India Only Country In The World With Potential To Give 5-8x Returns, Says Krishna Memani

Speaking on the current environment for the rupee, Memani said the U.S. Federal Reserve is not making life easier for any emerging market central banker.

“The environment for the rupee and central bank policy will remain challenging, but the Indian central bank has done a good job managing through all this,” he said.

“The currency depreciation hurts the inflationary situation in India, but given the relative stability after significant crude appreciation, the impact is manageable. Given the track record, RBI has done a very decent job managing inflation and future of growth in India.”

The driver on how the markets will fare is really the Fed, he said.

“The crude situation was very important when the Ukraine invasion took place, but that concern has receded though not gone away.”

According to him, the Fed is “experimenting” and “doesn’t really know what the destination is” in terms of rate hikes.

“The inflation is so high that they really don’t know what the impact of the things they’re doing will be on the global economy. It’s a very unusual situation for the Fed over the last 2-3 decades.”

Through the tightening, the Fed wants the strength of the labour market to go down—openings to reduce and wage growth to slacken—but there are problems.

“None of it is manifesting right now. It always comes with a lag. The question is how large is the lag? If it’s going to be longer, the Fed has a few more 50 basis points hikes to go, even after the 75 basis points hike in September,” Memani said.