bikoo Profile picture
16 Sep, 7 tweets, 2 min read
INR seems to be getting consolidated in 73 - 73.30 zone. Last few days, bid was seen at lower level but supply has been equally strong.
Weaker growth, rising fiscal and heightened tension at border don't seem to deter the INR bulls. Everyone wants to go with the easy and consensus trade - a weaker dollar and copious flows.
Today's FOMC will be critical from defining the next move in dollar. Market will probe FED to know more about AIT in granularity. At Jackson Hole, it was one way communication.
FED will obviously be dovish and dollar may see some beating but don't see much juice in short dollar. Most of the measures already priced in dollar. Will get to know in few hours.
Now, coming to flows, I think a large part of it has got front loaded and over next 6 months, the number may not be as healthy as it has been in last 6 months, excluding the chunky Amazon deal, if it materializes.
On top of it, with economy getting unlocked, trade number to worsen only, from here onwards. So from risk reward perspective, shorting dollar does not look so juicy - sees at most Rs. 1 on short (up to 72.50) but Rs. 2.5 to 3 on upside (76 to 76.50) over the next 3 months.
Finally, some hard data. Guess what would be net FDI inflows for Apr - July. It must be higher than last year and at record high, isn't so. Don't be surprsied. The numbers are not adding up to all the euphoria around FDI inflows.

BTW, what is this line item - RBI?

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More from @meandmarkets

2 Sep
The intensity of selling has tapered off in USDINR in last two days. Heart says to remain with trend but mind says - NO, given where the INR fundamentals are - plunging growth, negative real rates, inflation overhang, messy fiscal and ballooning public debt.
The only positive for INR in short term is flows and FX reserves but are largely opportunistic and borrowed.

CA surplus is not something to cheer about but shows the deep malaise of demand slowdown.
Govt wants to promote local manufacturing - Atmanirbhar Bharat but how to do that in a strong currency environment.

Why to take all the hassle to set up a plant when can simply import and sell the product in domestic market.
Read 9 tweets
24 Jun
Jio got the CCI approval today for FB investment. Since the announcement, there has been a lot of market gossip, if FB dollar has hit the onshore market or not.
Normally money does not hit the Indian shores without having all the regulatory clearances in place. But it raises an interesting point - if money has not flown, who have been supplying dollars to RBI all this while?
Becasue, if someone extrapolates BoP for first 2 month, it does not adds up to $30 bln, which has been mopped by RBI since March end. Even if one excludes the valuation impact, net accretion would not be less than $25/26 bln.
Read 11 tweets
21 Jun
With India's forex reserves now above $500 bn and India staring at a record fiscal deficit (>12%) this FY, isn't the time for us once again to explore sovereign bond (SB) issuance.
If market experts were not comfortable with SB at $400-425 bln FX reserves last year, not sure if they hold the same view with reserves now above $500 bln, and FX related parameters like import cover, short term external debt/NIIP vs FX reserves further improving.
What's the point of having such a large reserve yielding around 1-1.5% and govt borrowing in domestic market around 6%.
Read 9 tweets
28 May
Any business entity, need easy access to capital (credit) - first for survival and then growth.

In recent govt backed stimulus for MSMEs, govt failed to recognise that a large part of their problem is longer WC cycle.
Most of the MSMEs start with their own equity (capital) in a small way and remain a micro unit for life or die in their struggle transitioning from micro to small. Obviously, in most of the cases, because of no access to formal credit or wrong business decisions.
Few which grow from micro to small to medium, as MSME stands for, and has better chance of success in business, instead of life becoming little easier, gets more complex as requirement for capital goes manifold.
Read 8 tweets
9 May
Ok...here a short story.

So we know what happened last evening.😉

Please don't get me wrong. Just that govt. short fling with the market got exposed when it surprised the later with higher borrowing to 12 lac crs against 7.8 lac crs for the year. @andymukherjee70 @dugalira
The story goes like this. There was a prodigal guy (govt) who kept outspending his income every year & needed a gullible, young & rich girl (market) to fund his expenses. So he started a courtship with the promise, will keep the borrowing known well in advance and no divergence.
The guy overall kept the promise with small divergences here and there, but it was also working for lady as she needed the company to park her funds safely. @ananthng @EmergingRoy
Read 11 tweets
27 Apr
Why MSMEs are so critical for India and who will stand for them - a snap-shot:

1) There are around 63.4 million MSMEs in India

2) provides employment to 120 million people (30% of India's labour force)

3) contributes to 45% of India's exports, and

@andymukherjee70
4) have almost 30% share in India's GDP.

But MSMEs still receive just 6.3% of bank credit (2017-18).

From any parameter of evaluation, as deem fit by anyone, IMO, they deserve better place under the sun.

But the woes do not stop here,

@dugalira @chokhani_manish @ananthng
5) According to a study by screener.in, avg debtor days for MSMEs was 220 days in FY18. The same was 240 during GFC.

Imagine, what would be the likely number in present lock-down.

@ayushmitt @latha_venkatesh @deepakshenoy @TVMohandasPai
Read 9 tweets

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