Wowzers! The run on the Indian Rupee is gathering speed and down another almost 4% versus the US dollar in today’s trading session. That’s a 30% dilution of purchasing power in less than 6 months and threatens domestic economic chaos. Is this a re-run of Thailand 1997? Who knows for sure but the volatility in Indonesian, Brazilian, Thai and Philippina currency and stock markets are causing pretty resonant flashbacks.
What is a new twist on the Asia 1998 crisis is a potentially concurrent energy shock at exactly the wrong moment. The prospect of a strike on Syria is certain but the outcome less so, particularly an Iranian response and the effects on 20% of the planet’s oil supply going through the Strait of Hormuz. Analysts at Societe Generale are talking Brent crude at $125/barrel as a base case….
Here’s the chart(Source: Bloomberg) of the Indian Rupee USD exchange rate progress over the last year. Who would want to be running a business in India today?
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