Impacts of currency demonetization to investments after 2 years

Demonetization impact on Investments

Some years ago, there was demonetization of the Indian currency which led to an imbalance in the economy of the country causing a reduction in the value of the country’s currency. The change in the currency of India in the year 2016 caused a lot of problem for the people. Investments usually depends on the value of the currency of the country, considering the amount placed in the investment before the demonetization actually occurred, there will be a decrease in the value of the currency upon withdrawal which may make it not profitable for everyone.

demonetization impact on investments

The process had a lot of effect on people who are involved in savings in banks and other financial institute. Even though it was a one-time thing, it had a lot of effect on the capability of the currency to meet the possible needs of the citizens.

Demonetization impact on Interest rates or FDs

The demonetization has led to a lot of issue in the market structure, the banks have been forced to take up the action of slashing interest rates on funds of fixed deposits with a very poor demand for credits and an overall reduction in the assets of the company. This has led to a sudden reduction in the poor demand for credits by the people and there by causing an overall reduction in the interest rates provided.

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However, by virtue of tradition, the fixed deposits have been considered the in-demand interest option for the people involved and this gives a better security to capitals. The demonetization has added to the things that led the people to other possible investment alternatives so as to make all the possible income. Demonetization and some other factors such as reduced interest rate, great return from equity have also contributed to the shift in the interest of the people in terms of investment.

Demonetization impact on Cryptocurrency trading

Demonetization has also led to an increase in the number of people who now gets involved in the technological form of investment, popularly known as the cryptocurrency, which has proven to be a very good type of investment as compared to some others in the market. Cryptocurrency had a tremendous increase in value over the years, although having a fall in value as at present due to its ability to make better profits.

It is important that one should be able to make the essential profit required from the investment. The demonetization also caused a higher interest in the use of the mutual funds and placed a downward effect in the interest rates on investment.

The demonetization actually had a positive input on the time of investments (assets such as the mutual funds) which had an increase in the number of people actually participating in other essential investments. This acted as a catalyst for the increase in investment of these financial instruments. There was a massive inflow of about Rs. 1.23 Lakh crore for the investors over the years after demonetization. This has brought about a sudden shift towards investments in the Indian country and it’s surroundings.

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