Within few months, dollar took a complete 'U' turn and started appreciating against all the currencies. This is what I expected, however, many were were caught napping, especially exporters, who had started hedging dollar at Rs 38-39 levels in anticipation of it reaching Rs 32 levels and had to book notional losses. Also world-wide there was a steep rise in the prices of all the commodities which led to high inflation. The Indian government got so worried that it (RBI) was forced to increase the interest rates several times during this period.
Please read this entire chain of mails starting from bottom to understand how currencies and economy behave in a global world.
I always welcome communication which helps improving our knowledge and understanding about stocks, economy, international markets & trade. You may upload your opinion or alternatively send me an email.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
On Tue, Sep 16, 2008 at 4:59 PM, Niteen S Dharmawat
Rupee has even crossed the final target of Rs 47 just in a day from earlier 46. You would recall that the first predication on Rupee was made by me on 27 July 2007 when Rupee was struggling at around Rs 38. That time there were many pundits who were predicting the death of dollar and forecasting rupee to see a level of 35 or worst 32. But nothing of that sort happened which surprised many, including exporters who were in a rush to hedge dollar at any cost which proved to be extremely costly (if someone has hedged dollar at 38 in anticipation to come at 35-32 then the person has eroded the profits by more than 23%).
Now my next target is Rs 50. Dollar will remain between 45-48 levels during next 6-9 months before it hits a different direction.
Many are asking me, when American economy is passing thru' turbulent times then whey is $ getting appreciated? The simple answer is read my first mail below to understand why dollar will appreciate. The US economy is bleeding but still that has not changed the ground reality. The world trade is still carried out in USD and not in Euro/Gold or anything else. When you want to buy crude then you would need more dollars because crude prices have gone up 2-3 folds. Dollar will have to appreciate if everyone is demanding it. Had there been no problems with US economy, with a similar steep rise in crude prices, dollar would have touched Rs 60. So the pace at which it should have appreciated has come down because of problem with US economy.
Now if in the changing scenario where crude comes down to say 50 bbl from present 93 bbl then dollar will depreciate again? My question is, will that really happen? It has a very dim possibility because oil exporting nations, OPAC, will never allow that to happen. They will reduce the production but sale crude at lower prices.
I trust you have enjoyed the prediction. You may post your comments to me.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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On Mon, Sep 15, 2008 at 5:06 PM, Niteen S Dharmawat
Rupee has today convincingly crossed our next target of Rs 46 and is now heading for 47 levels.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
On Tue, Sep 2, 2008 at 10:26 AM, Niteen S Dharmawat
Double whammy means difficult times ahead for them if crude price does not come down. Since they are paying more than double then what they were paying a year ahead because of rise in the crude prices. Now this extra burden because the dollar is appreciated and is currently trading near 44.20 and is expected to cross 45.
Extremely bad for the government exchequer as fiscal deficit will be soaring up. No government will dare to rise prices of petroleum products in an election year. This will lead to inflationary pressure in long term. Controlling the prices will continue to be an arduous task if crude does not dance below 80 on a constant basis.
Cheers,
Niteen S Dharmawat
On Mon, Sep 1, 2008 at 8:19 PM, Nishit wrote:
And what about the importers especially crude oil imports?
On Mon, Sep 1, 2008 at 12:29 PM, Niteen S Dharmawat
Today Rupee has crossed 44 mark decisively and is now trading at 44.21. It's heading for our next target of 45. This will bring cheers on exporters' face.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
On Wed, May 28, 2008 at 5:13 PM, Niteen S Dharmawat
I am of the opinion that Rupee will depreciate further and may touch 45 or even more in coming months...
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
On 5/16/08, Niteen S Dharmawat
I don't know how may of you would be able to recall this message now where I predicted about appreciation of Dollar vis-a-vis Rupee and raise of inflation. Sending it again for your info.... and comments.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
"Niteen S Dharmawat"
07/20/2007 04:21 PM
To ndharmawat@india.com
Subject: Rupee-dollar equation
Hi,
One more thing, I have a contrarian opinion on slide of Rupee. Everyone is now talking of the slide in rupee and they are predicting that it would take rupee to as low as 35. But I feel that rupee will not sustain any levels below 40, if it goes to that levels, then it will bounce back to 40+ or may be above very strongly. Why?
To answer why we will have to answer first thing that why rupee appreciated at all? It got appreciated because: we had more dollar flow compared to rupee. Which led to the pressure on dollar and it got depreciated. We earn dollar whenever we have made any export in dollars, investments by FIIs/FDIs and vice-a-versa incase import is made/an exit by FIIs. If economy is booming and we have had export surplus (more export compared to imports) then it puts pressure on dollar, because we get more dollars. We understand from the law of demand and supply that whatever is more in the market gets depreciated (reduced in value). That's what preciously happened with dollar.
Now what different has happened which has made me conclude that dollar will not depreciate (or rupee will not appreciate) any further? Something major has changed which will change the balance of payment towards dollar. This will raise our import bill by at least 35% compared to April'07 while the rupee has not depreciated that much. The major factor that constitute our import bill is crude oil which is now trading at $75.97 per bbl compared to $55 per bbl few months ago. This is a change of more than 35% and would seriously dent import bill (or exit of dollar). The impact will not be visible to us immediately, it will take a month or two to show some signs and that would be the time when rupee will be depreciated again.
These are my two-pence-worth and I tried to keep that as simple as I can. You may like to share your views.
Cheers,
Niteen S Dharmawat
Mobile: 9850571857
p.s.: Rise in crude price is not good for other industry and could further have impact on several things including inflation. But that's little complex to understand. Till that time we should not worry too much about the nothing and keep our investment in quality stocks. Also dollar is depreciated because of it's own good reasons in their home economy. While presenting the analogy, I have kept it to our shores and compared it with rupee only because that will make more sense to us.
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