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
