Posted at 4:35 PM , on December 15, 2015
It really may not be too far off, but then no worries!
As the Rupee hovers around the 67/$ mark, it once again raises the specter of the rupee crossing 70/$. The memories of the 2013 crisis are still fresh in the minds of analysts and traders. With the US likely to hike Fed rates in December or early next year, it is all the more likely that the rupee could breach 70/$. However, despite an additional 5% depreciation, there is not much to be worried about. Here is why… Continue reading
Posted at 2:18 PM , on December 1, 2015
The Credit policy on December 01st was announced in the background of mixed macroeconomic signals. On the one hand the possible Fed rate hike is likely to make the dollar stronger. On the other hand, the inclusion of the Chinese Yuan into the SDR basket on 30th November means that the Yuan will strengthen due to increased demand for the currency. Both are likely to influence capital inflows into the US and China positively. The RBI therefore needs to ensure that India’s capital flows do not get competitively outdone. This will be the primer driver for the RBI. Continue reading
Posted at 7:15 PM , on August 31, 2015
September focus will be on Janet Yellen
In the last Fed meet, they did nothing on interest rates and the question is what has changed in the last 2 months. Frankly, but for an additional bout of volatility in markets, nothing much has changed. US growth continues to flatter with marginal positive surprises. Inflation continues to stay low due to cheap crude and cheaper commodities. The US continues to attract capital flows from risk-off trade, which has been the investment theme over the last 2 months. So what does all this mean for the Fed decision on rates in September?
Posted at 10:13 AM , on August 25, 2015
The 2% devaluation of the Yuan was the beginning of something that could become a contagion shortly. In fact, it has already started! Immediately after the Chinese devalued the Yuan, the Vietnamese Dong and the Kazakh Tenge sharply lost value. Many other currencies like the Korean Won, Brazilian Real and Turkish Lira have also been losing value. But why this free fall?
Posted at 1:02 PM , on August 24, 2015
Could we see a currency war in the world?
Will there be a currency war? That was the trending question on Twitter the day after China devalued the Yuan by 2%. To be fair, a currency war began in 2010 when countries like Japan and the EU adopted a loose money policy. The idea was to debase their currencies so that exports increased. Ironically, 2010 was also the year when the US had announced plans to double exports by 2015. But other countries debasing currencies and China debasing its currency are entirely different. First, the history of currency wars! Continue reading