Friday, August 17, 2007

Strong Rupee

For years now, I had a strong belief had economic growth data brought out by govts are short-sighted , politically motivated and outright biased.

Take the example of projecting double digit growth for India & China, where majority still lives in villages ; the people in rural services- well ,lets say for all of their services is no yardstick for value determination. So we depend on city based consumption data or industrial production data.

Only in last week, people went overboard the strong rupee bandwagon. Little did the analysts knew in the integrated global money market, one currency getting strong against only one major currency is of no use.

My estimate will be US$ will be appreciated by 4 to 5 % in next one month. Why? The reason is the funds in western world will have a torrid time, with a poor third quarter going on in the US.
Sept-end reports will definitely show poor condition of Job Markets, therefore poor consumer confidence and loss of consumption power; All due to bad performance by local manufacturing and little bit by uncertain weather patterns.

So for third quarter stability of funds they would take out money from IT, Telecom & Infrastructure sector. We have enough foreign exchange to handle the scenario. But these sectors need to show real resilience in third quarter results to attract FDI attention.

Henceforth the depreciation in the rupee and sensex at 13,000 (around).

1 comment:

  1. Very very subtle words are being invented at the editorial discretion. For example a "Market Meltdown" is different from a "Market Crash". It is perhaps because of various fund managers who would gladly invest other people's money calling “a buy” at the most precarious financial scenario.
    If market slides down any further they would invest another new term, "Market Vaporization".