decline.

NET IMPORTER 2. On the other hand, importers will increase their

competitiveness in domestic markets. Therefore, their profit and stock prices will increase.

High volatility in exchange rate/ stability of stock market ?

– Investors shift to stock market.

Exchange rate is stable /stock market is high volatility – Investors stay with their

foreign reserves.

BEFORE MT.EVEREST WAS DISCOVERED, WHAT WAS THE HIGHEST MOUNTAIN IN THE WORLD?

ITS MT.EVEREST ONLY

CHALLENGE YOUR LIMIT, NEVER MISS AN

OPPORTUNITYTHANK YOU