Indian Rupee depreciation against Dollar

[sob]

Rupee vulnerable after hitting record low - Money Matters - livemint.com

The Indian rupee fell to an all-time low on Tuesday as oil refiners and other companies scrambled to buy dollars, with the currency looking increasingly vulnerable to a swelling current account deficit and fears over the global economy and euro zone.Exposure to short-term portfolio flows, a rising oil import bill and worsening government finances have heightened the risk for the rupee, Asia's worst-performing currency this year, and the outlook remains bearish.

The rupee has skidded nearly 17% from a 2011 high reached in late July as risk-averse investors flee emerging markets, increasing the difficulties for a government already struggling with high inflation, slowing economic growth and a widening trade gap.

"At this point in time, the options for the RBI and the government are really limited. The movement in the rupee is dictated more by macro fundamentals rather than speculation," said N. Bhanumurthy, economist with National Institute of Public Finance and Policy in New Delhi."I will not be surprised if the rupee breaches the 53 level and stays there for some time. I don't see a pullback till external macro conditions change."

The falling rupee, combined with slowing growth, has added to a sense of urgency for a scandal-tainted government to push reforms to encourage investment.

Foreign funds have sold more than $300 million worth of shares over the last week, reducing the net inflows in 2011 to just under $400 million, sharply below record inflows of more than $29 billion seen in 2010.

 

[sob]

This year the Indian rupee has been the worst performer in Asia and on a global scale it is the 3rd worst performing Currency trailing behind the Turkish Lira and the Kenyan Schilling.

With the macro economic figures coming out of the Govt. not showing any signs of improvement, and the Govt. in no mood to curtail it's ballooning social sector spend, the signs are not looking good for the Indian economy.

With about US$ 380 billion in reserves, the import bill is around US $ 35 per month. This ratio as pointed by the economists is about par with 1991 when we had to mortgage our Gold reserves.

Also with RBI Dy. Governer Gokharan, speaking to the media admitted that RBI could not do much to prop up the Rupee also has sent a negative signal in the market and has put the Rupee under pressure.

 

[Yusuf]

You have no idea how mighty fvcking pissed I am right now and have been for the last couple of months.y margins have vanished. I ain't got no clue what's going to happen next. My customers are not ready to buy at increased costs and I have material waiting on port that I have to release. I am so fvcking screwed by the fvcking dollar.

PS:- language used is intentional and shows how frustrated I am.

 

[sob]

Rupee fall disruptive, medium-term goals to guide action: RBI | Firstpost

Describing the sharp depreciation of the rupee as "disruptive", the Reserve Bank of India (RBI) today said any action to arrest the fall will be guided by medium-term considerations."We don't really have a target or a rate in mind. It's moving as per market dynamics. It (fall in the value of the rupee) is disruptive, there is no question. There (will be) impact on our import bill, particularly for energy. It's having an impact on companies and it is a problem," Reserve Bank Deputy Governor Subir Gokarn told reporters here.
The immediate impact of the fall in the value of rupee, he said, will be on the inflation rate, which has been hovering near the double-digit mark for several months.

 

[sob]

You have no idea how mighty fvcking pissed I am right now and have been for the last couple of months.y margins have vanished. I ain't got no clue what's going to happen next. My customers are not ready to buy at increased costs and I have material waiting on port that I have to release. I am so fvcking screwed by the fvcking dollar.

PS:- language used is intentional and shows how frustrated I am.

Yusuf I deal with Japanese components, till last year the Ex Rate was 100 Yen to 48 INR, In Sept it was 100 JPY to 52 INR and today it is 100: 70.
I am trying to just cling on and see where it goes from here.

 

[sob]

I am also worried about whether the Govt. will put a brake on many of Defense procurement as they do not have the money and all the money is required for the NREGA and the FOOD Bill.

 

[Yusuf]

I don't know why RBI didn't step in and let the rupee fall beyond 48 let alone cross 50 and touch 52.50. I have no clue what RBIs policy is with regards to the rupee. Expect another piece hike in oil and also many of the day to day items will go up too like FMCGs.

 

[Yusuf]

Govt can play with that. Forex reserves are there and in far greater multiples than the biggest of all 10billon deal. Anyways they don't have to pay today or tomorrow for it.

 

[Iamanidiot]

Elections..elections..elections.. everyone is expecting a mid term in 2012 so they are pork barreling

 

[sob]

I don't know why RBI didn't step in and let the rupee fall beyond 48 let alone cross 50 and touch 52.50. I have no clue what RBIs policy is with regards to the rupee. Expect another piece hike in oil and also many of the day to day items will go up too like FMCGs.

I will try to find a very interesting article on why the RBI cannot intervene in the Forex market. Apparently looking at the Forex reserves our Imports, the trade imbalance, the conclusion was that we simply did not have the money to fight the battle in the Forex market.

 

[Galaxy]

This Congress regime is worst government i have ever seen.

High Inflation,$ value, Interest rate, level of corruption,level of incompetence, budget deficit. This government should go and fresh election should come. Any government would be better than present one.

 

[Yusuf]

The "regime" can't do shit about this matter. It's RBIs prerogative.

 

[SHASH2K2]

isn't RBI under indirect control of the government? Can anyone elaborate the reason behind this free fall of rupees. is it due to outflow of foreign currency from Indian market?

 

[Galaxy]

The "regime" can't do shit about this matter. It's RBIs prerogative.

Who controls the RBI ?? It's all government policy on economical front initiated by PM,FM and Planning commission which is moved forward by RBI. RBI can't do anything until government trade/budget deficit and policy is in right direction.

RBI raised reverse repo, CRR, repo rate around 12-14 times in last 18 months to control Inflation. Still, Inflation is around 10%. Then why the hell RBI raised so much of rate ?? Indeed it is damaging high input cost, PAT for 1,000 of companies across the board which is effecting our economy and IIP no.. Going forward, it doesn't look like Inflation will come thanks to INR deprecation.

Rupee plunge may blunt India's inflation fight

 

[Yusuf]

The government cannot do anything about outflow. Investors have moved away from countries like India due to turbulence elsewhere and guess what? They have taken refuge in US treasury bonds!!

RBI can sell dollars to keep the price in check.

 

[Param]

isn't RBI under indirect control of the government? Can anyone elaborate the reason behind this free fall of rupees. is it due to outflow of foreign currency from Indian market?

Yes,according to politicsparty.com:World's Best Analysis.Quickest News.Politics.Polls.Governance.Economy.Astro.Strategic Affairs.Media.

 

[Galaxy]

The government cannot do anything about outflow. Investors have moved away from countries like India due to turbulence elsewhere and guess what? They have taken refuge in US treasury bonds!!

RBI can sell dollars to keep the price in check.

First of all, FII's, FDI and Investors didn't moved away. They just didn't invested in FY 11-12 due to Inflation, reducing margin for top companies, lacklustre macro-economic, delay in all project and process.

In early FY11, government thought Inflation will soften and will come around 6% if RBI raises interest rate several time (25-50 bps in every 30-60 days). They did, still Inflation is not down. Historically, Inflation never decreases due to increase in interest rate but growth do decrease. Why government sacrificed 1% GDP growth, I am failed to understand. INR was expected to depreciate due to concern in MENA, PIGS, Eurozone and US. Government could have taken various steps in FY10-11 to execute 50 odd pending project in FDI, Big acquisition, Merger, pledging and IPO & FPO. Even U.S. which is trading at 15 trillion $ debt is not facing the heat compare with India. Why ?? Incompetence, slow process, unreliable future and not taking strong measure in economy. It's all government failure on economic front.

 

[nrj]

Devaluation of rupee is good for me. Higher remittance!

Approximately 14-15% higher earnings compared to last year

Trade deficit is the last thing I care. Also non-incremental cost of service means more clients

Only problem I've with RBI is its stupid Paypal policy

 

[Yusuf]

Who controls the RBI ?? It's all government policy on economical front initiated by PM,FM and Planning commission which is moved forward by RBI. RBI can't do anything until government trade/budget deficit and policy is in right direction.

RBI raised reverse repo, CRR, repo rate around 12-14 times in last 18 months to control Inflation. Still, Inflation is around 10%. Then why the hell RBI raised so much of rate ?? Indeed it is damaging high input cost, PAT for 1,000 of companies across the board which is effecting our economy and IIP no.. Going forward, it doesn't look like Inflation will come thanks to INR deprecation.

Rupee plunge may blunt India's inflation fight

Interest rates are raised to control inflation. RBI follows laws passed by parliament and not govt dictat. RBI is like the SC.

 

[Galaxy]

India's Trade is increasing, commodity price is stable, Forex reserve is fine. Rs. deprecation is more due to domestic economic policies, budget deficit and No hedging.