Asia's Worst Performing Currency

[patna_ke_presley]

Don't know where you got that, but Pakistan has had in excess of $70 billion losses fighting the US's war on terror. End result is that Pakistan has a net loss, which impacts heavily on the economy.

$70 Billion is that money that you will need for repairing you infrastructure, if your government could not extract $3 billion a year from this infrastructure. Also, that $70 Billion loss is done by your homegrown militant groups who want to bring Taliban type rule in Pakistan. It was not America's fault, it was Musharraf's fault. He did Lal Masjid siege killing 1500 people and in return extremist destroyed Pakistan with bomb-blast. I still remember, before Lal Masjid siege, there were very few terror attacks in Pakistan.

India's international debt is over $325 billion. And in terms of public debt, India's public debt to GDP ratio is 51.9%, whereas Pakistan's is 50.7%.

Still India external debt is not 4 times of foreign exchange reserve.

Credit ratings are the credit rating agencies' opinions, as they acknowledge themselves. They are not very accurate, which is why if the US's credit rating had really been AAA, there would have been no need to raise the debt ceiling.

India's budget deficit % of GDP is 6.06%, whereas Pakistan's is 6.24%.

But still all world economist follow them, and you want to disagree with them because they are saying what you want to listen.

 

[HariSeldon]

One knock-on effect of a sliding rupee is a worsening trade deficit. If you import more than you export and your currency is losing value, your imports are going to get more and more expensive, and money will start flowing out of the country.

(India's widening trade deficit | News and views on emerging markets from the Financial Times)

hmm..so even if INR slides down it does not effect the import\export ? Than why US\EU wanted CN to appreciate there curr while CN defended its action on Yuan?

I know you\ur frnds here will comeback that IN does not have large industrial base like IN. Agreed. But this not mean that basic tenants of Economy will not apply here.

I said in prev post...any idea why EURO is flawed? Why Germany is stil sticking to EURO when in the end its proping the countries who spend recklessly in past.

In the end you and ur friends here know that this slide has limited downside risk. DO you know what are other imp items in IN import basket beside crude. Gold (do our poor need this), Diamond (which we export back after what ever they do with that- means the importer can just turnaround and sale it after couple of weeks and still make money if sold on same dollar value - +ve for IN) and yes Coal. This is the only item beside crude which is issue and need to managed.

I am amused that nobody has picked up the effect of sliding rs on FCCB and other loans that IN's corporate has binged on. Hey flashing news...You gave Billion $ loans to RelPow...this grp is most exposed to INR slide....

hmmm...so what does that mean.....as a capitalist we allow them to default.....now who has given the loan has to fig out what they need to do with credit that they have extended.

Need more learning...find out what diff in handling of crisis betwen Iceland and Ireland...Just one letter difference ...but former is already looking its wayout for crisis while latter has pawned it future generation.

Note: don't rely on blogs...put forward ur point....blogs are just somebody's opinion...no matter who they are...Its better if we spend time dicsussing our opinion rather than somebody's else

 

[Chinese-Dragon]

India is a developing nation, yet they already have a large trade deficit, because they import so much more than they export.

In order to pay for those imports, they need a strong Rupee. When the Rupee falls, those imports get much more expensive.

India, which already has close to double-digit inflation, is now going to experience their imports becoming much more expensive due to their falling currency.

 

[FairAndUnbiased]

hmm..so even if INR slides down it does not effect the import\export ? Than why US\EU wanted CN to appreciate there curr while CN defended its action on Yuan?

I know you\ur frnds here will comeback that IN does not have large industrial base like IN. Agreed. But this not mean that basic tenants of Economy will not apply here.

I said in prev post...any idea why EURO is flawed? Why Germany is stil sticking to EURO when in the end its proping the countries who spend recklessly in past.

In the end you and ur friends here know that this slide has limited downside risk. DO you know what are other imp items in IN import basket beside crude. Gold (do our poor need this), Diamond (which we export back after what ever they do with that- means the importer can just turnaround and sale it after couple of weeks and still make money if sold on same dollar value - +ve for IN) and yes Coal. This is the only item beside crude which is issue and need to managed.

I am amused that nobody has picked up the effect of sliding rs on FCCB and other loans that IN's corporate has binged on. Hey flashing news...You gave Billion $ loans to RelPow...this grp is most exposed to INR slide....

hmmm...so what does that mean.....as a capitalist we allow them to default.....now who has given the loan has to fig out what they need to do with credit that they have extended.

Need more learning...find out what diff in handling of crisis betwen Iceland and Ireland...Just one letter difference ...but former is already looking its wayout for crisis while latter has pawned it future generation.

Note: don't rely on blogs...put forward ur point....blogs are just somebody's opinion...no matter who they are...Its better if we spend time dicsussing our opinion rather than somebody's else

The RMB appreciated 30% in the past 6 years.

China does not want to appreciate the RMB too fast. The objective of the US is not to get the RMB to appreciate. The objective of the US is to get the RMB to zero. In order to do so, it wants to create a metastable, high energy (worth) state for the RMB, from which a small perturbation can cause it to crash down into low level equilibrium.

 

[Chinese-Dragon]

China does not want to appreciate the RMB too fast.

Exactly right.

It is to our benefit to appreciate the value of the RMB slowly. That will give Chinese customers more spending power, and helps us to move away from an investment-fueled economy... towards one that is more balanced between consumption/exports/investment.

The USA helped to collapse the Japanese economy in the 1980's, by forcing the value of the Yen to appreciate too quickly, leading to the Japanese financial crisis and the lost decade(s) for the Japanese economy. That's what you get from taking orders from those who do not care about your interests, only theirs.

 

[FairAndUnbiased]

Exactly right.

It is to our benefit to appreciate the value of the RMB slowly. That will give Chinese customers more spending power, and helps us to move away from an investment-fueled economy... towards one that is more balanced between consumption/exports/investment.

The USA helped to collapse the Japanese economy in the 1980's, by forcing the value of the Yen to appreciate too quickly, leading to the Japanese financial crisis and the lost decade(s) for the Japanese economy. That's what you get from taking orders from those who do not care about your interests, only theirs.

The US actually collapsed Japan by forcing them into a currency bubble - an asset bubble where the mispriced asset is the currency itself. That's what destroyed their virtual economy. US is trying the same trick on us and hoping we didn't learn

 

[Chinese-Dragon]

The US actually collapsed Japan by forcing them into a currency bubble - an asset bubble where the mispriced asset is the currency itself. That's what destroyed their virtual economy. US is trying the same trick on us and hoping we didn't learn

Well, we didn't fall for it. Everytime the US asks us for a large "one-time" appreciation of our currency, we always say NO.

We do it on our own timetable, we are not Japan who was willing to crash their economy when the USA told them to do so.

 

[CardSharp]

Devaluing currency actually reduces exports, as it increases the cost of inputs like petroleum and foreign made machinery.

Don't listen to the stupid US propagandists who tell you countries try to "devalue" to gain an advantage. There is nearly no advantage in devaluing your currency. If there was, Zimbabwe would be #1 economic superpower. With a strong currency, your companies can buy resources, buy technology, and expand to foreign countries at low cost. A weak currency means that you will be spending huge amounts of money importing raw materials.

The only time a weak currency can possibly help a country is when it imports nothing and is a major export power. Needless to say, there is no such country in this world.

Pretty true. With a weak currency, labour is going to cheaper, that's the American compliant at the moment but if you don't have a labour intensive export sector, a weaker currency is just bad. Period.

 

[FairAndUnbiased]

Pretty true. With a weak currency, labour is going to cheaper, that's the American compliant at the moment but if you don't have a labour intensive export sector, a weaker currency is just bad. Period.

That's a joke. What good is cheap labor if keeping them fed and getting them to work costs more, due to lower purchasing power for imported petroleum and food?

There isn't even a labor advantage for cheap currency.

 

[HongWu]

One knock-on effect of a sliding rupee is a worsening trade deficit. If you import more than you export and your currency is losing value, your imports are going to get more and more expensive, and money will start flowing out of the country.

(India's widening trade deficit | News and views on emerging markets from the Financial Times)

India is a developing nation, yet they already have a large trade deficit, because they import so much more than they export.

In order to pay for those imports, they need a strong Rupee. When the Rupee falls, those imports get much more expensive.

India, which already has close to double-digit inflation, is now going to experience their imports becoming much more expensive due to their falling currency.

The single most significant effect of the collapsing rupee is india will be unable to pay for imported oil. Right now it imports about 3x as much oil as it produces.

To exchange for oil, india will experience asset flight. india's biggest asset is it has a lot of gold. Watch for GOI to issue an order to the population to exchange their gold for "rupee gold certificates" as the rupee continues down its death spiral.

 

[karan.1970]

Watch for GOI to issue an order to the population to exchange their gold for "rupee gold certificates" as the rupee continues down its death spiral.

No disrespect, but these things work a little differently in India as against how they work in China.. The rupee Gold certificate sale (for the sake of argument) would probably be thru Tax SOPs and interest rate carrots..

 

[indushek]

You know we are in Exports related service Industry and our profits are increasing due to this downward spiral of rupee.

 

[FairAndUnbiased]

No disrespect, but these things work a little differently in India as against how they work in China.. The rupee Gold certificate sale (for the sake of argument) would probably be thru Tax SOPs and interest rate carrots..

Never happened in China but happened in the US during the 1930's. Roosevelt ordered US citizens to exchange their gold for gold backed dollars, and then immediately did 2 things.

1. refuse to trade gold back for dollars.
2. immediately devalued the dollar by increasing the price of gold.