Jamal Mecklai

Articles By Jamal Mecklai

111 Articles

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

I don’t believe the dollar will be replaced any time soon—it still is used for over 80% of trade invoicing and represents more than 60% of global reserves.

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).

He also hoped that the cooperation between the two countries during the COVID-19 pandemic would continue in areas of building infrastructure, increasing bilateral investments, and generating jobs.

A strange and risky picture: Why it is much more difficult to manage USD-Rupee risk as compared to EUR-USD

Following a structured programme that carries low risk—less than, say, 1.5%—and captures at least the average gain, would be the best solution

The rupee depreciated 61% of the time—in a closer-to-normal scenario, it should depreciate only a little more (or less) than 50%.

Market volatility: More storms ahead for gold and currency market?

Today’s story appears to be different, and, if equity volatility continues to climb, we could see currencies and gold unstable for a longer period, as they were back in 2008

With reserves at $500 bn, the cost would be $20-25 bn (or more than Rs 1.5 lakh crore), reducing RBI’s profits dramatically.

$500 billion and counting: If the dollar does indeed fall over time, India’s reserves will also enjoy huge passive swelling

Over the long term (10 years) the correlation between USD-INR and EUR-USD was as high as 81%; over a shorter horizon, the correlation is much lower (20-25%).

Thus, while the $500 bn number is certainly something to celebrate, we need to understand that $8.4 bn did NOT flow into India during that week.

India needs to wake up to the dire need for police reforms

Given the atrocities that have been carried out by the police towards citizens, especially the minorities. It calls for reforms within the machinery to prevent such outcomes

Dealing with the unknown unknowns

The big question, of course, is why is the rupee so “strong”? Well, the obvious answer is that there is more demand for rupees than supply.

rupee, exchange rate, rupee against dollar

Covid-19 crisis and India’s next government

The Covid crisis has politicised a new crop of leaders who are young, smart, and committed to the country

Could the rupee be getting a little respite?

Since 2011, there have been seven episodes of sharp rupee declines and it has never turned lower after recovering from the low for so long.

banks, loans, CEA, subramanian krishnamurthy, msme, lending, repo, reverse repo

Covid-19: We are all in this together — pandemic does have collateral value

The only way forward is to focus on what we share in common and delegate the differences—that had so taken over the foreground of the media—to the back of the bus.

Why is rupee sacrosanct?

If the government were to follow FICCI’s recommendations and put out a package of 5-6% of GDP, with a focus on both the poor and the MSME sector, it is possible that the rupee may decline to, say, 85 or 90.

According to the report by DBS Bank, the combined fiscal gap will increase by 480 basis point (bps).

Is the rupee fishing for a bottom?

The correlation of movement in spot and the 5-day average of the NDF/onshore difference since December has been a huge 89%.

Will the rupee take a breather?

Even if the rupee does enjoy some respite over the next couple of weeks—the one-month NDF is down a little bit—it is dangerous to believe that waiting and watching is a good approach.

India after the virus passes

There is no doubt that the coronavirus is a seminal turning point in human history, and like all countries, India, too, will be definitively changed.

With millions of working Indians unable to survive for more than a few days of no work, it is an insult to humanity to call India even a developing country. (AP Photo)

A bright spot in the corona-crisis: How the calamity will push politics to reflect world’s shift toward community

The pandemic, which proves beyond doubt that we sink or swim together will push politics to reflect the world’s shift toward community.

This shift is already being seen in the approaches to the huge government spending that is necessary in this crisis to simply sustain economies.

After the fall: Difficult for policymakers to even think about taxing capital

Far from recognising the problem, the central banks remained focused—counterproductively—on preventing any decline in asset prices.

policymakers, interest rates, financial assets, capital assets, corona virus, taxing capital, asset prices

The Gods must be crazy: Central banks believe ther are protecting investors from their own foolishness

Today, central banks are the loudest voice in the market, believing that they are protecting investors from their own foolishness, and financial markets from instability.

2008 once more? The world may be headed for another global economic crisis

Given the current economic situation—mainly, the US-China trade war, and the breakdown of corona virus—the world may be headed for another global economic crisis

trade, us

Ladder system in corporate world: pros and cons

Main positives of using a ladder are that it does not require the use of a market view, and they can be relatively simple to implement. However, they carry too much risk

Let us look at a simple ladder running for 12 months, where 25% of the exposure is hedged to 12 months, 25% to nine months, and 25% to six months with the balance held open for spot. (Representational image)

Welcome to Shaheen Bagh: PM Modi inadvertently unites huge mass of Indians

The current regime has no other agenda but to divide Indian from Indian, as viciously as it possibly can. We have to respond peacefully and cleverly, and with a breath of humour

As time passes, the protests will become about much more than CAA/NRC/NPR. (Reuters image)

Another all-time low for Rupee? Continuing troubles with economic growth

If, indeed, the rupee does tank, this would weaken the balance sheets of many companies and push more and more of them to get even more risk-averse, and the long dreamed of investment cycle will be further delayed.

 Rupee, Rupee at all time low, economic growth, Rupee to dollar, india economy

Time for a big bang: Rupee needs to be made convertible on capital account

RBI, of course, has been steadily buying dollars—its reserves have risen by over $1 billion for seven straight weeks—no doubt aware that a stronger rupee would be disastrous for both the export sector, and local manufactu

Dr Rajan, who had just come in as RBI Governor, launched his rescue effort, which helped the rupee recover to 58 in about a year.

AAP has arrived: Delhi govt has been delivering the goods over last 5 years

Its approach to governance is systematic, which means changes are likely to be sustainable.

aap, aam admi party

Weak Rupee: Will it boost exports?

Indeed, the sudden outflow of about $2 bn in August did push the rupee quickly through 70 to 72+, but it has recovered since then, despite continuing FPI selling in the equity markets.

It does seem that India’s government yield of 6-6.5% could continue to draw investment interest, despite the fumbling economy and nervous rupee

Jalan panel’s recommendations represent a possible silver lining

Given that the global growth environment is also turning more difficult, the government needs to wake up and build on its lone expert-driven success.

Jalan Committee, RBI, India economic growth, india fiscal deficit target, india GDP, Modi government economy, india policy frameworks, GST reforms, GDP growth fall

To generate growth with equity, the driving principal should be to make labour-earned income tax free

To regenerate growth with equity, the driving principle should be to make labour-earned income tax-free; only money earned from money should be taxable.

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