$ vs INR : What's Next?

In the last financial year we have seen a great deal of appreciation of rupee against dollar. The conversion rate is into late 40s. will the rupee further appreciate or it will go down??

Here is the insight

Why Rupee is appreciating?

The Indian economy is booming like anything. The services, energy and manufacturing sector is doing very well. The monsoon has been good. When the economy is booming and attractive investors will pour in money into the economy. In the recent months the sudden surge in the stock market is because of FII and foreign mutual funds investing their money in Indian Economy. As they need to buy everything in Rupees the demand for Rupee has increased.

On the other hand, the US economy is slowing down. There is major credit crunch. Also there are companies in their better times promised that their employees will be given all medical care even if they are retired. The US health care however is too expensive and it is sucking money out of the profits these companies are earning. Also, the thirst of oil will never die in US. Oil has reached all time high and the inflation has increased.

The US fed reserve is continuously cutting down on interest rates. There is no way citizens of US can appreciate their daollar savings withing the country. Hence they are looking around for the booming economies.

All in all, as long as US economy does not boom up, there is no way rupee is going to get weak. It will continue to appreciate. Stock market players have a good time :-)