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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Rupee depreciation seems imminent

Rupee depreciation seems imminent

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1Rupee depreciation seems imminent  Empty Rupee depreciation seems imminent Wed Feb 08, 2012 1:01 pm

mra

mra
Manager - Equity Analytics
Manager - Equity Analytics
This week there could be a Rupee depreciation anytime according to bankers and expected about 120/- level per USD. this could be a another blow for ailing cse.

2Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 1:25 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@mra wrote:This week there could be a Rupee depreciation anytime according to bankers and expected about 120/- level per USD. this could be a another blow for ailing cse.

A created drop from 114.2 to Rs 120! That too drastic. The rupee should have been gradually depreciated over time. We held it around rs 110 for too long. Typical Sri lanka Style. Procastination, then panic and then drastic action in short term if this happens. Evil or Very Mad

3Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 1:30 pm

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
This can be prevented if we cut all unnecessary imports for 2 months
Except oil, pharmaceutical, tires

Also foreigners don't want worry about investing leisure industry. It is currency risk free industry

4Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 1:40 pm

jaya


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
The deprecation of Rupee is need. On other hand that could be less value the share for foreigners

5Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 1:43 pm

wallstreetguy


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I was just speaking to my bank manager, and he said, that the rupee will be devalued to 15- 20%, so just like mra said, it will be around >120

Dam, this is just a big hit

6Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 1:52 pm

Tiger

Tiger
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Re posting........

Re: Sri Lankan Trade Deficit Widens In October
by Tiger on Sat Dec 24, 2011 9:06 am

The CA deficit could be narrowed in the coming months owing to devaluing the rupee, rising interest rates, (and expecting foreign borrowing by some financial institutions) . If the gap doesn't narrowed down we could see another round of currency devaluation in around March 2012. According to me another devaluation is inevitable given the fact that Indian rupee has lost 30% over past three months. Unless exchange rates were adjusted slowly we will be heading to exchange rate problem again as experienced in 2009.

I believe LKR needs to be devalued at least 10-15% within next 12months. Leading up to this won't be so attractive at CSE.

7Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 2:21 pm

wiser

wiser
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
If you have cash in your hand then you need to worry. But if you hv investments like properties, equities you may be worry in short term but long term it will give good return than you deposit money in a FD. These equity in long term inflation resistance.

8Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 2:44 pm

mra

mra
Manager - Equity Analytics
Manager - Equity Analytics
Buy USD today and sell after one week. may give u some sort of green relief.

9Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 4:21 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@wallstreetguy wrote:I was just speaking to my bank manager, and he said, that the rupee will be devalued to 15- 20%, so just like mra said, it will be around >120

Dam, this is just a big hit


15-20%? Now it is around Rs 114. So another 15% will make it over Rs 135? Do they want a crash overnight?

10Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 5:47 pm

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
At Most it could go to 120. Nothing more than that. But 115 is the best bet
With credit rate increase.
Remember
interest rate has hiked
there is a ceiling for credits growth (18% ?).
34% of the credit is in the import sector.

CB has to do unconventional things. For an example pressure bank to limit credit to import( unnecessary imports) sector.

11Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 9:28 pm

hariesha


Vice President - Equity Analytics
Vice President - Equity Analytics
If they depreciate the Rs., I think it will have a positive effect to the market.

1. Foreign selling will be much discouraged. (If they sell COMB.N @ 100/- today they will get USD 0.8771. If the CB decided to depreciate it to Rs.120/- per USD, then the seller will get only USD 0.8333. A 5% exchange loss)

2. It will encourage foreign buyers. (Since they are getting 5% more rupees on conversion, A buyer who wants to by JKH @ Rs.160/-, he is getting additional 5% FC gain which means his actual cost for JKH is Rs.152/- per share.

3. I don't think this depreciation will go beyond Rs.120/-, as in future government will try to avoid all unnecessary imports, resulting less USD demand.
4. This will be a boost to tourism and export oriented industries. In the current tourism season, Sri Lanka was one of the cheapest destinations (1 of 5) for western Europeans. Further depreciation means, it will become more cheaper. This will be the same for exports.
So, depreciating up to Rs.120/- or Rs.118/- gradually will be ok. But anything beyond Rs.120/- will be unwarranted and unreasonable, which will have a huge negative impact on the economy specially when servicing loans.

12Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 10:06 pm

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
Depreciation has pros and cons

Foreigners will get high rupees. But they will think what will happen when they converting rupee to dollar.

It is good for exporters and bad for importers. But oil price hike is not a good thing. It will affect the whole economy. But before last budget 10% oil price hike was done. Rupee was devalue 3%

Best thing CB can do is somewhat unconventional thing.

* Ceiling for import related credit
* Tax for import which can made locally

Try to identify good sectors
I know about software industry. Government hasn't done anything to improve it. Only what they have done is introduce a tax cut.
But lot of thing can be done. Don't worry about where they find jobs. Increase the number of students. Lot of SL go to Singapore and send money to SL
Also lot people out side Colombo are leaving the industry after 40. Then they will go into other industries. Government hasn't done anything to prevent this. Government has to divest the industry from Colombo to town like Kandy, Galle/Matara. They are going to establish IT park in Hambantota. Who will go there and work ? People not retaining in Colombo. Will they go to Hambantota ?



13Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Wed Feb 08, 2012 10:07 pm

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Please read this link.
http://forum.srilankaequity.com/t15661-depreciation-is-chemotherapy

14Rupee depreciation seems imminent  Empty Re: Rupee depreciation seems imminent Thu Feb 09, 2012 10:05 am

mra

mra
Manager - Equity Analytics
Manager - Equity Analytics
1.Only leisure sector will benefit if we concern cse side of it, as tourist arrival will
be higher.
2. export sector won't benefit much as their overheads also will increase. only
very short time benefit.

3. can't expect foreigners to enter cse on buy mood with Rs. depreciation say at
120/- level as their will be fear of further depreciation after 120/- that will let
them loose when they sell.

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