Please answer my question it is from the chapter balance of payment
Dear student,
Selling of Foreign Institutional Investors(FII) in Indian capital market will make an increase in demand for foreign exchange in India and a fall in supply of foreign currency in the economy. So, it will create a situation of excess demand of foreign currency at prevailing foreign exchange rate. In this situation, the rate of foreign exchange will rise, making domestic currency depreciate.
Regards
Selling of Foreign Institutional Investors(FII) in Indian capital market will make an increase in demand for foreign exchange in India and a fall in supply of foreign currency in the economy. So, it will create a situation of excess demand of foreign currency at prevailing foreign exchange rate. In this situation, the rate of foreign exchange will rise, making domestic currency depreciate.
Regards