Readings: Dollar oversold, RBI raises MSS limit, $100B+ of write-downs
The average bull market for the US Dollar is 1,710 days long for an average gain of 48.90%. The average bear market is 1,610 days for an average decline of 31.84%. Based on these averages, the current bear market is both longer in duration and more extreme in its decline. Since the current bear market in the US Dollar started in July 2001, currency has declined 37.69%.
Currently, the US Dollar is 2.25% below the bottom of it trading range. As highlighted in the second chart below, the Dollar has reached oversold levels of 3% to 4% quite frequently.
The yearly limit on sales of the so-called stabilization bonds, used to drain surplus cash released via dollar purchases intended to slow the rupee’s advance, was raised to 2.5 trillion rupees ($63.5 billion) from 2 trillion rupees.
India’s money supply growth has averaged 21 percent this fiscal year, compared with the central bank’s target range of 17 percent to 17.5 percent.
Ajay Shah expects this to cost us Rs.10,000 crore a year.
U.S. banks and brokers face as much as $100 billion of writedowns because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump.
“This credit crisis, when all is out, will see $250 billion to $500 billion of losses,” said Janjuah, who’s based in London. “The heat is on and it is inevitable that more players will have to revalue at least a decent portion” of assets they currently value using “mark-to-make believe.”
Astounding!
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