Be Sure about Rupee appreciation

The recent declaration of Warren Buffet about his visit to India in March 2011 regarding his investment plans in the India would be the prime reason for appreciation of rupee in future. Since Buffet is holding his assets in Dollars and would certainly not like his investments being depreciated due to depreciation of Dollars, off course no investor would like that.

So what strategy has Buffet adopted?, the answer is to invest in the growing economies (China, India..... ). About Buffet holdings in China, it holds 9.95 stake in Chinese auto maker company BYD and many such large stakes. India is the next destiny of investment after Sep-2011 and will also force other such investors to pump their money in Indian economy. 

The calculation of investors is simple a 50 % (per annum) growth in Indian economy will stand profit whereas a 15% (per annum) decline in depreciation of Dollars or other currency stands a loss. What they would be left is with 35% Nett profit (per annum) on this trade. The point where they will pull the money back from India is when they will find that % growth of economy is equal to % of deprecation of currency because such trade will lead to neither loss nor profit.   Investors always prefer to invest in rising economies since the assets are cheap at an initial stage. This will appreciate Rupee because to buy Indian assets they will sell dollar in exchange of a Rupees. 

Even after growth of two Asian giants India & China, USA stands ahead because the profit will certainly be deployed in buying the Dollar assets again because they would be cheap after appreciation of Rupee so always buy dollars when cheaply available. 

A golden rule says "Always buy assets when cheap and sell when when they are  at high prices." 

Enjoy making money......

Kuldeep H. P
Making love for Economics & Financial Analysis
pitrodakuldeep@gmail.com