India rupee CRISIS: Could rupee PLUNGE to 100 against US dollar? Dr Doom in BLEAK analysis

THE India rupee could plunge to depths of 100 against the US dollar if the crisis-hit currency continues to fall in value against the US dollar, according to a prominent investor and economic analyst known as ‘Dr Doom’. The languishing rupee has shed around 15 percent of its worth versus the American currency this year and is currently the worst-performing tender in Asia.

This month saw the rupee breach the 74-mark for the first time ever against the US dollar as it falters under pressure from soaring oil prices and higher interest rates.

Financial analysts are now wondering how low the rupee will continue to sink, with Marc Faber, veteran investor and publisher of the Gloom Boom & Doom Report newsletter, admitting that “India’s fiscal position is not particularly good”.

As of just before 12:30 BST, the Indian rupee is trading at 73.61, according to data from Bloomberg.

When asked if the rupee could plummet to levels of 100 against the US dollar, Mr Faber said this would require a depreciation of 5 to 10 percent per year.

But he stressed that this process would need to rumble on for “the next few years” in order to reach triple figures against the greenback.

Mr Faber told The Economic Times: “Well the timeframe is I would look for is a depreciation of 5 to 10 percent per year for the next few years.”

Mr Faber also called on India to raise interest rates “meaningfully” to give the rupee some breathing space.

He said: “Either India has to increase interest rates meaningfully, which would mean that the economy would be hurt, or they obviously will have a weaker currency over time – and nobody can deny the fact that over the last 10, 20, 30 years, the rupee has been a weak currency.”

The Reserve Bank of India went against predictions from financial analysts as it held interest rates at the start of October.

The RBI's monetary policy committee (MPC) left the repo rate unchanged at 6.50 percent, with five out of six panel members voting to hold the rate

In its policy statement, the bank said: “Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook.”

Defending the decision, the bank said it was acting "to further strengthen domestic macroeconomic fundamentals”.

- Source, Express UK

Marc Faber: The Long Term Trend for India is Down

What is happening with the EM currencies? The fall also reflects the gain in the trade weighted dollar index pegged towards EM currency basket. Is the dollar buying seen as risk aversion or just better yield?

It is the question more of this tightening global liquidity and the way emerging economies borrowed. They borrowed in dollars and so there is a lot of demand for dollars to pay the interest on the dollar debts.

Number two, when you look at international investors, they have some cash and they have some bonds. If you look at what they do in terms of money in cash and in bonds, they can buy US treasuries. The 10-years now are available at an yield of 3% but they could also buy in Europe treasuries but the yield would be much lower.

For example, in Germany they would get a yield of 0.5% on German governments. In Portugal, they would get 2.2%, in Spain 1.66%. The dollar compared to this European currencies and bonds is relatively attractive in terms of a yield. It is not particularly attractive as a currency because some emerging economies have a much better financial condition today than they had in the last crisis or in ‘97-98.

If you ask me what I think about India, last time I said the currency has become a bit oversold and may rally a little bit, maybe to 71-72 against the US dollar. But I think the long-term trend of the Indian rupee is down...

- Source, Economic Times

Marc Faber: India's Interest Rates Have to Rise Sharply or Rupee will Crash

What are rising yields across US as well as Europe indicating about the risk that the world is running on?

The financial markets were already very fragile at the beginning of this year and this fragility has actually increased because there is a tendency among central banks to step back from asset purchases, letting interest rates gradually adjust on the upside. And so this liquidity that we have in the world has been diminishing. It is not shrinking, but it is growing at the diminishing rate.

Then came the announcement of the Trump administration. It is a really bad idea to pick on China and to launch not only a trade war but a confrontation with the US’ largest trading partner who also happens to be a large buyer of US assets, bonds, stocks and of course, properties. 

This idea has disturbed the financial markets around the world and so they are adjusting on the downside. Now, I would not call that the crash. A crash happened in 1987 when the Dow Jones dropped 21% in just one day.

In the US, we have gone from a peak to the current level, down by 7%. This is nothing. This is after an increase of the S&P from 666 in 2009 to the current level of over 2900. This correction is really not very meaningful but yet it may become meaningful.

- Source, Economic Times

Marc Faber: You MUST Have Your Seat In The Lifeboat BEFORE The Titanic Hits The Iceberg

SBTV’s latest guest is Dr Marc Faber, editor of the Gloom, Boom & Doom Report. We discuss the signs showing that the US is an empire in decline and how the next financial crisis will impact asset owners. Despite the video difficulties in this episode, Dr. Faber doesn’t disappoint and delivers a great interview on various topics.

We also asked Dr Faber what he would do to reverse the US trade deficit if he was the President of the US.

- Source

Central Banks Could End Up Owning Every Asset In a Country

SBTV's latest guest is Dr Marc Faber, editor of the Gloom, Boom & Doom Report. 

We discuss the signs showing that the US is an empire in decline and how the next financial crisis will impact asset owners. 

Despite the video difficulties in this episode, Dr. Faber doesn't disappoint and delivers a great interview on various topics. 

We also asked Dr Faber what he would do to reverse the US trade deficit if he was the President of the US.

- Source, SBTV