On Jan 6, 2021, the always stellar Mr @deepakshenoy tweeted, this:
https://t.co/fa3GX9VnW0
Innocuous 1 sentence, but its a full economic theory at play.
Let me break it down for you. (1/n)
91 day TBills at 3.03%. Interest rates are even lower than RBI has them.
— Deepak Shenoy (@deepakshenoy) January 6, 2021
In essence, if RBI opts and continues to manage exchange rate, then that is "fiddling with the exchange rate"
RBI has done that in the past and has restarted it in 2020 - very explicitly. (3/n)
Implying INR will be bought from the open markets in order to prevent INR from falling vis a vis USD (4/n)
https://t.co/9kpWP7ovyM
Which is what the subject of my Sept 2020 essay with @CFASocietyIndia was. (6/n)
This:
Consider three legs of a stool of an economy-
a. Ability of Dollar to flow in when excess in global economy
b. Fixed Exchange Rate
c. Ability to set interest rates (7/n)
You can choose any 2 of the 3 legs.
Choose : controlled interest rate (and hence low inflation) and fixed INR/USD rate, you cannot have an open economy.
Which India was till 1992. (8/n)
INR will fluctuate around.
Which India has adopted in the recent years. (9/n)
Many famous currency bets were made because central banks sought to ignore this theory. (10/n)
Because RBI has chosen to have a 'fixed exchange rate' (or at least as fixed as markets would allow) and an open economy, it is losing its influence on setting the interest rates in the market (12/n)
More from Economy
One of the hardest problems post-pandemic will be how to revive so-called "left behind" places.
Post-industrial towns, run-down suburbs, coastal communities - these places were already struggling before the crisis and have fared worst in the last year.
What should we do?
Today, @ukonward sets out the beginning of a plan to repair our social fabric. It follows our extensive research over the last year, expertly chaired by @jamesosh, and funded by @jrf_uk, @Shelter and @peoplesbiz.
https://t.co/d3T5uPwG9N
Before I get into recommendations, some findings from previous Onward research.
In 2018, we found 71% of people believe "community has declined in my lifetime"
In 2019, we found 65% would rather live in “a society that focuses on giving people more security” vs 35% for freedom
This was the basis for our identification of 'Workington Man' as the archetypal swing voter in 2019, and led us to predict (correctly) that large numbers of Red Wall seats could fall. A key driver was a desire for security, belonging and pride in place.
There is also a key regional dimension to this. We also tested people's affinity with the UK's direction of travel, across both cultural and economic dimensions - revealing the extraordinary spread below: London vs. the Rest.
https://t.co/HrorW4xaLp
Post-industrial towns, run-down suburbs, coastal communities - these places were already struggling before the crisis and have fared worst in the last year.
What should we do?
Today, @ukonward sets out the beginning of a plan to repair our social fabric. It follows our extensive research over the last year, expertly chaired by @jamesosh, and funded by @jrf_uk, @Shelter and @peoplesbiz.
https://t.co/d3T5uPwG9N
Before I get into recommendations, some findings from previous Onward research.
In 2018, we found 71% of people believe "community has declined in my lifetime"
In 2019, we found 65% would rather live in “a society that focuses on giving people more security” vs 35% for freedom
This was the basis for our identification of 'Workington Man' as the archetypal swing voter in 2019, and led us to predict (correctly) that large numbers of Red Wall seats could fall. A key driver was a desire for security, belonging and pride in place.
There is also a key regional dimension to this. We also tested people's affinity with the UK's direction of travel, across both cultural and economic dimensions - revealing the extraordinary spread below: London vs. the Rest.
https://t.co/HrorW4xaLp
I really think people have a very short-sighted view of the city and its key role in decades to come for the economy of 🇨🇳. Every so often, people have a handful of misconceptions about the city's future because they lack of basics in strategy 👇
https://t.co/6wuRzXGkYZ The West propaganda seems to make people think we are cracking down on 🇭🇰 people because we no longer need them and we will inevitably suppress their rights. Every now and then, I talk with people in 🇭🇰 who think the Great Firewall will extend to 🇭🇰
🇺🇸-led liberal order is very strong to come across 🇭🇰 people and make them believe what they want. Brainwashed people don't think rationally and fall for the lies and propaganda. This guy is one among so many others I met in 🇭🇰 who told me the same thing, that the city is doomed
They couldn't be more ignorant ! Unfortunately they will end up leaving the city and missing out on incredible opportunities... But they don't know that nothing will eventually change after 2047 ? 🙃Let me explain you why
I bet even after 2047 🇭🇰 will still enjoy a high degree of autonomy and freedoms that its mainland counterpart can’t enjoy : an independent legal and financial system, English as one of the official language, an access to the West internet, its traditional medias, etc.
Most Western countries are already starting to reconsider whether Hong Kong will remain a viable trading centre.
— Isaac Cheung | \U0001f1ed\U0001f1f0 | (@SoAlive0513) February 15, 2021
When the entire world stops trading with HK, how will HK be the financial center of the world?
I doubt tourism would be any better in the next few years either lol
https://t.co/6wuRzXGkYZ The West propaganda seems to make people think we are cracking down on 🇭🇰 people because we no longer need them and we will inevitably suppress their rights. Every now and then, I talk with people in 🇭🇰 who think the Great Firewall will extend to 🇭🇰
🇺🇸-led liberal order is very strong to come across 🇭🇰 people and make them believe what they want. Brainwashed people don't think rationally and fall for the lies and propaganda. This guy is one among so many others I met in 🇭🇰 who told me the same thing, that the city is doomed
They couldn't be more ignorant ! Unfortunately they will end up leaving the city and missing out on incredible opportunities... But they don't know that nothing will eventually change after 2047 ? 🙃Let me explain you why
I bet even after 2047 🇭🇰 will still enjoy a high degree of autonomy and freedoms that its mainland counterpart can’t enjoy : an independent legal and financial system, English as one of the official language, an access to the West internet, its traditional medias, etc.