no matter the promises in the dark a foreign investor making INR denominated investments is being diluted by a depreciating currency on repatriation
imagine a 3 year lock in with an entry at INR 50 and an exit at INR 65 or -35 % on the fx (unhedged and most are because of the relative illiquidity and lack of conversion of the INR)
and an IRR of say 35% for the period. all square plus expenses
the minimum gain for the carry has to be 4x of INR or 1.5-2x in 3 years
of technical interest is the measure and consistency of "overshooting" in the INR market as measured by the distance from 200 day moving average
1. the INR trades > 15 % of the 200 day ema consistently and the spot plus average continue with a - INR + USD rate of change over time
2. the INR rarely trades below its 200 day ema even to 5 %
the tape tells the tale
imagine a 3 year lock in with an entry at INR 50 and an exit at INR 65 or -35 % on the fx (unhedged and most are because of the relative illiquidity and lack of conversion of the INR)
and an IRR of say 35% for the period. all square plus expenses
the minimum gain for the carry has to be 4x of INR or 1.5-2x in 3 years
of technical interest is the measure and consistency of "overshooting" in the INR market as measured by the distance from 200 day moving average
1. the INR trades > 15 % of the 200 day ema consistently and the spot plus average continue with a - INR + USD rate of change over time
2. the INR rarely trades below its 200 day ema even to 5 %
the tape tells the tale
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