This was not the script that one expected for INR. Raghuram Rajan, favorite of the markets, stepped down as RBI Governor 2 weeks back. $25-30 Billion USD of FCNR deposits maturing from September to November.
Most people expected Rupee to weaken, and justifiably so. But Rupee has managed to hold its own. Quite comfortably. And if there is even a slight uptick in markets, it will probably even strengthen!
What is going on? Yes - dollar is weak overall, because of expectations Fed is not going to raise rates - but still.
I think these are early signs that the FCNR redemption money is not deserting the country the way people were worried about for last few months. It is very much staying back in the country.
And if that money is staying back in the country, where would it most likely end up - why, the equity markets of course. The India story looks quite attractive, and especially considering how bad the situation looks elsewhere, this becomes the natural place to park the country. Even more so for Indophiles who were ready to park their money in India in 2013, a period that was probably as bad, or in some ways even worse, than the gloomy days of 1991!
If a significant portion of that money comes into Indian equities, it could potentially push markets way higher.
Watch out for the flood.
Most people expected Rupee to weaken, and justifiably so. But Rupee has managed to hold its own. Quite comfortably. And if there is even a slight uptick in markets, it will probably even strengthen!
What is going on? Yes - dollar is weak overall, because of expectations Fed is not going to raise rates - but still.
I think these are early signs that the FCNR redemption money is not deserting the country the way people were worried about for last few months. It is very much staying back in the country.
And if that money is staying back in the country, where would it most likely end up - why, the equity markets of course. The India story looks quite attractive, and especially considering how bad the situation looks elsewhere, this becomes the natural place to park the country. Even more so for Indophiles who were ready to park their money in India in 2013, a period that was probably as bad, or in some ways even worse, than the gloomy days of 1991!
If a significant portion of that money comes into Indian equities, it could potentially push markets way higher.
Watch out for the flood.
INR - deviating from the script
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