Indian Rupee dives on FOMC - 2nd biggest fall in history

Market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term on the back of FOMC has caused thunder in the markets as equities and commodities suffered huge losses.

The Indian rupee suffered its second biggest fall in history as the US dollar continued to be sought by investors as a safe asset and expectations of foreign investor inflows were belied. The local currency dropped by Rs 1.24 against the dollar to close at 49.58 and is now expected to further weaken to below Rs 50 against the dollar.

Those planning an overseas vacation will have to spend nearly 10% more than what they would have set aside three months back for their dollar purchase. The weak rupee will make all imports, including oil, more expensive and add to inflationary pressures. Exporters, however, stand to gain as they will now get more rupees for their dollars. The fall in rupee value will also encourage overseas workers to send more money home and park them in domestic deposits.

Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term dealers said that the worst might still be ahead with the three-month forward trading at 50.21 in offshore markets as compared to 49 on Wednesday. Although the rupee is not convertible overseas investors hedge their exposure to rupee in the overseas through transaction in non-deliverable forwards - a future market where there is no delivery of rupee currency, but the exchange difference between spot and future rupee is settled in dollars.

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