Local currency has dipped before major elections and recovered just ahead of results for decades R N Bhaskar | Mumbai When the rupee began ceding ground to the dollar in the last week of last August, setting alarm bells ringing for exporters and economists, a money market dealer was overheard saying, "It (the local currency) will be weak till February, after which it will begin to recover." The nonchalance elicited titters, but the dealer remained unfazed, smug even. For many elections now, he had watched the currency wobble and felt this time would be no different. True to form, the rupee continued to tumble. At one point, the Reserve Bank of India even indicated it will not intervene to arrest the slide. The local currency kept falling and even breached 53 per dollar in January - an all-time low. Soon, election dates got announced and the rupee price began stabilising, just the way the dealer had said it would. The rupee closed ...

In my September 13 2011 blog, Sensex  bottom target : The UPA gap I had written that the Sensex will bottom between 12000 to 13000. I had also draw parallels between the Great Depression of the 40"s  and the present recession. But instead from a low of 15175 on 20th December the Sensex went to 18428 ( Feb 21) in a span of 2 months ( Jan and Feb.) A return of 20/50% in most A group stocks. What Happened? A. Post Lehman collapse in 2008 ( corresponding to 1938) the Liquidity gush provided by QE1 and QE2 sparked the Equity + Commodity + Bullion rally. ( Dollar carry trade) Waning of the effects of QE lead to the declines in 2011 ( corresponding to 1940) B. LTRO ( Long term refinancing operations of the ECB): First round of 500 Billion Euros in Dec /Jan and Second round due on Feb 29 expected to be again of 500 Billion Euros. The Euro carry trade now, leads to Global equity + Crude  rally. This will lead to a peak  ( corresponding to the peak between 1940 /...