The trouble with the Rupee chart is that it is not the Rupee
chart, it’s the Bank of India chart. Like the chart for Sterling this muddies
the water a little- however it is not without its uses and in the absence of
anything more concrete ( E.G.. A chart for 6th century BC!) it is as
good as it gets. Although 15 August 1950 is another possibility. Given the
predictability of the chart ( see November 2016), however we’re sticking with
it.
2017
January (and less so
February) see continued difficulties subsequent to the changes in November.
However, this is a phase that is now ending and should mostly be resolved by
the end of the two months.
March to June therefore see the beginning of a new phase.
Finance and particularly the value of the Rupee are undergoing a deep
transformation which may be a long process. This might also be the introduction
of the proposed new taxes. There is confusion at this point; no clear value
emerges. But there is also a build up to a major shake- up which will occur
over the next year or so. At this point
though the currency is probably quite attractive and buying significant.
This picture continues into the July to October period.
Investors are feeling positive. However there are major sudden shocks or
radical technological changes which may cause problems. Initially this might
mean some restriction on trade in the currency but that is short lived. By
October there will be a backlash against any such restriction and demands for
more freedom in trading.
November to December see the currency establishing a new
foundation. The period is somewhat mixed
but towards the end looks exceedingly positive. Overbuying by investors is even
possible.
January and February 2018 are definitely more mixed. There
is far more likelihood of the value being undermined and of general problems:
maybe technological difficulties, maybe external currency shocks, It causes
some difficulty for the central bank, though this is fairly easily resolved by
(new?) policies.
Overall there is definite positive boost in the currency’s
value and /or in tax revenues.
March to May sees another phase of challenges. Initially
this may relate to external shocks or technological adaptions which just cause
volatility, but there is also evidence of attempts to undermine the currency
through trade.
The currency reaches a critical 30 year turning point and
this may create further difficulties for the central bank.
Investors and local people will probably have to make
adjustments to adapt to the events.
However once again it is not all doom and gloom and there may be bursts of
upward value amongst the changes.
The situation is more moderate in June to September, even
though the issues haven’t gone away.
Although the period is still mixed, there is clearer support
than earlier in the year and my feeling is the currency should rise in value
now.
October and November see another phase of change or currency
shocks, which once again creates volatility and/or challenges for the Bank. It
is likely on balance to be a down phase but not too long lasting one. And by sheer
force of will this phase can be overcome.
December is similar to October and November but now there
are final resolutions to the issues arising in March to May.
Indeed the last few weeks of the year there is evidence that
the currency will be most attractive. Interest rate changes may be responsible
for this.
The background theme of 2019 is financial stability.
But January to March is not about stability, it’s about more
uncertainty and disruption. There are major financial flows relating to debt
and the values of other currencies now. I don’t see this
as being totally negative for the Rupee though. Perhaps it is the other
currencies that are affected more. Certainly it’s a time of big shifts in value.
April to June continues this theme. But again there is some
protection being afforded to the currency. However this time the balance seems
to be against the Rupee. There are more likely to be falls now than earlier.
July to September doesn’t see the challenges ( especially
targeted large investor selling) go away but it is a more moderated time and
with the background forces for the year being ones of stability I think this
few months should be relatively calm with less volatility and no big trend
movements.
October and November see trade in the currency as a focus.
There ‘s continued optimism despite value/technology/tax shocks and it has to
be said that on balance this might even still be a positive time, It is not as
clear cut as some earlier months though and there is a risk that some of this
positive mood is in fact channelled into high inflation.
December, surprisingly given indications elsewhere, is a
relatively positive month. Not overwhelmingly- there are still some restrictive
elements- but enough to suggest positive trends.
January and February of 2020 are more mixed. It is likely to
be a turning point in the value of the
currency, but which way depends on what has happened in 2019. There are some
pretty large financial flows still which could easily be negative- there may be
debt re-negotaitions. The positive indicators are more short term and include
comfort for the central bank and investors. Possible more interest rate changes
occur.
March and April are again mixed. It is a key period for
global investors in the currency, but stabilising influences are offset by
questions over fundamental value. Probably the value of the currency will
remain flat trend-wise, although volatility can’t be ruled out. A strange
period when there are restrictions on technology and more debt renegotiations.
May and June see this continuing. But now there is much more
opportunity for the Bank to make positive changes in management and rates.
However it might not be viewed as so positive by the outside world.
July to September still sees no change in the themes of the
year. However once again there are definite opportunities.
Some speculative activity, possibly attacking the currency
is a likelihood now.
October and November are much the same but the financial
flows of the previous years are magnified now. Things much come to a head.
December, therefore sees some reduction in both the level of
trade and instability, although there may be further value or tax surprises. It
is, however a less fraught month than much of the last year.
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