Rusty Saw - any opinions on shorting Indian index etfs?
The convnetional view is that due to capital outflows, we’ll see declining Rupee, and will hurt the current account balance. The end result is that the inability to import things like OIL is going to push India into near recession. Sure, lower rupee could drive exports…but that may take a while.
Nothing strikes me as wrong with the above view. The other issue is that the government seems unwilling to take the pro growth steps necessary to reverse this slide, and with an election year coming, likely won’t.
Seems to signal the impending rise of Narendra Modi…
I mean, this has been going on a long time already, Palintir. It’s only freaked everyone out recently. My buddy wrote an article for the economist a year and a half ago basically predicting all this. You want me to call a bottom? I have no idea.
I can tell you one thing though! Every single big multinational has poured into India since I started living here. We have brands and shit that you can’t even get in many parts of the United States. The dirty secret is that nobody is making any money. I know the local heads of pretty much all these multinational companies and they have all been getting their butts kicked since day 1, but have stuck with it because of the “potential” of the Indian market. At some point many of them are gonna have to give up on this dream. Is that happening now?
If you’re interested in what is really causing the weak rupee:
Indeed, I agree that the economy has been struggling for a while, but I didn’t know what the catalyst would be.
The graphs are interesting, but it’s hard to believe, given how expensive fuel is, to allow the rupee to devalue this much going into an election. But you never know, the leadership may well be overconfident going into 2014.