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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Rational who wrote (1911)	2/4/1998 9:15:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 9980

Sankar, how are things with you? I just came back (10 days ago) from India after a 3 1/2 week trip. I agree with your assessment that a conservative foreign exchange and trade policy adopted by India may save the nation from the trouble. Especially from currency risk. However, if China does a competitive currency devaluation, I think Rupee will fall towards 50sh. Otherwise I think it will stabilize in the 40 range. One of the prominent things I noticed is that people have abundant cash on hand and there seems to be very little interest in borrowing. VDIS scheme grossed Rs. 10,000 crores to the exchequer (~ $2bil) but as I understand much of it will not be recurring. The main problem is that the IT department cajoled and arm twisted a lot of business people to inflate their asset prices from the previously booked values and made them pay huge tax bills. I have read somewhere that more than 60% of the money could be a one time event. Though VDIS definitely enhanced the tax stream, the hidden curse is that there new investments may slow down in the near future. Some say India is bracing for lower interest rates, for fiscal stimulous, soon after the elections. Not a good prospect when there may be threat on the currency. Other significant issues are that over-investment can be seen everywhere. Especially the real-estate. Per some accounts Greater Bombay RE prices slumped about 40%. Bangalore real-estate is getting slow. Hyderabad commercial RE appears to be hot but new apartments are not moving unless the prices are marked down. On a US related issue, you said, My fear was that an ever rising USD would dampen corporate earnings, result in a greater deficit and trade surplus; now these ills will be moderated if USD falls sufficiently, reducing the impact on the Democrats. Of course, a fall in USD will soon crack some of the ballooning stocks. I too noticed that Greenspan is concerned about one thing - possible weakening of the dollar. I think as long as the demand for the treasuries is strong, he could care less if the stock market retreats. In the current worldwide stampede for the USD, Greenspan is perhaps making merry. All the more reason to monitize more debt without the fear of inflation. My question is what happens when the world markets stabilize and dollar chase is over? Higher interest rates, right? -Mohan

To: Rational who wrote (1911)	2/5/1998 2:46:00 AM
From: Thomas Haegin	Read Replies (2) \| Respond to of 9980

Sankar, OK the Yen has come down to around 123 now. But isn't this still weak by historical standards? I think some time ago I read that Japanese industry would like to see it or could better cope with it at 110 to the US$. I don't know whether this target level still holds true. I doubt that the Yen will reach or break 110 anytime soon as a weak Yen is welcome for Japanese exporters and make debt payments easier for the SEA countries. Really my 2› only. Set me straight if you feel like it :-) Thomas