Investment and Exchange Rate

Topics: Investment, Economics, Purchasing power parity Pages: 2 (1025 words) Published: September 3, 2013
India
An Emerging Market and its Economy

An exchange traded fund is a commodity or a group of assets like an index fund, but trades like a stock on an exchange. ETF’s experience price changes throughout the day as they are bought and sold. When you buy shares of an ETF you are buying shares of a portfolio that tracks the yield on a return of its native index. The emerging markets are growing at a high rate, which attract positive foreign investments. India and China are considered to have the largest economic increase in foreign economic growth. According to Wikipedia, India is the 3rd largest economy by purchasing power parity. In 2005 India’s GDP growth rate was 9.3% and remained stable through 2007. In 2008 India’s GDP fell to 3.9% and ended at 10.5% in 2010. India was one of the first to recover from the economic bust around 2008. India received the highest investments during the last fiscal year (http://indien.ahk.de/fileadmin/ahk_indien/Bilder/2013_Updates/News_and_Info/India_receiveshighest_investments.pdf). The symbol for India’s currency is INR, which began around July 2010. After the independence in 1950, India followed the fixed exchange rate and the INR was linked to the USD. Around 1975, the INR was devalued and the fixed par rate was replaced with a bucket of different currencies such as the Pound, USD, Yen, and Deutsche Mark, this continued till the early 1990’s. India has adopted the flexible exchange rate (Dua & Ranjan, 2010). Since India moved to the exchange rate system there have been some fluctuations. In the last 20 years Indian currency has depreciated against the USD. During the years (2006-2010), the INR has been very volatile in 2006 the exchange rate was .0224 and fluctuated until reaching a high of .0256 in 2007. Not long after it peaked, the INR started to depreciate again. As the world economy started to crumble, investors started to sell the emerging markets and moved to safer investments such as the...

References: Google Search 2013 http://en.wikipedia.org
Yahoo Finance 2013 http://finance.yahoo.com
Google Finance 2013 http://www.google.com/finance?q=INRUSD
Google Search 2013 http://www.marketoracle.co.uk/Article28468.html
Google Search 2013 http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG
Yahoo Finance 2013 http://finance.yahoo.com/q/pr?s=INDY+Profile
CIA World Fact Book 2013 http://www.cia.gov/library/publications/the-world-factbook/geos/in.html
Google Search 2013 http://www.indohistory.com/economic_history_of_india.html
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Rate of Exchange and Foreign Investment Essay
  • EXCHANGE RATES ESSAY
  • Exchange Rates Essay
  • Exchange Rate Mechanisms Essay
  • Exchange Rate Essay
  • Exchange Rate Essay
  • exchange rates Essay
  • Exchange Rates Essay

Become a StudyMode Member

Sign Up - It's Free