Why investors shouldn't panic if stock market and rupee seem to tango

Historically, the impact of currency depreciation on equities has only been for a limited period

India once again finds itself caught in a global currency market turmoil. The rupee has fallen a little over 12 per cent against the US dollar this calendar year. While the depreciation had been steady in the first half of the year, the second half saw a sharper fall.

The challenges within the currency market have affected sentiments in other markets as well – both equities and fixed income. Specifically, the equity market – after seemingly holding firm in the first half – has seen a sharp correction in the past two-three months, mirroring the acute phase of the currency depreciation.

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