Are you really making money?

deepsa52 · #1 12th March 2008, 09:25 PM

Jim Rogers on CNCB, its relevant in Indian context as well. Rupee is dangerously low compared to dollar - perfect recipe for a disaster, if you think what the Rupee will buy.

http://www.cnbc.com/id/23588079/site/14081545/

Just my opinion is that what is happening is that central banks ( including RBI who assists this ) is robbing the middle class by pumping in fake money to prop up the markets. The hedge funds, wall street firms, and the wealthy individuals who can trade in multiple markets and use leveraged bets will survive, others shall perish first in times of trouble like this.

I have also attached a chart of India Fund ( as a proxy for Indian Stock market ) versus gold, silver, and commodities ( food and energy );

IndiaFund vs Gold - down about 40%
vs silver - down about 50%
vs commodities - down about 40%
And last one , Indian Rupee vs Euro.

So the Indian rupee buys a lot less than just a few months ago.
And if one is putting money in a fixed deposit during this period, that is a guaranteed way of becoming poor.

kkseal · #2 12th March 2008, 09:53 PM

Quote:

Originally Posted by deepsa52

... Rupee is dangerously low compared to dollar ... -

On the contrary it's the US T-Notes that are at risk* (savvy investors no longer consider it a safe haven - hence the rush for commodities) if the $ continues to plummet viz a viz other currencies.

And the RBI has been squeezing liquidity by raising rates & CRR rather than 'pumping in fake money'

Regards,
Kalyan.

* could become the mother of all junk bonds

raosrinivas · #3 12th March 2008, 09:59 PM

Quote:

Originally Posted by kkseal

And the RBI has been squeezing liquidity by raising rates & CRR rather than 'pumping in fake money'

Regards,
Kalyan.

I agree, when the rupee appreciated to 38.5 for a $, exporters were having problem, so RBI is taking steps to get it to 40, so that exports are not effected drastically.

deepsa52 · #4 12th March 2008, 10:06 PM

My opinion is what is being done by RBI is *nowhere* near enough..that is just my opinion. Please take a look at USDINR=X at finance ***** for three months. I understand the point on exports, but debasing the currency for exporting to a bankrupt economy like US may back fire.

All I am saying is this not good for the poor people or middle class.
It might work for traders like you.

kkseal · #5 12th March 2008, 10:09 PM

Actually the RBI has done nothing that i can remember. The reason the rupee looks better is due to the seasonal demand around year end from corporates for adv tax.
The FinMin has armtwisted PSU banks to reduce int rates somewhat. (And so much of armtwisting - the loan waiver included - has scared away investors

)

Regards,
Kalyan.

P.S. The silver lining being that we have the monitory options in store in case there's a need to stimulate growth.

chiruvyapari · #6 12th March 2008, 10:10 PM

what RBI is doing is very correct. In retrospect everybody will apreciate the steps taken by RBI despite the indirect directions from F.M.

deepsa52 · #7 12th March 2008, 10:42 PM

Chinese Yuan is appreciating rapidly against the dollar. So is EUR. What is special about Indian Rupee? If Indian Rupee is allowed to appreciate against the dollar, it will be good, otherwise we can see more suicides, not just farmers.
I hope it all ends well.

raosrinivas · #8 12th March 2008, 10:52 PM

Quote:

Originally Posted by deepsa52

Chinese Yuan is appreciating rapidly against the dollar. So is EUR. What is special about Indian Rupee? If Indian Rupee is allowed to appreciate against the dollar, it will be good, otherwise we can see more suicides, not just farmers.
I hope it all ends well.

Chinese yuan is not appreciating against $, it is piggy backed to the $. that's the issue that has been in discussion between the 2 countries for the last 4-5 years.

strong rupee is good for the country i agree, but currently to make indian goods competitive , 40 is a neutral value not too high and not too low. at 25 all exporters will shutdown and all software exports will cease, so not much choice there.

deepsa52 · #9 12th March 2008, 11:04 PM

Yes, this has been a topic of discussion for few years. However, Chinese have been loosening the peg and are allowing the yuan to appreciate.
Yuan is about 10% up for 12 months; if you look at yuan vs Dollar. For last few months, it had been appreciating faster and I suspect it will continue to appreciate. But I am no expert in predicting these.

about 7.76 an year ago
about 7.08 now.

deepsa52 · #10 12th March 2008, 11:12 PM

Quote:

Originally Posted by raosrinivas

C40 is a neutral value not too high and not too low. at 25 all exporters will shutdown and all software exports will cease, so not much choice there.

Agreed, but that is not a sign of an emerging super power . Software and goods/services can be consumed domestically instead of providing cheap labor and selling good quality cashews and shrimps to Americans

. In any case some industries have to suffer.