Thursday, May 15, 2008

Dollar at INR 42.6 ...................................... Going up, up, up

There are conflicting reports emerging from various investment banks on Indian rupee (that already went to 42+) but it looks like most are forecasting a weaker rupee. Given that a lot of analysts would say “dark clouds are gathering” for a rain that has started J, I take analyst reports with a pinch of salt, but still the underlying fundamentals mean that rupee will weaken this year. Slowest industrial growth in over 7 years, historic oil prices and an American recession seems to have already taken a toll on India. Goldman Sachs and UBS have already given a lower forecast for rupee, while Lehman Brothers feel that Indian government might strengthen it to reduce inflation. The only way to do it is increasing interest rates, and I don’t think the government could do it in the face of weaker growth. On the other hand, just like when rupee went stronger, it is not just the rupee but it was the dollar that was going down. Now, it is reverse. The last 10 days dollar is getting a lot of strength.

For those who want to send money to India, this is good (not for me L).


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