USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency Futures Options Trading

USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency  Futures Options Trading

Why rupee is falling? Flow chart to understand. The causes, The results, Important to remember

Why rupee is falling? Flow chart to understand. The causes, The results, Important to remember

Why rupee is falling?

Rupee is at record low.  Everybody wants to know why this happens. 

I would like to explain the facts in a flow chart, so that it is very very simple to understand.

1. FIIs started investing in India, because their jobs market was worst.

2. US central bank proposed for Quantitative Easing 3 Process, means, printing more dollars ($) and bring into circulation.

3. This results in increasing inflation in USA.  Hence the real interest rate will be negative.  That is why gold was also increased.

4. Hence, they started investing in India where interest rates were attractive. They purchased Indian Government Bonds.

5. Now, US jobs market is showing good improvement, new jobs are being added every week by week.

6. This lessens the chance of implementing the QE. Means inflation will come down and interest rates will be high.

7. Hence they resorted to selling in Indian Bond markets.

8. Selling in domestic markets means they get sale proceeds in Indian rupee, they sell INR and purchase $Dollar.  This selling pressure cause fall in INR value and appreciation in USD.

I hope this is clear. I would like to depict the same information in charts so that its more easy to understand.

1. FIIs started investing in India, because their jobs market was worst.

UNITED STATES NON FARM PAYROLLS Non Farm Payrolls in the United States increased to 175 Thousand in May of 2013 from 149 Thousand in April of 2013. Non Farm Payrolls in the United States is reported by the Bureau of Labor Statistics. Historically, from 1939 until 2013, the United States Non Farm Payrolls averaged 118.38 Thousand reaching an all time high of 1114 Thousand in September of 1983 and a record low of -1966 Thousand in September of 1945. Nonfarm payrolls is an employment report released monthly, usually on the first Friday of every month, and heavily affects the US dollar, the bond market and the stock market. Current Employment Statistics (CES) program from the U.S. Department of Labor Bureau of Labor Statistics, surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work sites, in order to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls. This page includes a chart with historical data for the United States Non Farm Payrolls

2. US central bank proposed for Quantitative Easing 3 Process, means, printing more dollars ($) and bring into circulation. The more money in circulation, the less value for currency.

3. This results in increasing inflation in USA.  Hence the real interest rate will be negative.  That is why gold was also increased. People consider investing gold is good hedge against inflation.

4. Hence, they started investing in India where interest rates were attractive. They purchased Indian Government Bonds.

5. Now, US jobs market is showing good improvement, new jobs are being added every week by week.

6. This lessens the chance of implementing the QE. Means inflation will come down and interest rates will be high.

7. Hence they resorted to selling in Indian Bond markets. Indian bond market rates were falling.

INDIA GOVERNMENT BOND 10Y India's Government Bond Yield for 10 Year Notes declined 35 basis points during the last 30 days which means it became less expensive for India to borrow money from investors. During the last 12 months, India government bond yield declining 1.12 percent. Historically, from 1994 until 2013, India Government Bond 10Y averaged 9.3 Percent reaching an all time high of 14.8 Percent in April of 1996 and a record low of 5.0 Percent in October of 2003. Generally, a government bond is issued by a national government and is denominated in the country`s own currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds. The yield required by investors to loan funds to governments reflects inflation expectations and the likelihood that the debt will be repaid. This page includes a chart with historical data for India Government Bond 10Y.

8. Selling in domestic markets means they get sale proceeds in Indian rupee, they sell INR and purchase $Dollar.  This selling pressure cause fall in INR value and appreciation in USD. They started investing in thier own country. The following chart evidences the bond rates increasing in USA.
   
    

The global market for the rupee now clocks a turnover of $70 billion a day. To make a significant dent in the price, RBI would need to trade at least $3-7 billion per day. These are large numbers that would quickly exhaust reserves or distort reserve money.

Please write to  indianinvestorswelfareclub@gmail.com for further information.

USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency Futures Options Trading

USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency  Futures Options Trading

The rupee fell as dollar gained following disappointing data from China and slightly better-than-expected US jobs data, fueling expectations that the Federal Reserve might curb its asset purchases later this year.

According to analysts, foreign investors have been heavy sellers in recent weeks of Indian debt, which is worrisome for a country which depends heavily on foreign flows to finance its current account deficit and support its markets.

According to analysts, the fall is largely triggered by broad gains in the dollar that is also hitting other emerging currencies such as the Japanese Yen over worries about a potential end to the U.S. stimulus programme.

Dollar's longer-term bullish outlook is expected to remain intact as the Fed will eventually start scaling down its stimulus if jobs keep on adding to its kitty.

Most analysts expect dollar index to hit 88 levels by year-end and the outlook for rupee remains bearish with target of Rs 58-60 against US dollar.

We have collated views and recommendations from various experts on rupee and its future outlook:

Abhishek Goenka, Founder & CEO, India Forex Advisors

The rupee is currently on a free fall breaching the head and shoulder pattern at 55.20. The major reason that we foresee behind rupee depreciation is the rise in US treasury yield, which is leading to the unwinding of carry trade in USD/INR. The unwinding moves are very brutal and fast that's what we are seeing in rupee.

Going ahead, as long as the USD/INR is above 57.10, we expect the pair to move towards 58-60 in this week.

Shardul Kulkarni, senior technical analyst at Angel Broking

Last week, the equity market participants have finally been forced to take notice of the rupee. Despite all efforts by the government to reign in the trade deficit, the rupee continues to be a cause of concern.

We were also fortunate to get substantial inflows via FII investments. Despite of all these factors, the rupee is now trading almost near its all-time low. The consistent demand for the greenback is on account of the yellow metal. The technical outlook on the rupee suggests that 58 may soon be tested.

Saurabh Mukherjea, Head of Equities, Ambit Capital

I would rather focus on the fact that FII appetite for India still remains healthy, a big portion of long-only focused FIIs are still focused on increasing the exposure to India and that bodes very well for us going into the months of June and July.

Manisha Gupta, Editor - Currency and Commodities, ET Now

Investors are worried over the outcome of the Indian elections (expected early next year) and its impact on the economy and the Rupee. In the near term, they would keenly await the trade data, IIP & inflation data next week and the RBI policy review on June 17th to get some idea on the policy moves.

Most Indian bankers are not ruling out a possibility of the rupee correcting a per cent or two from current levels. However, they expect the RBI to come in and intervene and stop the rupee from the kind of fall it witnessed in the month of May.

USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency Futures Options Trading

USDINR all time low- Currency Depreciation - Rupee Falling - What to do? Currency  Futures Options Trading

India - 32,87,263 Square KM Area - Need of Cables - Telecom, Electrical, etc.

India - 32,87,263 Square KM Area - Need of Cables - Telecom, Electrical, etc.

Indian Telecom Users in Crores - Telecom Companies Limited - Reliance, Bharti Airtel, Vodafone, Idea, Uninor, Tata Docomo, etc.

Telecom cable is required to pave all over the India to establish the network.

The following are the stocks in telecom cables, 

Sterlite, Finolex, Aksh Opti Fibre, limited listed stocks. One fine day you will be the user if not today.

Invest for long term see the impact of returns... 

Indian Tyre Stocks - Why to invest? Investments, Analysis.

Indian Tyre Stocks - Why to invest? Investments, Analysis.

Indian population as you know 124 Crores+++
Every Indian uses, Cycle / Scooter / Motor Bike /
Auto / Car / Jeep / Bus / Lorry etc.. for various purposes.

But the tyre making companies in India are limited.

Say, MRF, Apollo, Ceat, Elgi, Balkrishna, JK etc.

Invest in these stocks for long term and see the result......

Falling Rupee - Historical Facts...

In early controlled exchange rate regime, the rupee exchange rate hovered around Rs 4 in the 1950s, Rs 5 in the 60s, Rs 7 in the 70s, and Rs 8 in the 80s. The liberalized era of 90s was different, the rupee moved in the Rs 20s (the rupee was also partly decontrolled in early 90s) and Rs 40 in the decade of 2000.

Not to forget two major devaluations by the government in between. The rupee was devalued first in 1966 by a massive 60 per cent from Rs 4.76 to Rs 7.50 against the US dollar. Twenty five years later in the 90s, the rupee was again devalued by 20 per cent from Rs 20.5 to Rs 24.5 against the US greenback. 

The reasons for the two devaluations were not too dissimilar; twin deficit (current account and fiscal), soaring inflation, insufficient foreign exchange reserves, and the developed world demanding decontrol and liberalization to allow them to do business in  India.  

Currency Depreciation -  Worsening of a Country's Balance of Trade?

Balance of trade is basically records the net exports of a nation (Exports-Imports). A worsening or a deficit of the Balance of trade means that the value of imports exceeds those of exports.

Basically when a country’s Terms of Trade worsens, become more expensive relative to the price of exports.

The outcome of the Balance of trade will largely depend on the Price Elasticity of Demand (PED) of both and exports. (PED is defined as the change in quantity demanded of a good to a change in its price)

Why do trade deficit increase initially? Remember that a country’s and are determined by 2 variables, Price (P) and Quantity (Q). When the Exchange Rate falls, quantity of decrease and quantity of rise while the price of rise and the price of fall. In the short run, Price tends to predominate over the quantity effects, so the Balance of trade deficit becomes larger (or surplus reduces).

As a conclusion, we can only determine whether a worsening of the Terms of Trade results in the worsening of the Balance of trade if we take into account other factors such as elasticity of both and and inflation rates both domestically and in foreign countries. It is up to the government to take certain steps and policies to manipulate Terms of Trade and Balance of trade to the greater benefit of the country.

How to Protect yourself against the rupee's fall ? Impact of Falling rupee on Investors, Common Man

Impact of Falling Rupee Fundamentals............

1. With the rupee hitting a new low almost every other day, 

Indians are likely to face a lot of pressure on their household 

budgets.

2. For starters, imports get costlier as we pay more for 

products such as oil, gold, fertilisers, machines, personal 

computers and mobiles, among others.

3. Your wallet will also shrink if you are planning a foreign 

tour or thinking of taking up educational courses abroad as 

these will be more expensive in Indian rupees.

4. Major imported things like Gold, Crude Oil, Food Items, 

Capital Goods, Machinery will cost you more.

5. Companies who have to pay international loans, will suffer 

loss because they need to pay more rupees to buy dollar to 

repay.

6. A depreciating rupee makes imports of component, capital 

goods and raw materials more expensive. As inputs and 

other equipment that are imported get costlier, margins get 

reduced to that extent. Companies with a high import 

component and those with foreign currency borrowings may 

be marked down in the stock market as the rupee 

depreciates.

7. Products that are directly imported, such as crude oil, 

fertilisers, pharmaceutical products, ores and metals, or use 

imported components such as Personal Computers and 

laptops, become more expensive following rupee 

depreciation.

A major chunk of the components in computers, viz., 

processor, hard disk drive and motherboard, is imported. 

Products such as mouse, keyboard and monitor would also 

witness a discernible impact on their prices on account of 

rupee depreciation. As the input costs increase, inflation may 

rise in the economy.

Depreciating rupee thus has an adverse impact on the 

inflation in the Indian economy, which is currently a major 

cause of concern for the RBI and the Industry alike.

To summarise, a falling rupee hurts you in the following way:

1. Prices of products -  especially oil – could go up hurting your wallet.
2. Investments in companies with foreign borrowings or which are exposed to currency fluctuations due to their business models can suffer.

How to protect ?

So, how can you protect against the falling rupee? For Indian 

residents, ensure you have at least some exposure to 

overseas assets like mutual funds. Over the last few years, a 

host of feeder funds and international index-based exchange 

traded funds have made their debut in India. Depending on 

the outlook for some these countries, investors could do well 

to take an exposure to these funds. A host of these 

international funds have a minimum investment of just 

around Rs 5,000.

Diversify your stock holdings, too. If you have companies 

that are largely export-oriented in your portfolio, you could 

take advantage of a falling rupee as these companies begin 

to report higher profits and thus see an increase in their 

market value.

Indian Paper stock companies - How to select ?

Indian Paper stock companies - How to select ?

Fundamental Analysis of Indian Stock Markets - Invest in Confidence

Fundamental Analysis of Indian Stock Markets - Invest in Confidence

Rupee depreciates sharply: What experts are saying

The rupee has depreciated sharply in the past week, being one of the worst performing Asian currencies. It weakened and fell 1.3% for the week, extending its losing streak to a third successive week, hurt by concerns about a possible pullback in global fund flows and the country's external deficit. 

While RBI has said that it will take steps to check volatility in the foreign exchange market, experts are divided over the depreciating currency's outlook. We bring you the viewpoints of seven renowned analysts:

other Asian currencies are also down with respect to the dollar. Ascribing the recent rupee volatility to a seasonal variation, Wadhawan said that 'usually there is a high dollar demand in the months of April and May' and it is also a time when the trade deficit is high. 

this demand would soon balance out and rupee is not likely to breach the 56.50 levels in the next two months. He said that beyond that time frame international developments may impact the rupee movement.

The rupee will continue to trade weak until the RBI reassures investor confidence by recouping at least the $65-billion (including forwards) of forex reserves sold since 2008.

The only way out of is for the RBI is to strategically buy FX — as it has rightly begun to do — to comfort the market, like it did in the late 1990s. We also hold the contrarian view that India would benefit from any withdrawal of quantitative easing by the Fed as it would stabilise commodity prices. 

Looking ahead, we see three options to augment FX reserves beyond the withholding tax cut on FII debt investments. First, the government can raise FII debt limits with the provision that the FX leg has to be deposited with the RBI. 

Second, the RBI can re-issue 5-year FX denominated NRI bonds like the Resurgent India Bonds of 1998 and the India Millennium Deposits of 2001. And finally, the government can issue sovereign debt.

The main reason causing the rupee to fall is the immense strength of the Dollar Index, which has touched its three-year high level of 84.30. The US dollar is looking like gold these days because the Federal Reserve is in a very different position versus the ECB, BoJ and the RBA. The Federal Reserve is talking about tapering asset purchases at a time when European officials are considering more aggressive monetary easing measures such as negative deposit rates. 

lack of optimism about the economy, along with "general dollar strength against global currencies and political uncertainties and limited bandwidth for reforms ahead of elections" as the key factors hurting the rupee. 

"In an environment where the US dollar is being bought against currencies across the board, the Indian rupee is depreciating. But that is the case with all other currencies and at least with a currency like the rupee you have some yield cushion to protect you during the periods of downdraft in values." It will pay you even if the currency is moving horizontally.

Invest in Indian Fundamental Stocks.....Phillips Carbon Black

Invest in Indian Fundamental Stocks...

Phillips Carbon Black

Rupee may touch 60/$ by year end - What to do?

Rupee may touch 60/$ by year end; CAD worrisome: JP Morgan

Brijen Puri, head- markets, JP Morgan says, in an interview to CNBC-TV18, that the rupee may touch 60 against the dollar by the year-end and finds the levels of current account deficit to be worrisome.

Buy USDINR DECEMBER 2013  @56.96  AND SELL USDINR JANUARY 2014 @58.50. Your total investment in this calendar spread is only Rs.3000 only........Write for more info. 

Why People Invest in Penny Stock

People Invest in Penny Stock - Why ? They found attractive, They get more........

The number-one reason people get involved in penny stocks is to get rich quick. They have a few hundred dollars, which they need to turn into several million before the weekend so they can buy a yacht and pay their telephone bill.

The likelihood of getting rich quickly from penny stocks is slim. Those who focus on investing well, and perform their own due diligence, tend to do dramatically better.

Penny stocks appeal to the impatient

A significant proportion of investors who seek out low-priced shares through other channels, tend to embrace the volatility of the underlying shares. The potential to make significant moves very rapidly appeals to them, even as it exposes them to equivalent downside risks.

While impatience may be the reason why many investors seek out penny stocks, this character trait can cause investment problems. Impatient investors may sell shares at inopportune times, such as just before the stock begins reflecting stronger operational results. They may jump from investment to investment in a constant hunt for profits, which can lead to many poor trading choices.

To succeed with penny stocks, you need to substitute contemplation for impatience. Give the underlying company time to let its business plan play out. As long as it’s making progress, however slow, and the reasons you got involved with it in the first place still hold true, let the shares gradually reflect the improving operational results.

Newer investors gravitate to penny stocks

Typically, newer investors are interested in penny stocks because they believe there is less downside. They find smaller and newer companies less intimidating, and they expect such investments to be more attainable and appropriate for their minimal level of trading experience.

Although such reasoning isn’t without merit, it can be dangerous. There is just as much downside risk in a 1¢ stock as in a $99 stock. Also, finding high-quality penny stocks is much more difficult than uncovering good investments among larger shares, mainly because low-priced stocks have fewer companies of high caliber and a greater percentage of lackluster options.

Despite the aforementioned pitfalls, newer investors may find many benefits to starting off with low-priced shares:

• Broader diversity of investments. Newer investors will learn much more from trading numerous types of investments, rather than just buying one or two. With penny stocks, you can spread a small investment among several stocks.
• Greater volatility. Larger and ostensibly more boring investments will not teach their shareholders much. Penny stocks will display greater volatility and, as such, be more educational for the newer investor.
• Price moves happen much more quickly. Whether your investment is going to go up or down, it will happen over a much shorter time period than with larger stocks. Newer investors tend to be attracted to these faster price moves.
• Steeper learning curve. Newer investors have the most to learn. The combination of greater volatility in penny stocks, rapid price moves, bigger magnitudes of those moves, and the potential to own several different stocks at once, enables inexperienced traders to get up to speed very quickly.
  
  

  Penny stocks appeal to smaller portfolios

  Individuals with less money to invest may only be able to afford a few shares in a larger company. They also may not be too impressed by 5 or 10 percent gains, especially if that adds up to only $50 over the course of an entire year.
  Given their situation, many investors with minimal portfolio values opt to not invest at all. Others gravitate to penny stocks.
  Investors who believe in the power of penny stocks, yet who do not have a significant portfolio, understand that low-priced speculative shares may be the best way to increase their financial standing. Of course, not all traders who buy and sell penny stocks have a small portfolio, but a significant portion of traders with small portfolios do trade penny stocks.

Indian Stock Market - Best Bets - Invest Regularly - Earn Gradually - Indian Penny Stocks

Indian Stock Market - Best Bets - Invest Regularly - Earn Gradually - Indian Penny Stocks

Unusual activity as on 31.5.2013. No Target, Just Speculative

Indian Stock Market - Best Bets - Invest Regularly - Earn Gradually - Indian Penny Stocks-Carborundem-Abrasives

Indian Stock Market - Best Bets - Invest Regularly - Earn Gradually - Indian Penny Stocks

USDINR - How to trade ? How to guess USDINR direction? USDINR Fundamentals

USDINR - How to trade ?  How to guess USDINR direction? USDINR Fundamentals