Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a negative note with stocks in the realty sector and energy sector witnessing maximum selling pressure.

The BSE Sensex is trading down 5 points (down 0.01%) and the NSE Nifty is trading up 2 points (up 0.01%). The BSE Mid Cap index is trading down by 0.6%, while the BSE Small Cap index is trading down by 0.5%. The rupee is trading at 63.67 to the US dollar.

In the news from the currency markets, the rupee is trading on a positive note this week. It yesterday ended up at a five-month high against the dollar.

The above momentum was seen for the past three sessions, where the rupee gained around 47 paise against the dollar.

Most of this was seen on the back of dollar unwinding by banks and exporters amid bearish sentiment for the dollar overseas.

Apart from that, expectations of robust capital inflows into India supported by various economic policy measures also kept the forex markets buoyant.

Note that the rupee surged almost 6% against the dollar in 2017, mostly driven by strong inflows into capital markets.

The appreciation in the rupee comes as a welcome breather for importers in India. A softer rupee helps importers to buy goods and services at a cheaper rate than earlier. This is vital for a developing economy that relies heavily on imports. So this bodes well for the Indian economy as higher imports normally mean increased economic activity.

But on the other hand, the rise in rupee can spell trouble for exporters. The exporters are at a disadvantage owing to the currency appreciation as this renders their produce expensive in the international markets as compared to other competing nations whose currencies haven’t appreciated on a similar scale. This tends to take away a part of the advantage from Indian companies, which they enjoy due to their cost competitiveness.

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