Its sad to see that most Indians are foolish by being jingoistic about a strong home currency. The rupee is getting stronger not due just due to the rosy picture painted about India but due to a concerted effort by the US to keep the dollar weak so that its exports can rise. This has helped US to bring its unemployment levels to all time record lows. The rupee strength is also due to currency arbitrageurs (ECB borrowers) who are borrowing in Japan & a few other countries at less than 1% & deploying those funds in our equity markets for double digit returns. They are also doubly benefited by the currency appreciation. Foolish Indians don%u2019t realize that due to rupee appreciation, exports become uncompetitive & exports will end up losing orders especially the manufacturing sectors unlike the IT sector which can shift some of its developing work overseas. When the industries in the export sector close down there will be a huge loss of jobs & the task of regaining the lost export orders is difficult. Once these corporates which rely on exports start making lower profits especially the one%u2019s in the Sensex & %u2018A%u2019 group stocks, the whole India story would evaporate. The rupee rise is mainly due to a few rich industrialists who are making money by borrowing huge funds abroad through ECB%u2019s & playing in the Indian stock markets at the cost of the foolish common man who is taken for a ride by the India story spun by these rich industrialists with the help of the
RE:Indians taken for a ride by the rising rupee
by poonam dil on Jul 25, 2007 11:34 AM Permalink
Chinese exports are costlier by 8%, especially infrastructure related. So are they worried? I dont think Indians should worry much as the entire global indices are overheated. Japan's pension plans and insurance sectors are investing more in our markets than the arbitrageurs. Indians should not participate in the stock rally as when these biggies pull out, it will be devastating. They are here for quick returns. Solid companies like Wipro and Infosys are suffering because of this mentality. Of course the current valuations didn't make sense in the first place. Invest in FDs I say. Be safe.
