The lending will reduce the supply of foreign currency, because lending is the outflow of foreign currency from our country. This reduction in the supply increases the demand of foreign exchange and the supply of foreign exchange remains unchanged. This will shift the supply curve from SS to S'S'. The new equilibrium is at point E′ where the exchange rate rises from OR to OR1. Lending to abroad by Indian investor affects the supply of foreign currency. This is because lending implies the flow of foreign currency from India to abroad leading to a fall in the supply of foreign currency in the country.