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Explained: Federal Reserve Hike Interest Rates Effects On Indian Markets And Currency

Federal Reserve Hike Interest Rates: As expected, the US Federal...

Federal Reserve Hike Interest Rates: As expected, the US Federal Reserve has once again increased interest rates. America’s central bank Federal Reserve has reduced interest rates by 0.75 percent, behind which the reason behind rising inflation has been given to keep inflation under control. Although this decision in America will cause the banks to increase interest rates there, but how will its effect on India, you can know here.

How will it affect India’s market and currency?
The effect of increasing the interest rates of US Federal Bank will be seen on the Indian rupee and it can go down further. The rupee has already touched the lowest level of 80 per dollar against the dollar. In such a situation, the move of increasing the rates of the American bank can increase the problems of India.

RBI will have to think about raising interest rates
The meeting of the Monetary Policy Committee of the Reserve Bank of India is going to be held from August 3 to 5, after which the RBI will announce the credit policy. This time too, the fear of increasing the rates of RBI has deepened. The Fed’s decision can also be considered as the reason behind this. If the RBI raises other policy rates including the repo rate, then the banks of the country will also have to increase the loan rates. This will have a direct impact on the EMI of your loan and they can increase.

India’s import cost will also increase
Due to the increase in the interest rate of Federal Bank, the value of rupee against the dollar may decrease, which will have an impact on India’s import spending. With the dollar becoming expensive, India’s import expenditure will increase and the country’s trade deficit may increase further, which has seen a boom in recent times. With the increasing trade deficit of the country, the government will have to take some steps in this direction, which can have an impact on the import of commodities and other commodities.

FII outflows from Indian stock market may increase
After the Fed raises rates, the dollar rate will rise and it will be more profitable for foreign investors to invest in the US market or dollar-based markets than in the Indian market. Therefore, they will invest more in the US market or other markets than the stock market of India. By reducing investment in India, there will be a risk of reducing the country’s foreign exchange reserves.

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