India's emerging market compared to the USA from 2005-2010 - Research Paper Example

Indias emerging market compared to the USA from 2005 As large and developed economies tried hard to regain their position during the recent economic crisis, several investors have actually been drawn to the propensity for substantial growth provided by emerging markets. The economy of India grew by about eight percent in the third quarter of the year 2009, surpassing the estimates by analysis by far. The first ETP, which was INP, was introduced in 2006 to expose the Indian markets and its current total market capitalization stands at over 1.

2 billion US dollars (Bhimrao 92). The Wisdom Tree Dreyfus Indian Rupee Fund; is an ETF that can be regarded as an investment in the markets of Indian money; it tries to attain total returns reflecting both rates of money markets in India that are available to the foreign investors and also changes in rate the rupee relative to the dollar. An expense ration of 0.45 percent is charged by the ICN: US Dollar ETN/ Market Vectors Indian Rupee; is an ETN that exposes the currency of India, with the aim of replicating the S&P Rupee Total Return Index’s performance.

An expense ration of 0.55 percent is charged by the INR (Pick 73). The exchange for Indian Rupee stood at $43.60 in the year 2005. However, in the subsequent years, pointers indicated that the currency would continue with its free fall. Several experts projected that the currency would even break with the dollar about the $35-mark, but this never came to be. Instead, it showed depreciation in the year 2008 (Arthur & Benjamin 58). The Indian Rupee hit the forty-dollar mark and continued falling.

The Rupee was not helped by the stock market crash. Although the currency never hit the forty five-dollar mark, analysts predicted it to happen in future. In the year 2009, the Indian rupee lost more than ten percent against the dollar as an unresolved debt crisis of the Eurozone sparked selling in the Asian currencies. The Indian rupee hit the 50 mark against the dollar in that particular year, and it was projected that further weakening would even hit 55 but it never happened (Arthur & Benjamin 58).

Increasing demand for the dollar from importers and official data that shows the inflation of Indian food industry got back to double-digits also lead to the domestic value’s fall. Nevertheless, Wisdom Tree is common for its line of essentially-weighted ETFs, and the EPI is one of the most common products of the assurer (Bhimrao 93). Corporations that are chosen for inclusion are considered on the basis of their revenues in the previous financial year; this means that those with negative revenues are not included and those that are near break-even get a minimal consideration.

However, even though the large cap stocks get the largest potion in the EPI; this fund maintains exposure of companies of all sizes, as firms with a market capitalization of not more that ten billion US dollars account for over forty percent of the total holdings (Nussbaum 162). Works cited Arthur S. Aiton and Benjamin W. Wheeler. "The First American Mint", The Hispanic American Historical Review 11(2), September, 2009. Bhimrao Ambedkar. The problem of the rupee: Its origin and its solution (history of Indian currency & banking), Chapter 2, Rajagraha, Bombay. 2010. Print.

Krause, Chester and Clifford Mishler. Standard Catalog of World Coins: 1801–1991 (18th ed. ed.). Krause Publications, 1991. Print. Nussbaum, Arthur. A History of the Dollar. New York: Columbia University Press, 1997.Print. Pick, Albert. Standard Catalog of World Paper Money: General Issues. Colin R. Bruce Krause Publications.1994.Print.