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Dollar rally |
ConMan
White Belt
Joined: 06 Aug 2008
Posts: 344
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Post: #1  Posted: Wed Jan 05, 2011 10:21 pm Post subject: Dollar rally |
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| We can expect good rally in dollar. Can any one explain the relation between dollar and other assets. Will we see a breakdown in equity and commodities? |
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beowulf
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Joined: 18 Aug 2010
Posts: 163
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| Post: #2 Posted: Wed Jan 05, 2011 11:30 pm Post subject: |
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Its good for IT, for sure..
especially services, watchout..!  |
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ConMan
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Joined: 06 Aug 2008
Posts: 344
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| Post: #3 Posted: Thu Jan 06, 2011 9:02 am Post subject: |
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| But how will it affect the asset classes |
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SID2060
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Joined: 04 Nov 2009
Posts: 319
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| Post: #4 Posted: Thu Jan 06, 2011 1:33 pm Post subject: |
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DEAR CHULBUL,
The FII have taken loan in USD $ to invest in emerging mkts like india, brazil, malaysia, china etc and they have to REPAY the loaN in USD $ ONLY... THE FII convert it into INDIAN RS to invest into indian stock markets... Now if the USD rises and indian rs falls, the loan liability/debt will also increase BECAUSE the USD $ is rising.....
The FII will book profits and sell off in the mkt if the USD $ continues to rally.... They have a stop loss value for the USD $ VALUE.. Above which they will sell off............They reenter the mkt when the Rupee currency become strong to rises against the USD $........
REGARDS,
SID |
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ConMan
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Joined: 06 Aug 2008
Posts: 344
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| Post: #5 Posted: Thu Jan 06, 2011 3:09 pm Post subject: |
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Hi Sid
Thanks for the info ... yes FIIs have been doing dollar carry trade ... So if the dollar moves up emerging mkts in particular have to correct
I also feel commodities like silver/gold will take a heavy beating as the flight of safety money will move back
Is Energy commodity related to the dollar movement ... I feel if dollar is going up so will the dollar economy (US) which is a good sign for Energy commodities ... am I right in my assumption  |
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