9/21/2023 0 Comments Keycue cost![]() ![]() They cannot fix the rupee because the rupee is being driven by external forces. Things are out of the control at this point in time. Also, I do not know why the market or economic participants are setting such a lot of store by what the RBI is saying or any policymaker is saying because it is not as if the RBI can change everything by saying something or doing something. However, one should not be too harsh with the Reserve Bank of India (RBI) because they are trying to fix something which cannot be fixed easily or at all under the current circumstances. So, when the macro picture top down is looking so bad, then usually one ends up not getting too interested in anything underneath that overall macro call. The top down country is looking quite awful. So, basically all parts of this market have become an avoid?Ī: Yes. So, I think that is the turn events have taken as you said the bond yields are heartening at the frontend, which people didn’t expect to see happen in such a great degree, equities are suffering as collateral damage. There was an interesting comment from UBS with regards to what you were saying about asset classes saying right now they are not interested in any asset class in India. Q: The problem for India like many other emerging markets is that it is just not fully in control of the situation, not with what is happening with the economy, not well in most parts, not with what is happening with the currency. So, the macro has been terrible and all the indicators yesterday say that the macros have moved in the wrong direction. The stock market was caught between the rupee and the bond market, it fell 250 points on the Sensex and we have broken some crucial levels in the last couple of days. Hence,the measures taken will stay for longer and interest rates will remain quite hard and that was the bond market’s message yesterday. So, that was the bond market’s way of saying okay you wish to do something about the rupee in terms of unwinding these measures, but guess what, the currency will not let you do any of that. The market is expecting a lot of rate cuts over the next four-five months. ![]() Looking at the bond market, the yields came from 8.60 percent to 8 percent.įor a moment people might have felt that okay the tone is dovish so rate cuts will happen and by the end of the day we were back to 8.25 percent. The market will test the RBI’s resolve quite severely on how hawkish or how serious they are about clamping down on the restrictions and keeping the rupee firmly between 58 and 60. Imagine what will happen if they actually take those measures out. They come out and say don't panic about these measures, we will withdraw them when circumstances allow us to, but before the ink dried on that paper, the rupee is back to 60.50 against the dollar, so it is higher than the day when the RBI took those measures at the merriest hint that this is not going to stay for a very long time. They are trying so many things at the same time and all asset classes are moving in the wrong direction. CNBC-TV18's Udayan Mukherjee says all eyes are now on Federal Reserve chairman Ben Bernanke's statement on the tapering of the quantitative easing.īelow is the edited transcript of Mukherjee's analysis of the market.Q: I don't know how much outright damage they did in their dialogue but I guess it was just like a mask had been removed and everything went back to natural state after that.Ī: Yes, the Reserve Bank of India’s (RBI) situation is now like that, they can't fix anything. The June monetary policy was announced on Tuesday leaving the rupee precariously near an all-time low, the bond yields are hard and the equity market too it on its chin.
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