Indian rupee on Tuesday saw a tragic fall as it suffered its highest fall in last 18 months on a single day due to a decrease in local shares. Euro also hit its four year low against dollar as the fear of debt crisis in Europe reaching Europe’s banking system created a panic in the market. Experts believe that rupee is getting affected temporarily by the Euro zone issues. Also, the Indian economy has grown tremendously in the quarter and hence supporting the idea that the current fall in rupee is a temporary fall.

Rupee ended at 47.16/17 per dollar, which is 1.7% down when compared to 46.36/37 at day end on Monday. The Euro fell to $1.2116 which is its four year lowest as European economy continues to struggle.

Looking at the above two examples, it is clear that investor confidence is very important. Doubt over the world economy causes investors to sell more, creating fear in the market. Most experts believe that the drop in rupee is a momentarily drop, and it will be interesting to see how market behaves for next couple of days. Indian investors should show more confidence in the market especially with the recent news of high Economic growth in India.