A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

Gaurav's Blog


Day: December 16, 2008

Russia continues to devalue the Rouble,deplete Fx Reserves to support it…a consequence of falling Oil Prices

An interesting news article in today’s Financial Express caught my eye….Russia’s Central bank devalued the Rouble for the second time in a week  

As 2008 began,Russia was flexing it’s economic muscle  and being touted as the next big super earner from surging Oil Prices to US $ 145/barrel…It had already began licking it’s lips in eager and exciting anticipation of surging  Revenues from Oil Exports

Within Months the Fairy tale Speculative Bubble rise in Oil Prices burst and Oil is now under US $ 50

This has taken a toll on Russia’s Currency…the Rouble…..For a straight ninth day it has depreciated against the Euro and it is now quoted at a four year low of 37.55 per euro

Russia’s Central Bank has already devalued the Rouble twice this week…It has already depleted it’s Fx Reserves by a huge US $ 161 billion or 27% to counter the 16% depreciation since August this year of the Rouble against the US Dollar as a consequence of Oil Prices crashing 69% from Highs

I vividly recollect 1991/92 and the open float of the Rouble and it’s consequent crash against the US Dollar by a factor of over 20 

In fact a leading Indian Investment Magazine had carried a blatant Editorial in it’s July 1992 Issue that just said “BUY HEAVILY”…not because of their   concluding that markets had bottomed out after correcting on the Harshad Mehta BR Scam exposed in April 1992 (They had not),but on the basis of the fact that they strongly opined that the Russian Rouble was to be floated and would crash significantly… Therefore our Russian Defence Debt of around Rs 50000 crs would be restated to probably just Rs 50 Crs !

This was poppycock !…the Bilateral Agreement between India and Russia clearly stated that the Indian Rupee to Rouble Exchange Rate would be fixed under all circumstances…If I remember correctly it was One Rouble to Rs 37…So there was no question of any restatement of Liabilities downwards

Stock Markets,reeling under the Harshad Scam, were looking at straws to revive and took this Wrong Editorial as one and there was renewed buying…even some of my clients at the time went against our advice…..1992 closed much lower.

Exchange Rates can play havoc…Currency Rate Volatility exposes risks that need to be proactively managed by hedging.  

India too has been hit in recent months by a 25% sudden depreciation in the Indian Rupee against the US Dollar…It was seen strong at US $/Rs 39 and expected to get stronger….but it retraced fast to US $/Rs 49…Normally Exporters would have loved and welcome and celebrated this…but they had already forward booked at US $ 42…Importers expecting more Rupee Strength at Rs US $/35 had not forward booked and have now got to pay heavily more for a further weakened rupee…The Value added Export Diamond Sector has been  greatly affected…check out how in my earlier Blog on this Industry read more

ADA Group Companies under ED Scanner for misuse of ECB/FCCB Funds: So What’s New ?

RNRL and Reliance Infrastructure,both Anil Ambani Group Companies have reacted sharply on headline news in the Economic Times that Enforcement Directorate are investigating the misuse of ECB/FCCB Funds in their UBS Bank Accounts in London.

Click on the Link below to read the full story 


So what’s New ?….It is well known that it’s either Monies of Indians lying undisclosed outside India or Indian Monies that are routed out of India through Havala that come back in as legitimate FII Investments through the rampant misuse of Participatory Notes…Diamond Dealers Network is used as they are easy facilitators

Who are the lenders to RNRL and Reliance Infra of these ECB/FCCB Funds ?…for all you know these too may  just be routed funds….as there is RBI strictures on end use you cannot afford to link these funds directly to Stock Market Manipulation of Share Prices…so with bank connivance you take overdrafts and route those funds through PNs and FIIs  

Remember how Lok Housing Collapsed from Rs 450 in January 2008 to fall below Rs 20…Check out earlier Blogs on Lok Housing…..In July 2008 we knew why this happened ……because Income Tax Authorities had been investigating it for Months and only disclosed the Income concealment of Rs 400 crs and tax evasion of Rs 100 crs in July 2008…those who knew beforehand of this Investigation surely misused this sensitive undisclosed news to make some inside money

Well….Share Prices of RNRL and Reliance Infra too have been demolished on the Stock Exchanges…Maybe SEBI could invetigate to try and establish a link between the sharp fall in Share Prices and the inside knowledge of such sensational news as the ED Investigation disclosed by ET today

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