‘Subra I need to make a US $ 1000 payment by November, should I do it now or later?’ – this was the 3rd forex related query. The earlier 2 were from parents talking about paying the fees of children studying abroad.

All were worried about the US $ hitting 70 or 75….and wanted to know whether to pay now or later.

At best, I can give them an irresponsible answer. The honest truth is I do not know. I also feel that nobody really knows the correct answer, not by a mile.

Indian government has reacted in panic. Flat TVs cannot be a part of the hand baggage, gold cannot be imported (what will you do with all the empty spaces in the bags?). Not to blame the Chinese directly but we cannot access our iron ore, bauxite, coal, ….and we have Jairam Ramesh thinking he is helping the world Environment. In 1991 we were worse off, sure, but we had a brilliant product called ‘software exports’ – this is now a dead horse.

Should the fair value of the $ be 60? 50? or 70? well I do not know, as I said earlier…..but remember as the Emerging Markets are struggling with a strong US $, tapering, and completely incompetent macro management do not expect to see any magic. It is not rare for a currency to spurt and then take rest for a while. Hopefully our Supreme Court will relent and we will start exporting iron ore, reduce gold imports, ….and improve.

However the equity portfolio of the FIIs is about US $ 200 billion. They sell about 5% and we will panic…our infra projects will go for a super toss. 2 of our good airports are owned by a company up shit creek. Our top 15 borrowers from PSU banks are in, well, not in good shape. Our NPAs are far greater than we want to believe…

So whatever the reason for your payment, your guess is as good as mine. 62-64 is not a bad rate….I do not see it fall to say 58 in a hurry, nor will it run away to 75 in a hurry. That is what I think.

Please appreciate I stare into a PC – not P Chidambaram….nor a tele prompter….


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  1. Subra Sir

    smuggling onions is more lucrative these days for NRI’s.

    do you know why they decided against flat TV?
    from Dubai alone 700 flat tv moving to india daily. ie 700*10,000 as duty is millions in forex and all the problems of CAD, Vanishing Growth, Inflation,BOP… is solved in one stroke.
    Congress kee jai, Opposition hai jai.

  2. The CAD is a red herring.It is an accounting convention and is actually irrelevant. The rupee and the CAD dont really have anything to do with each other. The rupee ,like any currency,is a commodity subject to demand and supply.Gold or TV imports have not suddenly gone thru the roof -even if they had,it would be a result of demand and supply :trying to alter is to shoot the messenger.

    The CAD would go into a surplus if the gold were counted as capital -which it is in most cases. People buy gold as investment against rupee inflation or as gift for their children’s marriage IN THE FUTURE.so it has a strong investment quality.This would make all mindless chatter about the CAD meaningless in one go.The GOI simply doesnt like competition for its rupee from gold.

    when the govt of india makes it clear that foreign money is welcome especially when they are here to make that dirty thing called PROFIT,then foreigners will consider purchasing rupees. indian citizens are a captive slave population for the govt.it prevents ordinary citizens from holding foreign currency (no capital convertibility) but allows NRIs and big businesses to do ECCB borrowing.

  3. It’s better to hold on to the forests for some more time while we can. If mining is permitted, politicians will line their pockets. At least lets have our forests while we can.

    Mining needn’t been the only option to earn money, surely there must be other avenues too.

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