Yes, save those who have been hiding under the rocks since Jan 2011, everyone else knows that the Indian Rupee has been a drag throughout this year. At the time of writing, the Rupee is trading at around an all time low of 52.5 to the USD.
The Reserve Bank of India, India's central bank, is not making much of a noise about the fall - nor is it threatening to intervene in a Bhakra Nangal manner to stem the tide. Last time I checked, they were weighing options. Now, while the central bank of the country is weighing its options, the country's Finance Minister, Pranab Mukherjee, says that RBI intervention in the forex market will not arrest the slide. There you go.
Now, I'm on the Finance Minister's side, since today morning. I too believe that the Rupee will not retrace its slide. Why?
Estimates by big daddies like Stanchart, Nomura and Crisil for the Rupee for December 2011 hovers around 49-50 to the dollar, while that for March 2012 is for 47-48. TILL I saw that prediction, I was hopeful about a pullback rally and was willing to go long on the Rupee, in hopes of a retracement or at least a rubber band type snap back. Now, I have reversed my stance.
I remember big daddies of the same ilk predicting Rupee will go up to 35 when our currency was kissing the 40 versus USD mark. That never happened. I also remember their prediction that the Rupee will go down to 58-60 levels when the Rupee was falling a few year's back. That also, as you may have guessed, was never meant to be. And I have also not forgotten the "crude oil at $200 a barrell" grim-n-firm predictions, which also did not materialize.
It may be a dumb thing, but I cannot refuse the temptation to bet against analysts' consensus estimates. So there you go. Short the Rupee (USDINR 28-12-11 contract) @52.8000. May Rupee weaken to 54-55. I say, this was all predestined the day we came up with a symbol for it.
