How does the economic system work?

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Stock market - I have basic idea - (somebody may explain in detail). Its the basic demand supply concept. If say some XYZ company doing good and so people want to invest on their stock - demand goes up - stock prices goes up.
And the BSE Sensex is just 'some' index of some top 30 stocks. list

Dollar - I have no idea. ;)
 
challapradyumna said:
How does the stock market work ?
Why is that 1 USD = 60 Rupees . What changes can affect it ?
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International trade is done in dollars.

In simple terms.
Example

Jan -> 1 apple = 1 dollar = 50 rupees
Mar -> 1apple = 1 dollar = 60 rupees.

In Mar You need to spend 10 rupees more to buy the same amount of apples as you bought in Jan. Naturally the price of certain commodities increses.

For export it's good as your getting more money for the same quantity.
 
1-Rupee and Us Dollar relation.
The value of Indian Rupee in US dollars is decided on the basis of amount of goods/services that costs in both the countries. For example, if one dollar is equal to fifty rupees, then it simply means that the good/services which costs 1 US dollar in United States would cost Rs. 50 in India.
2-Meaning of dropping of value of Rupee against US Dollar.
If the value of a currency increases against another currency, it is called currency appreciation and drop in the value of a currency against the other is called currency depreciation.
Drop in the value of Rupee against dollar means if earlier u can purchase 1 Dollar in 50 rupees, now 1 dollar will cost u more than that, say Rs 51 , which means that dollars has strengthened.
This depends on the value of capital inflows in the country.

That's all there in my head at this current moment.
 
Its not 'money inflow'. Its about having a product other countries don't have or are badly in need of it. I mean the demand.
 
challapradyumna said:
@blkrb0t Can you point me to the thread?
How does the money inflow strengthen the rupee ?
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I couldn't find it; don't know what keywords were used. However, I did find this prediction funny: Predict 2012 :D

There was actually a URL given in that post which lead to a page that explained it in a simple manner. I will try to find it and post if I can.
 
for that you should first understand the international monetary and banking system. then how US uses it's muscle to maintain supremacy of the dollar as the international standard currency. then how other nations currencies are pegged to the dollar. then how our stock markets are gamed using participatory notes that causes forex outflows. import export deficits. forward trading in commodities increasing food and oil prices. investor sentiment. and so many other things like industrial output, US economic performance/fed rates affect rupee value.

now start with this


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