Indian Economy - News & Discussion 27 May 2012

[Cosmo_R]

See when in difficulty one needs gold.

But surely they would not be selling it at these reduced prices. I am sure they will only use it as security.

The irony of this is that should they sell the gold to reduce the CAD, it will be re imported into India since we are one of the world's biggest importers.

The rupee free fall has simple roots: too many rupees chasing too few dollars etc. Too many rupees as a result of persistent deficits (not helped by FSB/VSB which show GOI is not in charge). Add to that a huge list of anti investor actions (back tax claims, local opposition etc.) and you have negative market sentiment.

Right now and for the foreseeable future (and possibly only when someone like Modi becomes PM), the India story gets you laughed at. No one at the major US companies would dare spend a minute on India, it'll get them laughed out of the meetings.

Every time Chidu speaks to 'calm' the markets using stupid arguments, there is a rush to dump the rupee because everyone fears it's going lower.

ravi_g, you know economics better than most of us so this not aimed at you. Perhaps you would care articulate it better than I have. IMHO, India would have been Greece (or the PIGs) except that we have our currency which has staved off a funding crisis. At some point (and in the immediate future), GOi borrowing/bank rates will go up to attract savings. This will of course, impact the consumers who are leveraged and result in a slowdown which in turn will widen the budget deficit as tax receipts fall off etc.

At the bottom of it is a governance/leadership crisis (anyone know where MMS the Flying Sikh is right now?). SG and the NAC are out of control and clueless.

[Suraj]

Actually, from an investor perspective, India is very attractive right now. The best buying opportunity is in the midst of doom and gloom. Suckers buy during giddy happy times.

[Cosmo_R]

Actually, from an investor perspective, India is very attractive right now. The best buying opportunity is in the midst of doom and gloom. Suckers buy during giddy happy times.

True. Assuming you've found the bottom. So are you buying now?

[Suraj]

I'm seriously looking at loading up a bit on India ETFs, yes. I don't care about the absolute bottom (or top) - it tends to be a fools errand. In any case, it can only be confirmed by hindsight. Buying during D&G isn't a bad investing approach, though - it's served me well over the last few years - I bought in May/June 2009, for example.

[RamaY]

Appreciate if someone posts the news article (either Economic Times or Deccan Chronicle) that talks about the impact of Gold imports ban on Jewelry industry.

[member_20292]

I'm seriously looking at loading up a bit on India ETFs, yes. I don't care about the absolute bottom (or top) - it tends to be a fools errand. In any case, it can only be confirmed by hindsight. Buying during D&G isn't a bad investing approach, though - it's served me well over the last few years - I bought in May/June 2009, for example.

bottom is when sensex reaches 15000. not right now.

[RamaY]

National Interest: Current accountability deficit - By Shekhar Gupta in Indian Express

Postscript: Here is a conversation not long ago with a well-informed global tycoon with large business interests in China and India. What is the difference between doing business in the two, I asked. In China, he said, once they decide to do something, they do it, no second thoughts, no retreats. Deng, he said, said 30 years ago, that within 25 years China should control 90 per cent of the world's rare metals and minerals (gadolinite, cerium, plus scandium and yttrium, etc) without which no modern electronic or telecom gadget can be produced. By now, they control at least 80 per cent of these. And when the Japanese "misbehaved", the Chinese squeezed these supplies and all of them, from Panasonic to Sony, went down on their knees. "And you know what," he said, "of the remaining 20 per cent in the entire world, India has more than half. And if you cannot access most of it, because of people you call as Maoists or Naxalites or their intellectual backers, and you think the Chinese have nothing to do with it, you know where you live. On cloud cuckooland."

So India has about 10% of rare earth metal ores, but neither industries to utilize it well nor policy to reduce high prices due to artificial shortage as mentioned above.

Also see how world goes round: the Chinese stated openly to control 90% of rare earth supplies and now control about 80% already. ; )

More from the same article:

The oil ministry has refused to recognise or clear two of Reliance’s gas-fields (NEC-25 and R series, adding up 30 mmscmd), and blocked Cairn’s Rs 13,000-crore investment that can produce another one lakh barrels of oil a day. Now how much is that worth at today’s price of a hundred dollars per barrel? And this, when under the production sharing agreements, the exchequer will get 80-85 per cent of this gas and crude. So you add the self-inflicted net deficit on steel (15), coal (16) and petroleum (20) and you get to 51 billion of the current year CAD estimate of 70.

51 billion $$ out of 70 billion $$ is the import lobby tax?

And who all benefit out of these short sighted policies even when there are abundant supplies- relatively speaking.

If I am not mistaken, the increase in CAD increases debt management in quantity and complexity.

Some details were posted in YS Rajashekar Reddy thread. Out of the 10% of world reserves in India, majority of them are in the sands of Andhra Pradesh.

These lands were given to a benami company floated by Son-In-Law of YSR, Brother Anil Kumar, who is a Christian proselytizer. This allocation is later turned down by KKR govt.

Wheels within wheels.

[Austin]

Prime Minister asks Moily to slash imports by $25 billion in FY14

Oil Minister Veerappa Moily said on Tuesday that the Prime Minister has asked him to save $25 billion on oil imports in the current fiscal year, to help the country narrow its current account deficit.

"Oil is one of the components which is responsible for CAD," Mr Moily said.

India's oil import bill rose 9.2 per cent to $169.25 billion in fiscal year 2012-13 that ended in March.

"I have already made attempts for $22 billion, and I will make attempts for another $3 billion," Mr Moily told reporters, but did not elaborate.

He also said India does not plan to allow oil marketing companies to raise diesel prices by more than the approved Rs. 0.50 per litre a month.

He told a private TV channel earlier this month that India would consider a request from oil marketing companies to be allowed to raise diesel prices.

[Suraj]

bottom is when sensex reaches 15000. not right now.

That only matters for a fund or ETF indexed to the sensex. Just like Dow, Sensex is too narrow (only 30 stocks) to be an effective overall market barometer. A minimum of 100 stocks in an index is a better one to monitor. For the US for example, the S&P500 is a far better tracker than Dow30.

[RamaY]

<snip>
Fact is that we import $50 billion in gold and jewelry at a moment when we are running a crippling deficit. I support an attempt to clamp down on that temporarily, even if GoI apparently has neither has the smarts nor the mandate to clearly accomplish the larger goal of stabilizing the economy fast. Still, at least temporarily, I cannot complain about a duty or import restriction meant to stabilize the exchange rate and current account situation.

A substantial part of the currency crisis of the moment is sentiment-driven. If you look at fundamentals, there's nothing substantial. If anything, the best monsoons in a decade should mean huge economic upside for the next 2-3 quarters. After previous strong monsoons, the economic press was salivating at the prospect of a strong festival season. Ideally, GoI would act temporarily to halt the Re slide in a decisive manner, but Surjit Bhalla's recent article suggests, they seem to be more in the 'lets pass a bunch of diktats and see if anything works' scattergun mode. Since that much expertise is what we can hope for, I'd rather see what sticks as well...

While I agree with most of what you say, you miss one key aspect.

All these problems are due to one simple thing. The Congress-Party/system and current Congress govt (UPA is nothing but congress-system).

I would have agreed with you more, if you recommended that we impose a constitutional ban on all congress-system parties and individuals for next 200 years, before recommendations like ban on Gold imports and/or skimming the public banks to steel public savings etc.

No wonder why certain forum members want to ban political discussions in the forum, so they can hide real issues and debate issues superficially without any value to the forum, or members or the society.

[Suraj]

RamaY: The irony may escape you, but your post validates the ban - it keeps folks like you from bringing your own personal politics into every single thread. Thanks for moderating yourself and not posting more on the topic.

[RamaY]

I was talking about the "sentiment" in Indian economy and its root causes. The negative sentiment is costing Indian Economy too much. Yet we must not discuss the root causes.

Only fools can think Gold imports (especially the domestic consumption type) can be imposed effectively. It didn't work before and it will not work now. Unless the real plan is to enable the political-mafia mercantile networks to benefit from these bans.

[Suraj]

Yet we must not discuss the root causes.

That's correct. You joined this forum agreeing to abide by forum rules. It's only reasonable to insist that you continue to do so. If it constrains you too much, there are other forums you can vent your frustrations at. Enough of this topic please - this isn't the first time you've been restrained from derailing threads.

[Cosmo_R]

Prime Minister asks Moily to slash imports by $25 billion in FY14

Oil Minister Veerappa Moily said on Tuesday that the Prime Minister has asked him to save $25 billion on oil imports in the current fiscal year, to help the country narrow its current account deficit.

"Oil is one of the components which is responsible for CAD," Mr Moily said.

India's oil import bill rose 9.2 per cent to $169.25 billion in fiscal year 2012-13 that ended in March.

"I have already made attempts for $22 billion, and I will make attempts for another $3 billion," Mr Moily told reporters, but did not elaborate.

He also said India does not plan to allow oil marketing companies to raise diesel prices by more than the approved Rs. 0.50 per litre a month.

He told a private TV channel earlier this month that India would consider a request from oil marketing companies to be allowed to raise diesel prices.

Oily Moily is saying that subsidies will be increased. INR, markets are going to tank. MMS may be the most overrated economist and most underrated political satrap.

[Karan M]

Just take a look at the chart posted by gakkad - where does that show overspending in luxury items and what not? Luxury items are still a niche item. And what the heck, why should "big city folks" after paying tons in TDS be subjected to such ridiculous diktats? You are asking for a return to the days of license raj!

See this post

we are spending $3.5 Billion + on importing cars? Over 10 years ignoring inflation this is a capital expense of $35 Billion.
This amount by itself would be enough to build a world class metro in our top 10 cities in 10 years or so.

Understood, that you were referencing that post.
The bigger problem though is that the GOI seems bent on tokenism, when we are so dependent on foreign firms (and consequently imports) for everything from heavy engineering items, to telecom equipment and even industrial grade IT hardware. These are what are gobbling up money en masse and there seems to be no effort in place to boost Indian economy. Instead, the GOI is shamelessly taking all the hard earned tax money, plus huge chunks of whatever we borrrow, and blowing it up in vote bank schemes. IMO, the manner in which all these luxury items etc are targeted, its just to buttress the Govts claim of being pro poor, while the Tharoors talk of "cattle class" trains and the others roam around in Spanish nightclubs seeing pics of Bacchan and saying this is India...all a bunch of modern day Neros.
Meanwhile the absymal state of Indian infrastructure, and the slipshod construction practises used make our cities, even the good ones, look mostly third world. A few swanky malls/IT buildings apart.

[Kakkaji]

Of course. It's not very different here on BRF either. In an ideal world threads like the economy, public policy, health, education, sanitation and similar threads would be the stars of the forum. But no, the out-of-India theory, Mughal rule etc gain much more attention. Why blame the public ?

Suraj Sir:

10 years ago the T&E Forum on BRF used to be much more active, and we used to debate vigorously the topics you have mentioned above. I myself used to post several articles from the Economic newspapers. The "Nation on the March" thread used to move at a fast clip. We used to discuss plans about huge additions to infrastructure, new projects etc.

Sorry to say this, but hope has slowly died out. I still scan the 'Economic Times' and the 'Business Standard' every day, but rarely find anything worth posting here.

Even the military forum nowadays has rarely any news of progress. Instead it is only BRF-ites fighting endlessly with each other, in the absence of any good news.

So, just like in Sultanat and Mughal times, people moved towards 'Bhakti' to survive, us BRF-ites have moved towards the GDF forum for time-pass and to survive the tough times.

May the topics dear to you get revived next year.

[disha]

...This entire UPA-II reeks of being a govt run by some Dilli-Billi Jholawala type activists and other associated lotus eaters, and just rank incompetents and crooks, who have never done a day's honest job in their lives and are simply clueless about how things actually work.

On top of that, we had those disastrous budgets by that geriatric dinosaur , who mercifully got kicked upstairs...

Maybe a secular pill will help.

And the person who you call the "geriatric dinosaur kicked upstairs"., he will be holding all aces in case of a hung parliament.

I think you should start thinking in terms of UPA III now. First time India lost a generation, there was a great civic infrastructure boom in US., the second time India lost a generation (think 22 year cycles)., there was a great IT boom in US - now when the third generation in India is lost - there is no boom anywhere in the world - incl. US. So where will all the youth go?**

Will a secular pill* help those youth?

* Policies, law & order and economy are intertwined.

** In 70's during "mehngai ka jamana - remember Nirupama Roy in one of the AB movies"., there was a huge civic infrastructure creation boom in US. Everybody knows what happened in 90s when Gold was being sold.

For the movie buffs, AB was pitched to superstardom in 70s. Nana Patekar/Om Puri came into being in 90s (and also the maar-dhaad negative movies of SRK, who transformed himself into a romantic hero when economy boomed). Now who will be the next great *new* actor? Time is ripe, explains why Chennai Express is a hit.

[disha]

Posting in full:

The rupee is where? Currency collapse confounds India Inc
REUTERS — 5:06 PM ET 08/27/13
By Nandita Bose
MUMBAI (Reuters) - Indian companies such as Whirlpool of India Ltd say they can't plan more than a couple of months out as a fast-falling rupee currency drives up the cost of imports, forcing them to raise prices even as consumer spending crumbles.
The timing is particularly tough for consumer companies that were counting on India's September-to-December holiday season to spur sales. India's consumers, whose spending helped see the country through the global financial crisis in 2008, are closing their wallets, squeezing companies from carmakers to shampoo sellers.
Companies that import finished goods or raw materials are the worst hit as they scramble to hold onto margins while balancing the need to raise prices without deterring buyers.
"We are now planning for a month or three months at best unlike six months or a year earlier," said Shantanu Dasgupta, vice president for corporate affairs and strategy at Whirlpool of India, the local arm of Whirlpool Corp , the world's largest home appliance maker.
The Indian rupee has tumbled 17 percent so far this year and hit an all-time low of 66.30 against the dollar on Tuesday, resisting a spate of interventions by the central bank and the government as investor fears about emerging markets deepened in anticipation of reduced U.S. monetary stimulus.
"A week back in our office we were working at (a rupee exchange rate of) 62 and now it's at 64 and looks like soon it will fall more and hit 67. How can a business operate when the currency is on a free-fall?" H.S. Bhatia, head of the enterprise business at television maker Videocon Industries , said in an August 21 interview.
The currency sell-off has since intensified, compounding difficulties for Videocon. The collapsing rupee pushes up prices of goods, adding to inflation on top of meager urban salary hikes and an economy growing at its slowest in a decade.
Videocon imports raw materials and is planning to raise prices by about 4 percent to 5 percent in the coming days, its second hike in 2 months.
The currency blow is landing just as Indian consumer companies look toward a boost from their strongest annual sales period, which starts in September with Ganesh Chaturthi, when the god of luck and prosperity is welcomed into Hindu homes, followed by the Diwali festival and then Christmas.
India's total consumption expenditure, which includes private and government spending, grew 3.3 percent in Jan-March 2013 from 9.3 percent in the same period a year earlier, according to government estimates. Total consumption expenditure as a share of the country's gross domestic product fell to 65.9 percent in the fourth quarter of 2012/13 from 72.1 percent in the first quarter of the same fiscal year.
SLOW SLOW SLOW THE BOAT
Indian shoppers are not only cutting back on big-ticket purchases such as refrigerators, TVs or expensive branded apparel but even staples including soaps, ketchup and cosmetics.
A survey by the Associated Chambers of Commerce and Industry in June found monthly bills for the middle class jumped by 15 to 20 percent in a month across major cities as the falling rupee drove up prices of petroleum products and edible oil.
A paper in August by the same group found that even deep-pocketed consumers were cutting back, with five-star hotels and fine dining restaurants registering a decline of 20 percent in sales in the past three months after prices of imported food ingredients and spirits rose.
Makers of consumer goods like shampoos and soaps, popular defensive plays in weak economic times, are also feeling the pinch, with market leader Hindustan Unilever Ltd posting lower sales volumes for a fifth consecutive quarter in the June period.
"India is witnessing a slowdown and only recently in the past one quarter has it been so pronounced," said Manish Tiwary, executive director of sales and customer development at Hindustan Unilever.
Apparel retailer Provogue India Ltd has shut several stores in the past 12 months and is moving cautiously on expansion with a focus on franchisee-operated stores.
"It is a tough environment to operate in and Indian consumers are seeking even more value in the current market which impacts both sales density and margins," Provogue business head Timothy Eyon said.
The country's largest retail conglomerate, Future Group has an added problem as it tries to reduce the 40 billion rupees debt on its books.
Its plan to raise 6 billion to 8 billion rupees ($91 million to $121 million) this fiscal year by offloading stakes in fashion brands to strategic and private equity players has been hit as the rupee volatility and weak capital market conditions have spooked investors, Group Chief Financial Officer C.P. Toshniwal said.
IMPACT WITH A LAG
While many consumer companies have resorted to price hikes to cope with the currency, long-term supplier contracts and hedging are helping some to bite the bullet for now.
Daimler AG's Mercedes-Benz has held off on a price hike even though it faces severe margin pressure from the sliding currency and rising fuel costs, but it may relent soon.
"We didn't get immediately affected by the weakening of rupee as we have a long-term hedging strategy. However the hedging period cannot be forever and we have to ensure that we run a sustainable business in the long term," Eberhard Kern, managing director at Mercedes-Benz India said.
Similarly, branded apparel maker Lacoste India is expecting a hit on its margins but will hold off on a price hike until the end of the year, Rajesh Jain, director and chief executive officer said. The company imports raw materials like yarn, but long-term supply contracts have so far insulated it from currency-related price increases of 15 percent.
However, that will be small comfort if demand stays weak.
"Growth has come to a grinding halt but that's not the only bad part," Whirlpool's Dassgupta said. "Demand is not likely to improve anytime soon and that's more worrying."
($1 = 66.2425 Indian rupees)
(Additional reporting by Aradhana Aravindan; Editing by Emily Kaiser)
(c) Reuters 2013. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

[disha]

And another one:

India's fiscal deficit target getting more challenging: Fitch
REUTERS — 08/26/13

MUMBAI (Reuters) - Fitch ratings said it was getting more challenging for India to meet its fiscal deficit target in the current fiscal year ending March 2014 with revenues slowing.

The rating agency is also monitoring India's growth, inflation, public finances and the current account deficit and its funding, analyst Art Woo said in a teleconference on Monday.

Fitch has a stable outlook on the 'BBB-' sovereign credit ratings. BBB- is the last rung on the ratings ladder above the so-called "junk" status that mainstream investors tend to avoid.

Last week, Fitch said India and Indonesia are not at immediate risk of credit rating downgrades, but warned it could act if the governments of these countries fail to calm current financial market tensions.

(Reporting by Suvashree Dey Choudhury and Neha Dasgupta; Editing by Prateek Chatterjee)
(c) Reuters 2013. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

[disha]

Gold smuggling will become popular now:

Gold advanced to a record in India after the nation’s currency extended a plunge to an all-time low, threatening jewelry demand during the main festival season in the world’s largest consumer.

The contract for delivery in October surged as much as 3.3 percent to 32,933 rupees per 10 grams ($1,555.96 an ounce) on the Multi Commodity Exchange of India Ltd. (MCX) in Mumbai today. Futures have rallied 33 percent since reaching a two-year low in June as the rupee tumbled about 10 percent, more than the 14 percent gain in bullion priced in dollars.

(personal note: gold price internationally is some 1400 USD., the spread is already 10% and if it stays consistently 10% - and the spread widens to say 15%., gold smuggling will be the "in" thing - rise of Dawood anyone?)

“The gap between domestic and international prices has become too much after adding the import duty, value-added tax and high local premiums,” said Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation, which represents 300,000 jewelers and bullion dealers across the country. “I am not too optimistic about demand during the festival season. This is an inflated rate.”

STORY:
India's Economic Woes Spread to Southeast Asia
Slowing demand may cheer Prime Minister Manmohan Singh’s government, which has raised import taxes on gold thrice this year to moderate consumption that has contributed to the slide in the rupee and a record current account deficit. Banks and traders have halted imports since the end of July after the central bank linked inbound shipments to re-exports.

Bullion in India rose as gold in London rebounded since reaching a 34-month low in June as demand for jewelry, bars and coins soared from China to Turkey. The rupee tumbled more than 2 percent to 66.0775 to a dollar today on concern that the current-account deficit will worsen as oil prices climb amid political tensions in the Middle East.

Convincing Consumers
“Indian consumers are confused right now and they are not going to come and buy jewelry at this point in time,” said Soni. “Consumers have seen 26,000 rupees rates just couple of months ago. It is difficult to digest this rate right now and it will be very difficult to convince customers to buy.”

(possibly., or in more gloom/doom situation people will repose their faith in Gold)

STORY: India's Rupee Keeps Falling and the Trade Deficit Keeps Widening
Gold is bought in India during festivals, for marriages as part of the bridal trousseau and gifted in the form of jewelry by relatives. The festival season in India runs from August to October, followed by the wedding season from November to December and from late March through early May.

The rally may spur scrap gold sales and ease a shortage of the precious metal in the domestic market, Soni said.

“Earlier 15 percent to 20 percent of our total turnover used to be from scrap sales,” he said. “This time we are expecting it to double.”

STORY:
A Grim Independence Day for India
Recycled gold supply in India fell 44 percent to 31 metric tons in the first six months of 2013, even as gold imports jumped 45 percent to 553 tons, World Gold Council data showed.

(So India imports some 500 tons of gold that is 50 million USD x 500 = 2.5B USD and a spread of 25M USD per year)

Higher tariffs and central-bank rules linking overseas purchases to re-exports may cut India’s imports in the second half to not more than 150 tons from 478 tons in 2012 and spur smuggling, according to Bachhraj Bamalwa, a director with the jewelry federation. The country may not import any gold in August, he said yesterday.

Consumption in India, which imports almost all the bullion it needs, accounted for about 20 percent of global demand in 2012, according to data from the gold council.

STORY:
India’s Rupee Slides to a Record Low
To contact the reporter on this story: Swansy Afonso in Mumbai at [email protected]

To contact the editor responsible for this story: Jake Lloyd-Smith at [email protected]

[Prem]

India approves raft of projects to kick-start economy
Kick start Nahi, Lick Start Hai Yeh. Zakhmo Pey namak

NEW DELHI: The Indian government said on Tuesday it had approved a raft of infrastructure projects worth 1.83 trillion Indian rupees (US$28.38 billion) to revive economic growth and restore investor confidence after a crash in the rupee to record lows."The message that we are sending is that the investment cycle has restarted, and we are pushing it. It is gathering pace," Finance Minister P. Chidambaram told a news conference to announce the kick-start for 36 stalled projects in sectors from oil, gas and power to roads and railways.He said a cabinet panel had cleared 18 power projects, alone worth 830 billion rupees.The announcement did not lift the rupee, which was trading at 65.39/41 per dollar at 0517 GMT, close to the record low of 65.56 reached last week.
Dealers said it was partly depressed by concerns over parliament's approval on Monday of a plan to provide cheap grain to the poor at a cost of nearly US$20 billion."It's not out of choice, but out of compulsion that the finance minister is announcing so many things," said G. Chokkalingam, managing director and chief investment officer of Centrum Wealth Management in Mumbai."The trinity of the fiscal deficit, slowing growth and an unstable currency is hitting us badly. In addition to these, the government has passed the food security bill which may put fear in the mind of rating agencies."It will also take time for these projects to have any impact on the economy, which will reduce the immediate affect of the news in financial markets."These projects have long gestation periods. So it will take several months, maybe years to achieve the desired economic activity," said Hitendra Dave, head of global markets at HSBC India."I think to the extent that the sheen had worn off because of decisions not taken, this will help to undo the damage of sense of indecision in the government."Chidambaram said that the rupee had "overshot its true level", and added that the food security bill would not lead to the government overshooting its fiscal deficit target.

[SwamyG]

The falling rupee yields several discussions. One thread I have witnessed in desi media is the plight of Indian students going abroad. Everyday some channel or the other seems to bring this once a day. Sometimes articles are written on this topic too. I find it fascinating that this topic has garnered this much attention. Frankly, this problem, which is a problem for a few, should be at the bottom of the totem pole.

[SwamyG]

Actually, from an investor perspective, India is very attractive right now. The best buying opportunity is in the midst of doom and gloom. Suckers buy during giddy happy times.

It is so tempting to pay off the home loan

[Vayutuvan]

... should be at the bottom of the totem pole.

but of course, the people affected are at the top of the totem pole.

[Austin]

Rupee has lost over 20% this year

[Austin]

Why is Brazil and Turkish currency is so strong against USD just 2.4 versus 1 USD ?

[krishnan]

and that too after dep, wonder what was the rate before that

[vina]

Why is Brazil and Turkish currency is so strong against USD just 2.4 versus 1 USD ?

Are they ? It is the percentage change that matters, not the actual number. For eg, if it goes from 2.0 to 2.4, what is the percentage change ?

Actually Turkish Lira used to be some 225000 or so against the USD and the Lira used to move some 20,000 to 30,000 per day as swings. What you have today is the YTL (Yeni ie, NEW Turkish Lira), which is the new currency with a couple of zeroes lopped off the old one.

Same case with Real I suppose.

Under UPA, India is moving in the same direction. I remember as a kid 1 paise, 2 paise and 5 paise coins and you could actually buy stuff with those and get change back. Then things started getting abolished one by one, the minimum became 25p, then 50p and now it is 1 Re. Soon it will be Re 5 and then Rs 10 and then maybe Rs 100 ! .

We would have reached the Japan / Indonesia kind of thing where their currencies dont have fractional denominaitions (less than 1Yen, and basically JPY is units of 100 for rough comparison against dollar). I only hope we have the Japanese std of living when we get there!

[Austin]

No I get the percentage part but my question was why does Brazil have to pay just 2.4 real for 1 USD while we have to pay say today 66 Rs for the same.

The 2.4 number wise looks quite low to me unless they dont have higher denomination currency in circulation or it might just indicate their currency is far stronger compared to USD hence the low base.

[Suraj]

Strength isn't a reflection of the actual value. As vina mentioned, even we can divide each Rupee by hundred to create a New Rupee that that is Rs.0.66 to the $. Does that magically make our currency strong ? No. It's how it moves in relation to the $ that denotes its strength.

[vina]

The 2.4 number wise looks quite low to me unless they dont have higher denomination currency in circulation or it might just indicate their currency is far stronger compared to USD hence the low base

It doesn't matter if it is 2.4 or 24 or 240 or 2400 or 24000 or 240000 . Those are just numbers. You can always come up with a "New Rupee" ie, RBI says that they will exchange your "Current/Old" Rupees for "New Rupees" at a ration of 1:10 (ie you get 1 New Rupee for 10 Old Ones) , and if you do that, the New Rupee vs Dollar exchange rate will be 6.6 instead of the current 66!

Note, you really dont become richer or fundamentally better off in any way because you got 1 New Rupee which has a 6.6 exchange rate with the dollar ! You are exactly where you are earlier.

[Sri]

1 USD = 97 yen

[Suraj]

Suraj {deleted}:

10 years ago the T&E Forum on BRF used to be much more active, and we used to debate vigorously the topics you have mentioned above. I myself used to post several articles from the Economic newspapers. The "Nation on the March" thread used to move at a fast clip. We used to discuss plans about huge additions to infrastructure, new projects etc.

Sorry to say this, but hope has slowly died out. I still scan the 'Economic Times' and the 'Business Standard' every day, but rarely find anything worth posting here.

Even the military forum nowadays has rarely any news of progress. Instead it is only BRF-ites fighting endlessly with each other, in the absence of any good news.

So, just like in Sultanat and Mughal times, people moved towards 'Bhakti' to survive, us BRF-ites have moved towards the GDF forum for time-pass and to survive the tough times.

May the topics dear to you get revived next year.

Please don't call me sir, Kakkaji - though I'll call you ji because that's already in your profile name, and Kakka sounds odd

I don't quite agree with the depiction of the forum, though I know that the enthusiasm regarding various important topics has markedly decreased. If that's a reflection of peoples' attention being focussed on politics, that's a pity, because all these problems still remain. There's also been a progressive trend of every discourse being colored by politics, and people judging other posters by their presumed allegiances. This is a toxic politicized mode of interaction we attempt to eliminate from threads, where members' interest in larger matters of importance are lost in favor of their attention on the political process. It's ironic that some of that discussion is about how the politicians are only focussed on the polls, when the posters' behavior isn't a lot different

If you'd like to continue discussion on the topic, please use the forum feedback thread.

[krishnan]

Romesh
Is there any match fixing in Re down fall?
by Romesh (View MyPage) on Aug 28, 2013 10:57 AM | Hide replies

Looks like UPA II is trying to get back the black money from Swiss Accts at high conversion rate and hence the Re fall!


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Indian
Re: Is there any match fixing in Re down fall?
by Indian (View MyPage) on Aug 28, 2013 10:58 AM
Might be one of the reason.

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[habal]

Until you can stop speculation of rupee in markets outside India, Rupee won't stabilize.

Any number of excuse given !

the day the UPA closes this tap, is the day rupee will stop falling. They know this well, so the question is what are they waiting for ? Maybe it isn't possible without some collateral damage, but some damage was always around the corner. So again, what are they waiting for ? I think UPA is collaborating with vested interests to precipitate this collapse.

[Philip]

Chidambaram has a "10 point" programme to restore the Rupee.I have a far simpler "One point programme" that will immediately see the Rupee bounce back.

PC.MMS,Soniaji,the UPA et al,"QUIT INDIA!"

Yashwant Sinha has said that the govt. must go,it must right now.No one has any more confidence in this venal,corrupt gang of bandicoots and vermin.

PS:If they're waiting for something,it is as is being speculated by many,that some of their ill-gotten gains in the hundreds of billions ,need to be brought back to win the elections.

[Austin]

Philip on 1 Point Agenda

Thanks Vina and Suraj for clarifying on that note.

[Singha]

approvals by the govt mean nothing. most are just "in principle" approvals SUBJECT to all other clearances incl the dreaded environmental clearance.
NAC has given express orders to that ministry to stop any project that employs more than 5 people in a hut because that is capitalist exploitation of the tribals and minorities.

[panduranghari]

x post

INR has broken the 68 barrier evil evil yindo economists are blaming it on FSB
meanwhile gobermerce manister janab Anand Sharma yesterdin was heard boasting
fikar not people,we will pawn 500 tonnes of Gold if need be
no,no, you evil mean spirited saffron arthshastri it is not 91 redux perish the thought,
manister janab was just enumerating way out of the current mess.

I think that is the plan. For Indians to sell their gold. Global bullion banks are running out of gold. Heck even US Fed refused German govt. to see their own (German) gold stored at Fed Reserve. I think its not there and so do many. I really hope, Indians are not forced to sell their gold.

[panduranghari]

The only saving grace is, if India goes down, many many other countries will follow suit. Western Europe and US wont be far behind.