Rupee Could Easily Hit 60: Mark Mobius
the world. The Fed has been behind the curve, didn’t anticipate the big crisis that we had in the US and now they seem to be too slow in moving in the other direction. We are in a situation now in India where there is an opportunity for the rupee to get stronger.
Where do you see the rupee by the end of this year? The rupee could easily hit 60 against the US dollar. It is quite possible.
Is the recent wave of loan waivers across states in India a concern? No, the main concern that we have at the state level is that some states are introducing new taxes. Maybe that’s a reaction to the countrywide sales tax introduced by Modi and some states are maybe trying to make up for any possible losses by introducing new ones.
Earlier this year, you had said that one should invest more in emerging markets, particularly Asia. Which are the top investment destinations for you within Asia? In Asia, China is right up there at the top and then India and Thailand follow. Then there is Korea and Taiwan. Among the smaller markets, Vietnam would be most interesting. Emerging markets are eyeing the September meeting of the Fed for cues on how they will carry out their balance sheet unwinding. As an investor with billions of dollars at stake in EMs, how do you see this unfolding? Central banks in US, Europe and Japan have been expanding their balance sheets dramatically. But then if you look at the loan-to-deposit ratios of banks, it is going down. The banks are not really utilising these funds to lend to businesses to the degree that they should be. With the reduction in the balance sheet of the central banks, we may see actually an expansion of lending from regular banks because they are going to have the wherewithal and the desire to increase their lending. We may see a completely different reaction to what everyone expects.
You recently said that US investors betting on economic boom under President Trump are bailing. What does it mean for EMs? One thing that US investors have realised is that they are very underweight in emerging markets. Since the beginning of last year, emerging markets have outperformed the US market. This has caught the attention of investors and they are therefore, going to be probably increasing their weight in the emerging markets. India will benefit from that as well.