Make the most of INR fall...Non Reisdent and Resident Indians...

 

 

 

Well, the reason to put money to work in India is not patriotic but entirely commercial. Recent depreciation of INR with respect to foreign currencies once again present unprecedented opportunity to invest in India. This could be in the form of deposit ( which is very attractive) or real estate.

 

India has gone through such kind of financial crisis in the past in 1991, 1998 and 2001 and that was the time when we have offered high interest rates to attract foreign exchange. This time is also no different from investors and savers point of view. Certainly, no body can forecast with certainty how long this crisis will continue and what would be the magnitude. However, history suggest that tolerance in our country to go to dogs is really very low. Whosoever be the policymakers, they always come together and devise the rescue plans. Everyday we are hearing that policymakers are working on all kinds of permutation and combinations to get precious foreign exchange. The moment they will unveil credible plan, markets will react positively and lo & behold things will come back to normalcy. However, these will be the short term measures to curb volatility in the markets. Moreover, if, policymakers comes out with structural reforms to improve manufacturing and boost productivity, this would be long term positive. This only will ultimately derive the value of INR in the long term.

 

The idea is not be fear-full about one way fall in the value of INR and have courage to invest. One approach one could follow is to invest in a gradual fashion a various price points. This is like a Systematic Investment Plan (SIP). It always works in your favor.  Right now, home developers are facing low sales and high demand for funds. Thus they are on the negotiation mode to make deals attractive. Take advantage of such scenario of twin unprecedented benefit like : low real estate price and attractive value of currency. This scenario may not persist for long  so go ahead and make your Years...

 

Long term resident investors should also be investing in Tax Free bonds available at attractive rates. This is also possible due to current high interest rates. Once stability arrives in the market, these rates will no longer be available. One should look for listed bonds available in the exchanges to lock-in attractive yield.

 

This is the time to feast on long term fixed income products. Lock in attractive rates and reap the benefits over the years.

 

 

Hupmty Dumpty Had A Great Fall..

 

Indian Rupee (INR) has again touched life time low at 62.00 against USD. The reasons are very obvious. Though RBI and government were taking measures to help support the INR but most of them were ill timed and lack necessary powers to convince the market that these are the potential solutions. This time is really different then in the past when we have faced similar foreign exchange crisis. Currently huge short term liability to the tune to USD 170 billion are going to mature in the current financial year. Accepted the fact that most of these will be rolled over as what we have witnessed in the past. However, these numbers are staggering and market is testing the resolve of the authorities and keep asking for show me the inflow of foreign currency.  

 

 Authorities are expected to understand the real cause of problem behind the latest persisting foreign exchange crisis. Let me outline them:

 

1. Global Factors : Indian markets were one of the beneficiary of the global quantitative easing since 2008, which has buoyed the equity and fixed income markets. Now, US growth is returning and thus it is expected that Federal Reserve would be scaling down purchases of securities gradually, which in tern reduce global funds available at ultra cheap rate.

 

2. Indian man made disaster : Policy paralysis and recent corruption has turned India into importer of certain products where we were either exporter like iron ore or net importer like coal.  This has increased demand for foreign currency suddenly. Further consumption of imported consumer goods like electronic items, food products, fancy SUV cars etc. further added to the demand for foreign exchange. Obviously, authorities have turned nelson eye to these events & failed to recognize these shifts in the market. Thus, here we are facing the music and currency is falling.

 

Once federal reserve have made public its intention of withdrawing excess liquidity in near  future, globally bond market & consequently local currencies fall down substantially as leveraged investors choose to move back to safe heaven and reduce risk. India which was recipient of global liquidity could not be left unscathed.

 

What is the solution... well, the real game changer would be shock and awe therapy. Authorities should come now with a realistic plan get at least USD 10 billion in the country within no time. This will only calm the market. In addition, government should not hesitate to take tough economic decisions like deregulating at least diesel & fertilizer price. Time has come to reduce subsidies and thereby reducing its consumption. Further, we should resolve that we have policies in place to improve our global competiveness so that exports can be encouraged. Markets are watching you...Please deliver before it is too late...

 

 

 

 

 

 

An open letter to all policital parties...Let us put Country First above all..

Dear Sir,

We are facing unprecedented economic and financial crisis. The need of the hour is to tackle it head on.  Moreover let us acknowledge and understand that we as a nation were overlooking macro imbalance build up since global financial crisis ( 2007) and unable to overcome that so far. Question of taking decisive measures  will not arrive as we have never acknowledge the gravity of the deteriorating economic fundamentals over last so many years.

 

We have been following band aid approach to fill the leaking tap. Now time has come to rise above all to take measures which would restore our economy to the path of sustainable growth to generate employment and contain ever rising consumer prices.

 

Government should go all out and seek support for crucial pending reform. Opposition parties in the interest of nation, should not oppose any bill just for sake of opposition. Let us work constructively to put India again on the path of sustainable growth.

 

Union Government should also undertake bod measures like complete deregulation of all petroleum products which will eventually bring down subsidy and consequently fiscal deficit. Those days are over when there would be nationwide protest for any rise in price of petroleum products. Now a days,  vegetable price, which are touching all time high, failed to attract any protest, then who is bothered about high petroleum prices.  Today, we are paying market prices for every product, then, why government is shying to make it market determined. In fact, high prices will automatically adjust the demand as well as users will be cautious.

 

Union Government should also cutting wasteful expenditure, which never reaches to the intended recipients.  No doubt, Adhar is a nice start, however, till such time it become reality, let us rationalize the need of the subsidy and expenditure as well.

 

It is high time we should put together our thoughts and energy so that we can overcome the current economic and financial crisis once for and all.