Do it yourself

Since the beginning of the year 2025, the exchange rate of India Rupee (INR) has fallen against the currencies of most of our major partners. Though, USDINR (INR vs USD) is the most keenly watched exchange rate (since a majority of our forex reserves, external debt and external trades are USD denominated), INR has depreciated most against EURO (EUR). The extent of depreciation against Japanese Yen (JPY), Chinese Yuan and British Pound (GBP) is mostly similar.  ​ ​ Notwithstanding the views of the finance minister that “INR is not weakening, but the other currencies are appreciating”, the INR depreciation is a matter of concern to a large majority of Indian investors. Since we are traditionally a current account negative economy, on the net basis, INR depreciation adversely affects the economic fundamentals. Besides, eroding the confidence in the economy, — ·          INR depreciation makes many things expensive for the Indian households...

The script in the US is playing mostly on the expected lines (see   here   and   here ). Department of Government Efficiency (DOGE) – crash landing Department of Government Efficiency (DOGE) is apparently on its way to crash land, with the pilot (Elon Musk) ejecting himself out shortly after taking off. DOGE’s actions have faced multiple lawsuits, with critics arguing that Musk and his team have violated federal laws, union agreements, and civil service protections. A federal judge halted parts of USAID’s shutdown, and courts have restricted DOGE’s access to payment systems. Despite Musk’s goal to cut $2 trillion from the federal budget, 2025 spending is slightly up from 2024, per Brookings Institution data. Mandatory spending (e.g., Social Security, Medicare) limits achievable cuts. Over two million federal employees were offered buyout deals, with some agencies facing mass layoffs. However, some fired staff have been rehired, indicating implementation challenges. Though...

 There are lots of events happening in global markets which cannot be full explained through conventional wisdom or empirical evidence. In my view, lot of these events are unintended consequences of policy actions, geopolitics and trade conflicts. For example, there is a massive rally in the global commodity prices, despite poor demand and growth outlook for next few years at least. The recovery to pre Covid level may not entirely explain the rise in commodity prices much beyond the 2019 levels. Popularization of electric mobility etc. can explain gains in some commodities, but not in steel, coal, crude etc. The forecasts of a commodity super cycle sound mostly unconvincing, given (i) worsening demographics of the world; (b) restricted mobility; (c) seriously impeded purchasing power of people; (d) already stretched limits and diminishing marginal utility of fiscal and monetary stimulus; (e) technology evolution focusing on reversal of trends in labor migration; and (f) diminis...

The rise in equity indices in the wake of global pandemic and its long term socio-economic consequences is keeping most experts busy. The central bank bashing is the favorite theme of market participants, like anytime in past 33years, ever since Alan Greenspan took over the Chair of US Federal Chairman and assumed the role of the "champion of stock markets" after 1987 market crash. Since then the markets have been overwhelmingly depending on the central bankers to support any fall in stock prices. Greenspan is criticized for both creating and causing the burst of dotcom bubble in 2000. It is popularly believed that the easy monetary policy unleashed by him during 1990s to support Clinton's deficit reduction program led to creation of massive dotcom bubble. It is also a popular belief that hiking rates many times by Greenspan in 2000 led to bursting of dotcom bubble. Both the popular beliefs are however contradicted by the empirical evidence. Greenspan was actua...