Shrinking Bond Yield Differentials leading to fall in Rupee

India has over the past year. by design, maintained a low interest rate environment. This has led to interest rate differentials shrinking between US and Indian bonds. While low interest rates in India are an indicator of a strong economy, a falling interest rate differential leads to capital flow out of India, thereby hurting the Rupee.

Its Budget Season in India, and at such a time if the equity markets are falling and so is the Rupee, then popular opinion gets shriller.

Hence this video to calm the nerves of investors by looking at the deeper data trends rather then falling prey to mindless cacophony.