Incidentally, when India received its independence inthe value of the rupee was on a par with the American dollar. External borrowings to finance development and the wars in China and Pakistan resulted in a huge deficit. So inthe rupee was devalued to Rs 7.
Motilal Oswal MF suspends subscription in ultra-short term fund "Markets were expecting a few more steps. The background to the whole story Rupee depreciation that the rupee per se is not a problem by itself, it is only a symptom and the problem is coming from CAD, Prasanna said.
One month forward in the non-deliverable forward market NDF is Is that the way we will start or will this cool? I think the NDF market has opened at around So I would call these measures as very promising and good on intent but possibly a little bit underwhelming as far as the actual action is concerned.
Markets were expecting a few more steps. The Rupee depreciation to the whole story is that the rupee per se is not a problem by itself, it is only a symptom and the problem is coming from the current account deficit CAD. So the market was expecting measures, which would have encouraged exports and discouraged non-essential imports which is why I said that the intent is positive because the government did mention it.
However, most of the action has not been announced on this front, so I Rupee depreciation presume that action related to imports like electronic goods or gems and jewellery could possibly be announced in the weeks ahead or in the days ahead.
What was announced was the overall steps which were relating to capital flows. So from that perspective, we are possibly doing some of these when the short-term view on emerging markets anyway is a little dicey, so I guess these things will come and become very positive when things also turnaround.
We need to look at, watch out for steps which the government announces as far as the CAD is concerned.
In the very immediate term, what kind of flows do you see from these measures itself and what else would you expect from the government over the next two-three weeks? We are living by the day and you know that we are all hostile to both oil prices as well as the dollar. There are two parts to the rupee depreciation over the last two months.
The first part, when it depreciated till around From that perspective, definitely, we are a part of an emerging market scare or fall. It is good that they have identified CAD as a problem and if the market gets to know that the government is on the job and is going to come out with measures, definitely the view going forward will get better.
What kind of a range, therefore, would you look for in the rupee? Today and over the weekend, the dollar has appreciated. China has also said if they the US impose tariffs then they will withdraw from the trade talks. We are completely hostile to what kind of development happens on this.
However, based on whatever measures which have been announced by the government, I would still say since the action was a little underwhelming, maybe So the range for three months is more could be in the region of The OMO announcement was kind of surprise at least for me.
All the assumptions that people had about how much open market operation they had to do or all of the assumptions about what kind of durable liquidity needs to be infused in a year when there is a lot of withdrawal of liquidity, from that perspective, I was a little surprised but having said that, the range would be in the region of We have already touched 8.
What is your sense of the yield market? Today even Reliance is 15 percent cheaper or at least 10 percent cheaper if you looked at the rupee and the markets also have come off, the equity markets, at some point Tata Consultancy Services TCS is 15 percent cheaper for a foreign buyer, what is your sense?
You think a combo of 8. Before answering that question, I wanted to make one point on the foreign currency convertible bond FCCB window that you were discussing. I feel that it is a measure which should possibly be the last on the line. When the last time we did it, we had problems of forex reserves in terms of import cover and all that.
Those are things which are positive to look for.
I have a feeling that the entire bazooka has not been released on Friday. It is very possible that they would come out with more steps this week.
To answer the question on equities and on rates, the situation is a little funny right now because we are seeing a deteriorating macro situation but a better micro. You are seeing earnings estimates coming up, revised higher and you are seeing that companies are coming out with better results.
If you look at the market price, it is a combination of earnings growth and discounting, and discounting is a function of interest rates also. The question is whether these earnings improvement is already factored in by the market or not, it is very difficult to say that. So as long as we continue to be in the EM kind of a crisis or this kind of a theme which is playing out in the emerging markets which is that we get hit by reducing dollar liquidity and rising US rate.
It will be very dicey to take a call or a positive view. So I think even in equity markets, we need to see the coming back of a stable government.So in , the rupee was devalued to Rs against the dollar.
It now stands at Rs for every dollar. Rupee depreciation means that the rupee has become less valuable with respect to . YET another surprise depreciation of the exchange rate jolted markets on Monday, with its effects lasting through.
A section of society has criticised the government for the continuing depreciation of the rupee. Although between December 8, and June 27, , the value of the rupee has gone down Sep 15, · Read more about Rupee depreciation is good for the economy: HSBC India's Hitendra Dave on Business Standard.
Dave says special dollar deposit schemes are not required at this point as the rupee's loss is more or less over. Seemingly, rupee depreciation is good for exports and bad for imports. In other words, when exporters can earn a higher amount of rupees, due to depreciation, exporters are encouraged to export.
Over the past one year, the rupee has consistently depreciated against the dollar with the last quarter of (calendar) being one of the worst in terms of Rupee Value Depreciation. On November 21 alone, overseas funds sold more than US$ million worth of Indian-listed shares over the five trading sessions, reducing net inflows for to under US$ million – a tiny sum compared with the .