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Jamal Mecklai

Articles By Jamal Mecklai

135 Articles

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

Along with tens and thousands of these small establishments, lakhs of workers will come on the road," the federation said in a letter to RBI Governor Shaktikanta Das.

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

On the other hand, many health analysts believe this wave will peak sometime over the next month or so, assuming that the people and the government begin to behave sensibly—both relatively tall orders.

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

investment

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

Of course, as we have all learned over the years, markets can stay irrational much, much longer than any of us can stay solvent, so, I guess, as always, the only certainty is continuing high volatility.

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

RBI

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

Again, Europe, like all other nations, has to grapple with immigration and assimilation.

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

US capitol

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?

Well, if most analysts end up surprised, equity markets will obviously also be surprised; contrariwise, many analysts are, in fact, beginning to warn of a pull-back—a few, in fact, looking for Armageddon.

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

Indeed, the US is coming to grips with the fact that its economic system is failing badly.

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

The group will study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place.

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.

ruppe

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

Indeed, RBI Governor Das, at last week’s annual day function of the Foreign Exchange Dealers Association of India (FEDAI), spoke explicitly of “Capital Account Convertibility … a long term vision with short and medium term goals…”

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

And, just as the discovery of a “successful” vaccine is turning the cycle of the pandemic, the longer cycle of increasing inequality—which has been running for over 40 years now—also appears to be coming to an end.

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

The stock market tanked, with the Dow losing nearly 38% in a matter of a month.

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

In a sense, this paraphrases Ambedkar, who believed that the only “real remedy for destroying discrimination is inter-marriage”. (File image)

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

Having said that, though, there appears to be some reasonably strong support (technically) at 74.50, and then 75.

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

Thus, it seems clear that 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

The Reserve Bank of India mainly factors in retail inflation while deciding on the key interest rate.

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

What we need is a new politics where Parliament (and state assemblies and municipal corporations) is (are) loaded with INDEPENDENT members, who are educated, focused on governance and speak their conscience.

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

Indeed, anecdotal evidence shows prices, particularly for essentials (including food) rising quite sharply and, on the ground, people are beginning to get a little alarmed.

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).

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.
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