.The
Indian Rupee - U.S. Dollar Exchange Rate .
Will the RupeeDepreciate?
May 2011 - A White Paper by Evalueserve
Authors: Ashutosh Gupta is the Vice President of Investment
Research and Chief Transition Officer at Evalueserve. Surbhee
Sirohi is a Manager in the Investment Research group at Evalueserve.
Special issue provided for the Club of Amsterdam.
Executive Summary
During the last decade, among major economies, India has achieved
consistently impressive growth, second only to China. In the first
half of fiscal 2010-11, the Indian economy grew at a healthy rate
of 8.9%, and the majority of global growth going forward is expected
to be driven by developing countries, specifically India and China.
India is home to a vibrant services economy and a hotbed of outsourcing.
Its economy has become increasingly interlinked with global markets
as trade has flourished.
The USD-INR exchange
rate is an important indicator of investor sentiment and can significantly
impact not only the fortunes of individual firms and sectors but
also the government. While this exchange rate has been very stable
overall for the last five years (44.86 on April 24th, 2006 and
44.34 on April 15th, 2011), there have been periods of significant
volatility. For example, USD-INR moved from 40 to 51.50 from March
2008 to March 2009. During the past 12 months, it has traded in
a relatively narrow range, between 47.33 and 43.99. We believe
there is a significant downside risk to USD-INR exchange rate
and this paper will explore some of the risk factors behind this:
Inflation is at
an all-time high; the Consumer Price Index (CPI) increased by
10.88% in 2009 and by 13.19% in 2010. The monetary policy changes
undertaken by the government to control inflation have been
ineffective. We believe this is because inflation is being driven
primarily by structural supply side challenges such as lack
of agricultural infrastructure, low crop yields, and the absence
of organized retail.
India is one of
the fastest growing economies and is considered a favored destination
for investment. Nevertheless, it witnessed a decline in Foreign
Direct Investments (FDI) in 2010, making it the only BRIC country
where this happened. This is troubling as FDI is an important
indicator of investors' faith in a country's long-term prospects.
Foreign Institutional Investment (FII), which provides short-term
portfolio investment money inflows, has been buoyant, but these
funds are volatile by nature and are prone to "flight risk"
at the first signs of trouble, something that happened during
the financial crisis.
Recent widespread
corruption scandals have reinforced the negative perception
of governance deficit in India and raised doubts about the availability
of a level playing field for businesses. This, combined with
regulatory and tax uncertainty, will deter many foreign investors.
For example, several global firms who invested in India's telecom
sector have had to write off billions of dollars of their investments.
Another major
source of foreign currency inflows to India is remittances;
India received USD 55 billion in remittances during 2010. This
money limits the country's current account deficit. The Middle
East accounts for a major share of this inflow and the current
turmoil in the region may negatively influence it as Indians
abroad leave the region due to security concerns. Remittances
from countries like Saudi Arabia and UAE, where the strife has
not spread, could also experience a decline as unemployment
in these nation rises.
The government
finances are in a bad shape and the combined central and state
government deficit has stubbornly stayed around 10% of GDP.
Experts believe that oil prices will remain high in the near
future. This is a major concern for India as it imports about
70% of its oil and efforts to increase the production capacity
of petroleum and natural gas domestically have not been very
successful.
India's current
deficit is about 3%, the level it reached during the crisis
of the 1990s. A current account deficit is not bad by itself
for a growing economy if it helps build important long-term
productive assets. However, in India's case it is due to insufficient
savings, especially by the government. This does not bode well
for the economy. Moreover, given India's rising import bill
and threat to remittances, the deficit will remain high in the
near future, creating pressure on the Indian Rupee.
The United States
(US) economy seems to be on the path to recovery. It is very
likely that the improving US economy will draw more funds at
the expense of emerging countries. This can already be seen
in the FDI inflows, which increased by 43% in 2010.
[ ... ]
Conclusion
After studying the various demand and supply factors, we have
arrived at three likely scenarios:
First Scenario - Rupee Depreciation
This scenario is likely to occur if oil prices continue to rise
or if FII money "exits" because of a crisis of confidence.
Based on past evidence, even a relatively orderly outflow of USD
15 billion of FII money over a year could result in the INR depreciating
by 22-30%. This would imply an exchange rate in the range of INR
55-60 to USD 1. It could get even worse if the flight of capital
were to take place over a shorter period, which would cause massive
concern among businesses and the government, since it would imply
a higher cost of petrol, diesel, and petroleum products in India,
leading to even higher food prices and Consumer Price Index. The
current account deficit would balloon and the rising inflation
could create a vicious cycle.
Second Scenario - Rupee Appreciation This scenario is likely to occur if the FII money continues
to flow in and FDI levels improve. The stock markets will climb
and there will be a rise in demand for INR. An appreciating Rupee
will make imports cheaper and lead to better managed deficits
and inflation. It must be pointed out that Rupee appreciation
would erode India's cost advantage in the export sector and negatively
affect the booming ITES sector as well as the textile sector and
this in turn would invite government intervention. This is what
happened just before the onset of the 2008 financial crisis when
the USD-INR touched 39 and the Indian government repeatedly intervened
in the currency markets to halt the appreciation of the Rupee.
Third Scenario - Status Quo This is the most benign scenario. The exchange rate continues
to move in its current range and appreciates over the long term
as the economy continues to develop and India strengthens its
position in the global markets. The government's efforts to improve
agricultural infrastructure bear fruit in the longer term and
inflation declines. The rate fluctuations do not cause any major
disruption in the trade environment.
According to
our analysis, during the next two years the probability of the
first scenario (depreciation of Indian Rupee by 20%) is the highest
(about 50%) while the other two scenarios have an equal probability
of approximately 25% each. In other words, there will be pressure
on the Rupee unless steps are taken to fix structural issues described
in this article. The Indian government and RBI are well aware
of this risk and are definitely hoping for the third scenario,
in which India essentially grows its way out of trouble over a
couple of decades and where they only have to intervene occasionally
to smoothen out excess volatility. As Subir Gokarn, a deputy governor
of RBI recently said, "Intervention is not costless, it simply
transfers the cost from one constituency of the economy to another."
About Evalueserve
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Evalueserve analyzes, improves and executes knowledge-intensive
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clients benefit from higher productivity, improved quality, freed-up
management time, better access to knowledge and information across
all parts of the company, and adding new capabilities to their
organization.
Hardy F.
Schloer, Owner, Schloer Consulting Group Democracy is dead, as we know it!
.The
Blue Brain Project
Reconstructing the
brain piece by piece and building a virtual brain in a supercomputer
— these are some of the goals of the Blue
Brain Project.
The virtual brain will be an exceptional tool giving neuroscientists
a new understanding of the brain and a better understanding of
neurological diseases.
The Blue Brain project
began in 2005 with an agreement between the EPFL and IBM, which
supplied the BlueGene/L supercomputer acquired by EPFL to build
the virtual brain.
The computing
power needed is considerable. Each simulated neuron requires
the equivalent of a laptop computer. A model of the whole brain
would have billions. Supercomputing technology is rapidly approaching
a level where simulating the whole brain becomes a concrete possibility.
As a first step,
the project succeeded in simulating a rat cortical column.
This neuronal network, the size of a pinhead, recurs repeatedly
in the cortex. A rat’s brain has about 100,000 columns of
in the order of 10,000 neurons each. In humans, the numbers are
dizzying — a human cortex may have as many as two million
columns, each having in the order of 100,000 neurons each.
Blue Brain is a resounding
success. In five years of work, Henry Markram’s team has
perfected a facility that can create realistic models of one of
the brain’s essential building blocks. This process is entirely
data driven and essentially automatically executed on the supercomputer.
Meanwhile the generated models show a behavior already observed
in years of neuroscientific experiments. These models will be
basic building blocks for larger scale models leading towards
a complete virtual brain.
[ ... ]
Modeling
The Builder Concept
All mathematical models used in Blue Brain virtual experiments
are created by a Builder.This isa software application that generates
a computer model of a particular brain structure. Models are based
on the experimental data collected and organized in the first
two steps of the Blue Brain workflow and on the mathematical abstractions
created in the third step. The Blue Brain modeling strategy requires
the construction of models representing different levels of brain
organization.
Each of these models requires its own builder. Below we describe
the goals, characteristics and status of individual builders.
Cell Builder
The purpose of the Cell Builder is to build models of individual
nerve cells.
The nerve cells of the mammalian brain display great diversity
in their morphology and electrical behavior. Later in this report,
we suggest that this diversity makes a crucial contribution to
the robust principles governing the construction and dynamic behavior
of neural circuits.
The design of the Cell Builder is based on a strategy of incorporating
the maximum possible number of biophysical constraints from experimental
data and from the results of Predictive Reverse Engineering. The
remaining parameters are optimized under these constraints.
Microcircuit Builder
The purpose of the Microcircuit Builder is to build models of
neural microcircuits in any part of the brain.
The integration and processing of information by the mammalian
brain depends in an essential way on structured interconnectivity
among nerve cells. At the microcircuit level, circuits appear
to be determined primarily by the composition of a given area
of the brain in terms of different types of cell, by the positions
of these cells, and by their respective morphologies. The Microcircuit
Builder uses this data to faithfully model neuronal microcircuitry.
Mesocircuit Builder
The purpose of the Mesocircuit Builder is to model mesoscale neural
circuitry i.e. circuits spanning several neocortical columns,
modules or microcircuits.
Every region of the neocortex contains multiple replicas of neuromicrocircuits,
which are basically similar but variable in their details, allowing
diversification and specialization. These microcircuits are highly
interconnected.
The Mesocircuit Builder, currently in the exploration phase, will
make it possible to build models of the connections among microcircuits.
The planned models will include experimental data on projections
formed by neurons within a brain area (e.g. S1 of the somatosensory
cortex), models of mid-range fiber growth, models of the ways
fibers penetrate a microcircuit, and the detection of touches
between incoming fibers and the rest of the circuit.
Experiment
Builder
The primary purpose of the Experiment Builder
is to create explicit descriptions of experimental environments
and protocols allowing their replication in silico.
The Experiment Builder will include features sup¬porting the
automated extraction of conditions and protocols from literature,
the design of new protocols, and the use of these protocols in experiments
based on Blue Brain models. In brief, the Experiment Builder will
become a primary control interface for the Blue Brain Facility.
What's next?
The ultimate goals of brain simulation are to answer age-old questions
about how we think, remember, learn and feel, to discover new treatments
for the scourge of brain disease and to build new computer technologies
that exploit what we have learned about the brain.
Blue Brain is a first
step in this direction. But we need to go further.
This is why Blue
Brain recently joined with other 12 partners to propose the Human
Brain Project – a very large 10 year project that will pursue
precisely these aims. The new grouping has just been awarded a
Euro 1.4 million European grant to formulate a detailed proposal.
Meet Justin, an android who will soon be controlled remotely by
the astronauts in ESA’s Columbus laboratory on the International
Space Station.
To help turn robotics and telepresence into a standard tool for
space missions, ESA is linking the Space Station and Earth for remotely
controlling terrestrial robotic experiments from the orbital outpost.
This Meteron (Multi-purpose End-To-End Robotic Operations Network)
initiative is a testbed for future missions to the Moon, Mars and
other celestial bodies. In
the first Meteron tests, the Station astronauts will operate ESA’s
Eurobot prototype from a computer equipped with special screens
and a joystick.
This prototype is a four-wheel rover with two arms, an advanced
navigation system, cameras and sensors that has been under testing
since 2008 at the Agency’s ESTEC space research and technology
centre in the Netherlands.
In the next phase,
the engineers will allow astronauts to control a robot with the
sense of force and ‘touch’. It can be connected to robots
like Justin, developed by the DLR German Aerospace Center.
“With these senses,
the astronauts will have a real feeling of the forces that the arms
of the robots are experiencing in their environment,” explains
André Schiele, in charge of ESA’s Telerobotics &
Haptics Laboratory.
Current wind power
generation relies on rigid supporting structures and is limited
to altitudes up to 200 m. Wind at higher altitudes is significantly
stronger and more persistent. To access this major potential of
renewable energy, the Kite Power research group is developing a
technology based on inflatable membrane wings which are tethered
to a motor/generator unit on the ground. The present kite power
demonstrator system operates a 25 or 50 m2 kite in periodic pumping
mode to generate 20 kW mechanical reel-out power. Systematic testing
and improvement has resulted in more than 100 completed pumping
cycles since January 2010, indicating a continuous increase in cycle
efficiency.
.Fast
fashion meets luxury labels
Take a stroll down London's Old Bond Street
or Milan's Via Montenapoleone and you will see the latest offerings
of Chanel and Gucci. Hop over to Oxford Street or Corso Vittorio
Emanuele, and you will discover the window displays of H&M
and Zara are exhibiting pretty much the same designs. Guess which
is flush with cash? INSEAD Assistant Professor, Frederic Godart,
has some surprising predictions as to which way this lucrative
market is heading.
Blink is about the first two seconds of looking--the decisive
glance that knows in an instant. Gladwell, the best-selling author
of The Tipping Point, campaigns for snap judgments and mind
reading with a gift for translating research into splendid storytelling.
Building his case with scenes from a marriage, heart attack triage,
speed dating, choking on the golf course, selling cars, and military
maneuvers, he persuades readers to think small and focus on the
meaning of "thin slices" of behavior. The key is to rely
on our "adaptive unconscious" - a 24/7 mental valet -
that provides us with instant and sophisticated information to warn
of danger, read a stranger, or react to a new idea.
Gladwell includes caveats about leaping to conclusions: marketers
can manipulate our first impressions, high arousal moments make
us "mind blind," focusing on the wrong cue leaves us vulnerable
to "the Warren Harding Effect" (i.e., voting for a handsome
but hapless president). In a provocative chapter that exposes the
"dark side of blink," he illuminates the failure of rapid
cognition in the tragic stakeout and murder of Amadou Diallo in
the Bronx. He underlines studies about autism, facial reading and
cardio uptick to urge training that enhances high-stakes decision-making.
In this brilliant, cage-rattling book, one can only wish for a thicker
slice of Gladwell's ideas about what Blink Camp might look like.
- Barbara Mackoff
.Zeitgeist:
Moving Forward
Zeitgeist: Moving Forward, by director Peter Joseph, is a
feature length documentary work which will present a case for
a needed transition out of the current socioeconomic monetary
paradigm which governs the entire world society.
This subject matter
will transcend the issues of cultural relativism and traditional
ideology and move to relate the core, empirical "life ground"
attributes of human and social survival, extrapolating those immutable
natural laws into a new sustainable social paradigm called a "Resource-Based
Economy".
Michio Kaku and Carl Sagan are not affiliated with the Zeitgeist
Movement.
This is the Official
Online (Youtube) Release of "Zeitgeist: Moving Forward"
by Peter Joseph. 2 hr and 42 min
On Jan. 15th, 2011,
"Zeitgeist: Moving Forward" was released theatrically
to sold out crowds in 60 countries; 31 languages; 295 cities and
341 Venues. It has been noted as the largest non-profit independent
film release in history.
"There are more people in the world who make things than
there are people who think of things to make." - Syd
Mead
Sydney Jay Mead
was born in St. Paul Minnesota, July 18th, 1933 but spent only
a few years there before moving to what would be the second of
many homes throughout the western United States prior to graduating
from High School in Colorado Springs, Colorado in 1951. After
serving a three year enlistment in the U.S. Army, Syd Mead continued
on to the Art Center School in Los Angeles, (now the Art Center
College of Design, Pasadena) where he graduated with great distinction
in June of 1959. He was immediately recruited by the Ford Motor
Company’s Advanced Styling Studio under the management of
Elwood Engle which he left after 2 years in order to accept a
variety of assignments to illustrate books and catalogues for
large corporate entities such as United State Steel, Celanese,
Allis Chalmers and Atlas Cement. In 1970, he launched Syd Mead
Inc. in Detroit, Michigan to accommodate the high caliber of offers
he received, most notably the PHILIPS ELECTRONICS. As the principal
of his newly formed corporation in the 1970’s, Syd Mead spent
about a third of his time in Europe primarily to provide designs
and illustrations for Philips of Holland. Together with his roster
of major American clients, he continues to make his creative mark,
internationally. Throughout the 1970’s and 1980’s, Syd
Mead, Inc. provided architectural renderings both interior and
exterior, for such clients as Intercontinental Hotels, 3D International,
Harwood Taylor & Associates, Don Ghia, and Gresham & Smith,
to mention a few. His architectural clients have recently expanded
to include the New York firm of Philip Koether Architects for
which he designed the interior of a Manhattan eatery. Design activity
accelerated after the corporate and personal move to California
in 1975. In 1979, projects began to include work with most major
studios, on such feature films as Star Trek: The Motion Picture,
followed by, Bladerunner, TRON, 2010, Short Circuit, Aliens, Time
Cop, Johnny Mnemonic, and most recently, “Mission Impossible-3”
starring Tom Cruise for director J.J. Abrams. Beginning in 1983,
Syd began to develop close working relationships with a number
of major Japanese corporate clients, including; Sony, Minolta,
Dentsu, Dyflex, Tiger, Seibu, Mitsukoshi, Bandai, NHK and Honda
as well as contributing to two Japanese film projects, The New
Yamato and Crises 2050. In the 1990s’, Syd supplied designs
for two Japanese toy icons, “The New Yamato” and all
eight robot characters in the new Turn-A Gundam mobile suite series
which were also seen as characters in Television shows.
With transportation
design as his first love, Syd Mead seldom misses an opportunity
to provide his unique blend of futurism and believability to those
projects consisting of a vehicle that travels from “A”
to ‘B”. Whether it be designing solar powered unicycles,
show cars, luxury yachts, cruise ships, or the interiors of private
747’s, each receives the same attention to detail within
a perfectly designed scenario. This combination has become a Syd
Mead trademark and has been seen in everything from concept cars
for Ford Motor Company to futuristic “Hypervans” which
have been the subject of his latest full color illustrations.
Syd Mead continues
an active schedule of one man shows, which started with an invitation
to exhibit at Documenta 6, Kassel, West Germany in 1973. His work
has since been exhibited in Japan, Italy, California, and Spain.
In 1983 in response to an in invitation from Chrysler Corporation
to be a guest speaker to their design staff, Syd Mead assembled
a selection of slides to visually enhance his lecture. The resulting
presentation was a resounding success and has since been expanded
and enhanced with computer generated imagery specifically assembled
at the requests of such clients as Disney, Carnegie Mellon University,
Purdue, Pratt University, the Society of Illustrators., and many
others both academic and corporate around the world. In March
of 2010, Syd completed a four city tour in Australia to capacity
audiences at each venue.
Always an advocate
of new technologies, Syd Mead has expanded his horizons to include
computer illustrations and graphics by mastering a variety of
Softwares. Beginning with the official poster of the 1991 Concours
d’Elegance “Eyes on the Classics” in Detroit, Michigan,
Mr. Mead has attempted to utilize the latest in available techniques
to their best advantage. In 1993, a digital gallery comprised
of 50 examples of his art with interface screens designed by Syd
Mead became one of the first CD ROM’s released in Japan in
1992 and in 2004 in response to many requests, cooperated with
the Gnomon School of Visual Effects to produce a 4 volume, “How
To” DVD series titled, “TECHNIQUES OF SYD MEAD”
which continues to be sought after by designers around the world.
His one man show,
“Cavalcade to the Crimson Castle” consisting of 114
original paintings and illustrations, enjoyed a three month showing
at the Center for the Arts in San Francisco in the Fall of 1996.
The highlight of the show turned out to be Syd’s presentation
and lecture attracted an audience that exceeded the available
capacity of the auditorium. Subsequent personal appearances at
schools across the country have attracted record numbers. A touring
exhibition of his work is now in the planning stage to mark the
40th anniversary of Syd Mead Inc.
In February 1998,
Syd Mead relocated his studio to Pasadena, California, where he
continues to be involved in a variety of design projects. He recently
completed work on a documentary of his career with director Joaquin
Montalvan, “VISUAL FUTURIST”, was released in May of
2007 on DVD and is available through the virtual Oblagon bookstore
on the Syd Mead official webpage WWW.SYDMEAD.COM . Mead attributes
success in an astonishing range of creative activities to the
premise that imagination…the idea, supersedes technique.
“There are more people in the world who make things than
there are people who think of things to make.”
2019: A Future
Imagined HD by Jim Hunter
Visual Futurist Syd Mead reflects upon the nature of creativity
and how it drives the future in 1920x1080 progressive high definition.
Club
of Amsterdam Journal.
