Markets: A Rigorous Course

M11 · Problem 13 ★ Check

The FPI's dollar return

A US-based fund buys the Nifty when USDINR is 94.47. Over the year the Nifty returns +8% in rupees and USDINR ends at 99.00. (a) Compute the dollar return. (b) At what year-end USDINR is the dollar return zero? (c) Explain how this arithmetic links an oil shock to FPI selling.

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Commas, ₹, % and 1e-3 notation are accepted.

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