NB: RBI= reserve bank of India (kind of like the US federal bank, but pertains to India) FII=foreign institutional investors (companies that invest in India)
1. I read that Japan started selling its currency leading to the yen depreciating against $$
2. Now if FIIs start to invest in India, they will create a demand for Rupees (which will be given to them by the RBI so that it gets pumped into the system; so the Rupee will appreciate) while they give the RBI $$ (so $$ depreciates against the rupee). My question is: if FIIs invest in India and demand rupees, isn’t this the same as saying that the RBI is giving or ‘selling’ its rupees for the $$ of the FII’s? (if so, then the rupees should depreciate, as rupee gets pumped into the system according to what the Japanese did)
Been breaking my head over this for quite some time. Any help is vastly appreciated (especially with the demand and supply curves), thanks.
Another question is that Japan sells its yen, so there is more yen in the world, so supply is abundant-->depreciation of the yen against $$
But this also means that the yen in japan is scarce (as it is available around the world in different places due to selling by govt of Japan). So by the law of supply, when supply decreases, the yen becomes more powerful (ie appreciate) in Japan? Right?
1. I read that Japan started selling its currency leading to the yen depreciating against $$
2. Now if FIIs start to invest in India, they will create a demand for Rupees (which will be given to them by the RBI so that it gets pumped into the system; so the Rupee will appreciate) while they give the RBI $$ (so $$ depreciates against the rupee). My question is: if FIIs invest in India and demand rupees, isn’t this the same as saying that the RBI is giving or ‘selling’ its rupees for the $$ of the FII’s? (if so, then the rupees should depreciate, as rupee gets pumped into the system according to what the Japanese did)
Been breaking my head over this for quite some time. Any help is vastly appreciated (especially with the demand and supply curves), thanks.
Another question is that Japan sells its yen, so there is more yen in the world, so supply is abundant-->depreciation of the yen against $$
But this also means that the yen in japan is scarce (as it is available around the world in different places due to selling by govt of Japan). So by the law of supply, when supply decreases, the yen becomes more powerful (ie appreciate) in Japan? Right?
