Managing FX risks on imports
While the premiums are, in general, higher than the average depreciation, they are substantially lower than the worst depreciation (to tenor) that we have seen over the past 10 years
Let us pray: RBI needs to pull out all the stops to prevent another sharp drop in the rupee
The rupee, on the surface, appears to be playing its own game. Since the start of 2020, it has taken two major hits, each one triggered by the Coronavirus; in both cases, it felt like the bottom was about to fall out, bringin
Can Reserve Bank of India win this war?
The market believes the rupee needs to be weaker. To ensure that this battle doesn’t turn into a crisis, more than just intervening heavily, RBI needs to tell the market in no uncertain terms that it is willing to sell more
How much longer can the rupee stay strong?
Over the past year, the rupee has already strengthened by around 4% against the dollar, while most emerging market currencies have been broadly steady or somewhat weaker
Will interest rates continue to rise?
The bond markets are pushing the central bank around and it is hard to see how/when this will stop
Reserve Bank can enhance social harmony
RBI needs to require that all real estate lending contracts have a clause prohibiting lenders from advancing money to any borrower (developer) who discriminates
Look at those premiums go!
This is the best time for companies with a natural hedge to actively manage it by covering imports at the spot and selling the equivalent amount of exports forward to 3-months
Could Brexit heal the world?
With Brexit taking one of the most difficult hurdles out of the picture, the grand scheme of a “United States of Europe” will accelerate towards fruition
The big lie
It is still a long time till 2024 and the lies will continue. But, so will the protests as more and more Indians have gotten over the TINA concern and are willing to stand up and act themselves
Is inflation coming back?
If inflation is set to rise globally—contrary, by the way, to what most analysts expect—what would be the implications for equity markets and the rupee?
Here’s to a grand new year! Sensitivity, kindness and gratitude must be the loudest sounds we hear in 2021
As a result of the pandemic, tens—maybe hundreds—of millions of people stepped out to help others far more than they usually did
Oh no, not again — another history lesson: Follow a systematic process for hedging your risk
Since 2014, the periods of strength have been shorter (354 days, on average) as compared to the period between 2006 and 2014 (502 days); correspondingly, the periods of weakness have been longer—the average since 2014 was 4
Currency Undercurrents: Another New Year’s Eve party?
RBI is losing the battle at preventing rupee appreciation, and the next couple of weeks could see some drama
Pictures at an exhibition: Markets are generally anything but neat
Markets are generally anything but neat. Thus, exporters should continue to follow a systematic programme of hedging with a risk limit and regular hedges.
Slow, steady steps to CAC
India needs to permit selected “other financial institutions” to access the FX market to a particular limit. This would increase both liquidity and volatility
Turning left is starting point of reducing inequality
The new voices that are demanding a stronger focus on—again—employment, education and health will perforce drive politics meaningfully to the Left
Is judgment day coming?
If this market collapse, as some fear, is the big one, it will be driven by a realisation that all the Fed’s horses and all the Fed’s men can do nothing to put the economy back on the rails again
Going beyond prejudice of ethnicity and pride of caste is the way ahead
Each of us needs to acknowledge our own prejudices, which are ultimately nothing but ignorance and fear
Volatility in the air? Market expects some dramatic move in the rupee over the next few months
The gap between USD-INR 3-month implied volatility (6.58%) and the realised volatility over the past 90 days (4.55%) is huge and has been sustaining for over a month. Market expects some sort of dramatic move in the rupee ove
Buy euro, sell gold
Gold and the euro operate on different paths and with different triggers, more so, in more recent times, when the relative liquidity of both markets has changed dramatically in favour of the euro
Is rupee’s flirtation with 73 over?
A bird in the hand is worth (often much more than) two in the bush. With premiums still around 4% a year, exporters should ensure that they are never more than half exposed
Don’t bogart that joint!
The shocking part is that the powers-that-be seem to be oblivious—it is almost as if the government genuinely believes that things are not that bad and are, of course, getting better.
What VPIs – very privileged Indians – have to do today
As VPIs, we need to find as many Indians like this as we can, support them (both financially and with other critical enablers) and help them change the country
How long can the rupee “strength” continue?
Importers should continue to thank their stars that the trauma anticipated when the rupee last collapsed has not come to pass. Again, with premiums quite attractive, a reasonable hedge out to three months would be sensible
A stronger European flavour
It does seem as if the long overdue rebalancing is coming to pass, with the Euro, which is, in any case, number two on the totem pole, likely to gain more share across the board
Gold, golder, goldest: Does anybody want to bet when gold will cross $2,000 an ounce?
A 50% hedge, while it has the same 1.6 return/risk profile, is a better strategy since the risk is cut in half. But, that is about hedging, which is boring.
Missing the forest for the trees: Why policymakers must focus on need for growth as govts look to cover huge deficits
It would be tragic if, again, policymakers missed the forest (the need for growth) for the trees (keeping asset prices supported).
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