Tuesday, October 28, 2014

INR devaluation and the real reasons behind it.....

I have been researching on this topic for some time to understand real reasons for a INR meltdown.
Is it really Gold imports, Oil prices ?
These are perennial problems nothing new, nothing that should move the currency 50%.
What else could be the reason ?
FDI /  FII pull out was the other common reason quoted
So i went into researching how a FDI/ FII can pull out.
To understand better how a FDI/ FII can pull out one must understand how they can come in at the first place.
Most Foreign investments use Participatory notes funneled through a FII to invest in indian markets.
There are a ton of advantages in doing so if you are really a foreign investor.
The problem with our currency deval is our beloved politicians take the money to SWISS and bring it back through Mauritius and invest in indian markets.
It does a few things
Inflates the indian markets
When they pull out because they fully take their money back in Dollars kills the currency in india.
This is a complex problem to solve and our ex FM knows it well.
So he played stories such as Gold imports should be curbed when the currency was getting killed.
Please research
Participatory notes
round tripping
Money laundering using P-Notes Participatory notes
black money hiding using participatory notes 

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