Well all over the press you are hearing about the rising dollar being the problem, right?
Well, there are some people who are rejoicing…who do you ask?
Well for starters hoteliers in Kerala, Goa, etc. – the foreigners are finding India an inexpensive destination, so they are coming in bigger numbers…
For the Indians who were planning a ‘foreign’ vacation, the vacation just got more expensive. These people are also now vacationing in India. Honeymooners are relocating their honeymoons to India…..
Those people who had booked their long ago hoping to buy the $ later on are the only people suffering. Even among them a few are reconsidering!! However all the goodies that people were buying abroad have gone for a toss…
People are postponing or looking for Indian substitutes – which means those companies whose manufacturing base is inside India are better off as compared to their competitors.
One more thing is that those FIIs who were playing the contrarian game are happy with the turn of events. If they had brought in the US $ at 68, they are sitting on a nice Currency gain – and a smart rise in the market too does not hurt!
Also the FII did not hurt as much while removing money from India as he was subject to less of a hair cut – in equities and debt thanks to a reasonable and deep equity / debt markets.
So let us do some crystal gazing…….
US will NOT reduce the QE by much – so some money could flow back. Not much, say 3 billion US $, maybe about US $ 10 billion in debt instruments. This could take the US $ to say 59 or even better 58.
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