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Another major impact is on **foreign trade**. A strong dollar can make Indian exports more competitive, as they become relatively cheaper for foreign buyers. This can boost exports and help reduce the trade deficit. However, it can also hurt exports in the opposite scenario. Additionally, it affects the Indian stock market. Foreign investors often use the dollar as a benchmark currency. A stronger dollar can sometimes lead to capital outflows from the Indian stock market, as investors might prefer to invest in dollar-denominated assets. However, in other situations, a robust economy may entice these foreign investors. Therefore, dollar value and investor confidence go hand in hand.
