Aug 28 2008
India outshines in Dollar index rally
After a long hiatus, the Indian economy is smiling again. All thanks to the present volatility in forex markets and US Dollar index. According to the statistics available, the Indian equity markets have by far succeeded in outperforming the world markets as a result of a marked rise in the US Dollar index since 15th July 2008. The US Dollar Index or the USDX, is a measure of the US Dollar in comparison to the other foreign currencies of the likes of the European Euro, the Japanese Yen, the French Franc, the British Pound, the Canadian Dollar and the Swedish Kroner.
It is traded exclusively only on the Intercontinental Exchange Platform and is the weighted average mean of the value of the Dollar in comparison to the basket of the 6 mentioned currencies. With the US Dollar index rising by an 7.83 per cent to shine at a high of 77.50 this August, both, the Sensex and the Nifty have shown simultaneous impressive gains amounting to 14% and 12% respectively. On the other hand, export dependent strong economies of the likes of Brazil and Russia have reported a downfall in the same period falling in the range of about 10-12 per cent. Serving the same fate were the economies of Japan and Hong Kong. Showing some positive movement was the equity benchmark of the FTSE 100 which managed a positive movement of about 4 per cent.
With the current interest of investors tilting towards commodity using countries rather than the commodity producing ones, the hedge funds around the world have taken an important part in making the dollar index a benchmark for commodity and equity trading. The huge worldwide buying of the Dollar in the Dollar index has resulted in a crash of commodity prices. In the present scenario, big bets are being laid for a rise in Dollar and is followed by taking a subsequent position in equity. This rise in dollar index compiled with the fact that India is not a major commodity exporting country has resulted in the upswing of the domestic market conditions.