When Rupee is kneeling down in front of the dollar, it would be interesting to probe into the other currencies which have already lost to the dollar and to pound as well. Along with that we will find the best currencies in 2013 which can give great returns on investing.
Iran Rial tops the list of the least valued currency. Introduced in 1798 as a coin Rial got its name from Spanish Rial. In 1945 Iran made USD as the peg for Rial leaving Pound and then 1USD was 32.25 Rial. The dollar devaluation in 1973 was not followed by Iran and the 1USD was 68.275 Rial. The value of the Rial declined due to the Islamic revolution and related capital flights and in 1999, 9430 rials equaled one dollar AND AS PER August 27, 1USD equals 24820.00IRR.
As of today 1USD is equal to 21,170000 VND, Vietnamese Dong when 1 GBP is equal to 32,910.8820 VND. Vietnamese Dong, the currency of Vietnam since 1978
Lesser known country São Tomé and Príncipe an Island nation situated in Gulf Guinea is the second smallest African country. Its currency Dobra was introduced in 1977 is the third least valued currency equaling 1 USD to 18325.00 Db. The country is planning to raise the value of its currency and for this purpose it has entered into a treaty with the Portuguese in 2010 to link Dobra with Euro.
The main tradable currencies are Japanese Yen, GBP, and USD obviously but South African Rand is considered to be the most tradable currency despite the collapse in emerging economies. South Africa Central Bank is a private entity and the 600 shareholders own less than 1% of outstanding shares. When translated to dollar pips the SAR equals to an average daily in GBP. That itself makes SAR most tradable against the USD.
The Australian Reserve Bank works towards target inflation of 2 to 3%. They have met this target nine times throughout this year. They even offer one of the best interest rate in global markets.
The Canadian Dollar is sound with low and stable inflation is considered as a safe and secure currency due to the efficient management by its Central Bank Even though an independed entity BoC is some times treated as a corporation like Swiss National Bank CAD is traded on a daily range of 30-40 pips
Wednesday 28 August 2013
Thursday 22 August 2013
India in Stagflation
This could be temporary and let it be…….. That’s the expectation which Indians keep when their currency weakens. As Mr Paul Krugman in his latest blog “Ruppee Panic” describes, let us also generalize that currency weakening phenomena is there in almost all emerging economies. He invites our attention to the Brazilian economy where the fluctuations are more severe than India. The Brazilian inflation rate is marked as 6.7% which it difficult for the government to execute the development plans .
It will be interesting to know who lost how much on this rupee dollar war in India. Mr Mukesh Ambani who is the owner of Reliance Industries Ltd. (RIL) the biggest refinery complex has lost $5.6 billion of his wealth since May 1 and his younger brother Mr Anil Ambani lost $1.3 billion. The second biggest loser is Mr Dilip Shanghvi, founder of Sun Pharmaceutical Industries Ltd and his loss is $2billion! Mr Kumar Mangalam Birla had a loss of 950 million; he is the owner of Aditya Birla Group.
The current situation in India is defined as Stagflation (a mixture of stagnation and Inflation) The RBI On Tuesday night announced that it would purchase Rs80bn of long-dated government bonds and execute further measures to lessen the pressures on Indian banks, whose forecasts were badly affected by the measures introduced to protect the rupee.
The Indian government doesn’t see any other way to come out of this crisis than inviting maximum foreign capital to the country. The production decreased to 10.4% compared to the last May. The ideal strategy is to increase the budget deficit to tackle this situation as Mr Pranab Mukherji did in 2008 but the present finance minister is unable to do since the inflation rate is at a high of 5.79%. RBI can’t reduce the interest rate because it will affect the foreign capital inflow. Another threat is the fear of an exodus in foreign investment in India since the majority of the foreign fund is invested as short term funds. If the panic of the rupee goes high the investors may withdraw them.
It will be interesting to know who lost how much on this rupee dollar war in India. Mr Mukesh Ambani who is the owner of Reliance Industries Ltd. (RIL) the biggest refinery complex has lost $5.6 billion of his wealth since May 1 and his younger brother Mr Anil Ambani lost $1.3 billion. The second biggest loser is Mr Dilip Shanghvi, founder of Sun Pharmaceutical Industries Ltd and his loss is $2billion! Mr Kumar Mangalam Birla had a loss of 950 million; he is the owner of Aditya Birla Group.
The current situation in India is defined as Stagflation (a mixture of stagnation and Inflation) The RBI On Tuesday night announced that it would purchase Rs80bn of long-dated government bonds and execute further measures to lessen the pressures on Indian banks, whose forecasts were badly affected by the measures introduced to protect the rupee.
The Indian government doesn’t see any other way to come out of this crisis than inviting maximum foreign capital to the country. The production decreased to 10.4% compared to the last May. The ideal strategy is to increase the budget deficit to tackle this situation as Mr Pranab Mukherji did in 2008 but the present finance minister is unable to do since the inflation rate is at a high of 5.79%. RBI can’t reduce the interest rate because it will affect the foreign capital inflow. Another threat is the fear of an exodus in foreign investment in India since the majority of the foreign fund is invested as short term funds. If the panic of the rupee goes high the investors may withdraw them.
Wednesday 14 August 2013
The Future of NPL s in the US and Europe
Despite the slowdown the NPL markets in the US and Europe is giving ample investment opportunities. Between the US and Europe latter is becoming the favorite for the investors. The transactions in the NPL markets have increased through 2012 and the banks are keen to sell their NPLs.
According to the January 2013 reports, US bank deposit rates fell down mainly due to the US senate’s failure to extend the TAG program which was a component of the Temporary Liquidity Guarantee Program of FDIC which was originally adopted in October 2008. Through this program lending became easier due to the reduction in cost of funding and lending became more viable and helped people to mend their businesses. The main components of the TAG were1) Debt Guarantee Program which temporarily guarantees all newly-issued senior unsecured debt up to prescribed limits issued by participating entities. 2) The Transaction Account Guarantee program gives a
Temporary full guarantee by the FDIC for funds held at FDIC-insured depository institutions in non-interest-bearing transaction accounts above the existing deposit insurance limit.
By December 2012 NPL s held by lenders were US$164bn in the distressed loans. In order to keep the value of the shareholders more than 7000 US banks are getting ready for the merger and acquisition. Consolidations also play a vital role in increasing the number of investors into the NPL market.
The sales of non performing CRE (commercial real estate) loans in the US fell down to US$15 billion in 2012 from US$26 billion in 2011. The sales of non performing
CMBS (Commercial mortgage-backed securities Commercial mortgage-backed securities) loans will be active from 2013 onwards.The decline in the unemployment rate and the stable growth will boost the demand for space in commercial properties.
Europe’s non performing loan market worth $10 trillion is showing vital signs of growth than the US. Investors are finding Europe the right place to invest. In order to be stable the European Banks have to refinance or sell NPLs worth €700 billion. Till January 2013 banks have sold NPLs around 20% to 25%
The Ernst and Young report on the NPL predicts that the German banks which made 3% NPLs last year will make only 2.8% NPL. And the rest of the Eurozone will get a rise in NPL sales to 7% Towards the end of 2012 German banks had NPL worth €200 born and due to the increased NPL sales the NPL in 2013 is expected to decline to €183 bn. Spain owns €190 being distressed loans, but not attracting too many investors. The other two countries investors target is the UK and Ireland.
According to the January 2013 reports, US bank deposit rates fell down mainly due to the US senate’s failure to extend the TAG program which was a component of the Temporary Liquidity Guarantee Program of FDIC which was originally adopted in October 2008. Through this program lending became easier due to the reduction in cost of funding and lending became more viable and helped people to mend their businesses. The main components of the TAG were1) Debt Guarantee Program which temporarily guarantees all newly-issued senior unsecured debt up to prescribed limits issued by participating entities. 2) The Transaction Account Guarantee program gives a
Temporary full guarantee by the FDIC for funds held at FDIC-insured depository institutions in non-interest-bearing transaction accounts above the existing deposit insurance limit.
By December 2012 NPL s held by lenders were US$164bn in the distressed loans. In order to keep the value of the shareholders more than 7000 US banks are getting ready for the merger and acquisition. Consolidations also play a vital role in increasing the number of investors into the NPL market.
The sales of non performing CRE (commercial real estate) loans in the US fell down to US$15 billion in 2012 from US$26 billion in 2011. The sales of non performing
CMBS (Commercial mortgage-backed securities Commercial mortgage-backed securities) loans will be active from 2013 onwards.The decline in the unemployment rate and the stable growth will boost the demand for space in commercial properties.
Europe’s non performing loan market worth $10 trillion is showing vital signs of growth than the US. Investors are finding Europe the right place to invest. In order to be stable the European Banks have to refinance or sell NPLs worth €700 billion. Till January 2013 banks have sold NPLs around 20% to 25%
The Ernst and Young report on the NPL predicts that the German banks which made 3% NPLs last year will make only 2.8% NPL. And the rest of the Eurozone will get a rise in NPL sales to 7% Towards the end of 2012 German banks had NPL worth €200 born and due to the increased NPL sales the NPL in 2013 is expected to decline to €183 bn. Spain owns €190 being distressed loans, but not attracting too many investors. The other two countries investors target is the UK and Ireland.
Thursday 8 August 2013
Rise of the BRICS Middle Class
An enormous upsurge in the middle class families across the globe especially in the BRICS countries has accrued high supposition among the economists. The total number of such families in BRICS is considered to be 5 billion by 2030. This transition has been found as "historical" in the last 150 years by the UN. This data is supposed to exceed G7 countries which are significantly industrialized than BRICS.
By the end of 2020 middle class families in Asian continent will be more than 3 bn and this is 5 times more than Europe and 10 times more than North America! The households which are capable of spending $10 to $100 per day from their disposable income is considered to be in the middle class group and this definition has been coined by the UN and OECD.
The number of people who earns $10 to $100 per day approximately is 150 mn and by 2030,500 mn people will earn the same in China alone if the economy has a stable growth. This data implies that by 2030, 70% of the Chinese population will be added to this middle class group. In India with the current 50 million middle class families an extra 150 mn families will be added to the middle class group by 2020.
As the number of such families increases a price hike in the commodities is also visible since more people are looking for resources. For e.g. the price of meat and meat products has gone up by 20% in the last 5 years. Now the companies all over the world are busy setting up their outlets in these BRICS nations looking at the opportunities the middle class families are going to bring .
By the end of 2020 middle class families in Asian continent will be more than 3 bn and this is 5 times more than Europe and 10 times more than North America! The households which are capable of spending $10 to $100 per day from their disposable income is considered to be in the middle class group and this definition has been coined by the UN and OECD.
The number of people who earns $10 to $100 per day approximately is 150 mn and by 2030,500 mn people will earn the same in China alone if the economy has a stable growth. This data implies that by 2030, 70% of the Chinese population will be added to this middle class group. In India with the current 50 million middle class families an extra 150 mn families will be added to the middle class group by 2020.
As the number of such families increases a price hike in the commodities is also visible since more people are looking for resources. For e.g. the price of meat and meat products has gone up by 20% in the last 5 years. Now the companies all over the world are busy setting up their outlets in these BRICS nations looking at the opportunities the middle class families are going to bring .
Monday 5 August 2013
The FDI Failures in India
The repeated failures of FDI may hamper the economic growth and may work against India’s reputation from being an investor friendly country. This emerging economy is witnessing a deleterious “Quit-India” movement of foreign companies making slowdown in furtherinvestments. India is in need of FDI to overcome the huge account deficit equal to 4.8% of GDP in the last fiscal year. The recent regulation by Indian government allows 100% foreign ownership in telecommunication companies and easing in various overseas investment segments to attract long-term investments.
The strong discontent over the macroeconomic conditions, market and regulatory conditions and the rupee’s instability led the UK company 3i’s exit from the Indian infrastructure business. The whopping amount of $1.2 bn investment couldn’t gain a sound profit which made the company analyze running this business in India is very challenging which resulted in the shut down in May 2013 even though 3i were the world’s largest India- dedicated fund in the infrastructure industry.
L&T Finance Holdings signed the deal with Fidelity Investments US to buy Fidelity’s mutual fund business in India in March 2012. The Company had Rs 8,800 crore worth assets invested in India when they decided upon the closure. Based on their analysis the Indian mutual fund sector is unattractive and Fidelity was one of the earlier entrants to the Indian Mutual fund industry suffered loss ever since they started in 2004
Telecom Company Augere Wireless, UK won the Broadband Wireless Access (BWA) spectrum in 2011 October and they exited in May 2012 blaming it on regulatory uncertainty. The disdain was on the TRAI regulations on re-auction, high prices, lack of clear cut telecom policies and Supreme Court’s cancellation of licenses which led the cancelling the investment plans worth Rs 270 crores
China Light Power (CLP) and AES Power were the strongest foreign companies in the Indian power industry along with small players like E ON, and GDF Suez. Among these CLP shut down thermal plants and moving forward only with renewable energy programs. AES Power having presence in more than 20 countries couldn’t get a mileage , shut down the operations in November 2011 and it is to be noted that they invested in India in the year 1993. The environmental issues, scarcity of funds, fuel shortages, issues with local landowners and non the cooperation of the state electricity boards are the factors which made AES Power’s pack up and the same reasons are told by E ON and GDF Suez.
RBS with 31 branches and comprised total assets of 190 million British pounds as on September 30, 2012 were forced to shut down 23 of their branches in May 2013, Morgan Stanley sold their wealth management unit to Standard Chartered Bank in May 2013, whereas UBS AG Switzerland surrendered its banking license in June 2013………..All these exits were on the basis of regulatory uncertainty and unclear policies.
South Korean company Posco and Arsenal Mittal , a Luxembourg company left India in 2013 July after creating so much of confusion. Arsenal Mittal lost Rs 50,0000 crore in investment and Posco lost Rs 30,000 crores.
As per the official report India lost nearly Rs 1 lakh crore in investment and 21% fall in FDI to $36.9 billion in 2012-2013 fiscal year where as 2011-2012 fiscal year closed with $46.6 billion FDI. Meantime the FDI flow to China was $111.6 billion in 2012
The strong discontent over the macroeconomic conditions, market and regulatory conditions and the rupee’s instability led the UK company 3i’s exit from the Indian infrastructure business. The whopping amount of $1.2 bn investment couldn’t gain a sound profit which made the company analyze running this business in India is very challenging which resulted in the shut down in May 2013 even though 3i were the world’s largest India- dedicated fund in the infrastructure industry.
L&T Finance Holdings signed the deal with Fidelity Investments US to buy Fidelity’s mutual fund business in India in March 2012. The Company had Rs 8,800 crore worth assets invested in India when they decided upon the closure. Based on their analysis the Indian mutual fund sector is unattractive and Fidelity was one of the earlier entrants to the Indian Mutual fund industry suffered loss ever since they started in 2004
Telecom Company Augere Wireless, UK won the Broadband Wireless Access (BWA) spectrum in 2011 October and they exited in May 2012 blaming it on regulatory uncertainty. The disdain was on the TRAI regulations on re-auction, high prices, lack of clear cut telecom policies and Supreme Court’s cancellation of licenses which led the cancelling the investment plans worth Rs 270 crores
China Light Power (CLP) and AES Power were the strongest foreign companies in the Indian power industry along with small players like E ON, and GDF Suez. Among these CLP shut down thermal plants and moving forward only with renewable energy programs. AES Power having presence in more than 20 countries couldn’t get a mileage , shut down the operations in November 2011 and it is to be noted that they invested in India in the year 1993. The environmental issues, scarcity of funds, fuel shortages, issues with local landowners and non the cooperation of the state electricity boards are the factors which made AES Power’s pack up and the same reasons are told by E ON and GDF Suez.
RBS with 31 branches and comprised total assets of 190 million British pounds as on September 30, 2012 were forced to shut down 23 of their branches in May 2013, Morgan Stanley sold their wealth management unit to Standard Chartered Bank in May 2013, whereas UBS AG Switzerland surrendered its banking license in June 2013………..All these exits were on the basis of regulatory uncertainty and unclear policies.
South Korean company Posco and Arsenal Mittal , a Luxembourg company left India in 2013 July after creating so much of confusion. Arsenal Mittal lost Rs 50,0000 crore in investment and Posco lost Rs 30,000 crores.
As per the official report India lost nearly Rs 1 lakh crore in investment and 21% fall in FDI to $36.9 billion in 2012-2013 fiscal year where as 2011-2012 fiscal year closed with $46.6 billion FDI. Meantime the FDI flow to China was $111.6 billion in 2012
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