Posted on 08/13/2018 6:49:58 AM PDT by robowombat
India rupee hits SHOCK LOW as Bank of India undertakes emergency intervention
The Indian rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking broader weakness in other emerging market currencies on concerns of a spill-over from a crisis-hit Turkey. The Reserve Bank of India was seen intervening to stem a sharp fall in the rupee, two dealers said.
“The RBI was there to curtail the volatility in early trade, but not in a big way,” said a senior dealer at a foreign bank.
The rupee reversed marginally from its record lows to trade at 69.53 to the dollar.
It had ended at 68.84 to the dollar on Friday.
The 10-year benchmark bond yield rose to 7.80 percent from its previous close of 7.75 percent, tracking the weakness in rupee.
. Investors preferred safe havens such as the US dollar and the yen after a plunge in the Turkish lira sent all emerging market currencies sharply lower.
The lira has fallen about 45 percent against the greenback this year on worries over Turkish President Tayyip Erdogan's increasing control of the economy and a deepening diplomatic rift with the United States.
"There is no point spending a lot of dollars in defending a rupee when the force of the fall is so strong across emerging markets," said a senior forex dealer at an Indian state-run bank.
(Excerpt) Read more at express.co.uk ...
Can I interpret this as “being in bed” with Turkey?
I can’t say I have a ton of sympathy.
No, you can’t.
It has to do with fear... because the LIRA is collapsing, investors are abandoning other currencies for safety... its not a direct link between turkey and india.
Think of it like 2008, when FORD who was profitable and doing well, was trading at under $2 a share, because GM and Chrysler were effed up... Ford had nothing to do with their problems, but the fear caused by those companies problem spread fear of the entire industry got punished.
. Investors preferred safe havens such as the US dollar and the yen after a plunge in the Turkish lira sent all emerging market currencies sharply lower.
The dollar and yen are crap, but compared to the rest, they are golden...……………...
This may have nothing to do with Turkey. The INR has been battered over the last year or so by the utter ineptness of the Modi regime. First demonetization, then GST, plus numerous questions about recent election results and the BJP’s naked power-seeking. I would see this more as a vote of No Confidence in the Modi administration by the markets.
The Indian rupee on Monday touched an all-time low of 69.62
i.e. how far has it actually fallen?
Obama did such a good job with the US economy it’s now killing currencies everywhere ,LOL
“The dollar and yen are crap, but compared to the rest, they are golden...”
Right now the US dollar is the proverbial best house in a crap neighborhood.
Just how can a bank intervene to protect the currency? The price is the amount of the latest transaction, and the price anyone will have to pay if he wants to buy the currency. This price is not SET by the government, although it sorely wishes it could.
The demand is not there, so the asking price falls. Government-run banks cannot change the demand, even if they enter the marketplace as a buyer.
Government broke it, but it cannot fix it.
When I was a kid, it was 12 Rupees to the Dollar.
But that was a long, long time ago.
This could be a buying opportunity.
Turkey, India, Iran, Mexico etc.
Seems like the flu.
Imports will be cheaper and the trade deficit will shrink.
5.56mm
The average exchange rate for the rupee was 54.41 a dollar in 2012-13 and 60.50 a dollar in 2013-14 although it had closed at a lifetime low of 68.82 on August 28, 2013.
Inflation is running @approx 5% per annum since then.So approximately 22% aggregate from then till now.
The major cause of the current depreciation is the deficit worry caused due to higher crude prices and the political uncertainity as national elections are about 8 months away.
Factoring in the inflation rates, the Indian ruppee is actually stronger, imho. But like in the US, the Indian MSM is all out to get the non leftie PM who took office in May 2014. The collapse of the currency really happened when the previous socialists were in power and fubar'd the economy.
Last I knew, India’s exposure to Turkey was miniscule. If true, something else is going on and Turkey is being made a scapegoat.
Or this is all about pressuring Trump to lay off Erdogan.
And if the Indian government has contracted TDS, that’s a problem...Bigly.
It doesn’t take much to be disruptive.
Just think about how screwed the US would be with interest rates at 5%. It’s not a huge change, but rates have been so low for so long the shock would send us into a recession in no time.
It’s also important to note that these EM hits are driving some countries to look at bilateral trade and actual barter—neither of which use the dollar.
This stuff adds up slowly. Until it’s not slow.
I guess that’s one way to look at it. I would not suggest it, but feel free to jump in with both feet.
Didn’t India try that “cashless” thing a while back only to find out that their infrastructure couldn’t handle it and retail companies could not perform transactions?
Looks like the EU is in far deeper doo doo in terms of exposure to Turkey, with Spain, Italy and France possibly being in for a world of hurt. BBVA, UniCredit and BNP Paribas the banks being mentioned.
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