Write up on interest rates and economical trends From March 07 onwards

1. Write up on 3rd May 07 suggesting that RBI intervention, liquidity, depth, breadth, debt padding to the markets and economy is important- accordingly there are instances of the same happening on 20th jan 08; suggested that the Japanese banks should be increasing rates to at least 1% levels- the same was true with in 8 months –JPY LIBOR was at .9% in jan 08; volatility in fx, commodity has been led by the changes in the rates induced by the FED, the repurcussion will be huge
2. First on Japanese trends was written on 7th March 07 - the same have come true in next two years
3. On Jan 21, 08 it is again emphasized and shared with investors that the FED should be reducing rates!! on 23rd rates are cut by 75bp
4. Another write up was done in Sept 07 suggesting that the interest rates will fall to 3-3.5% level by March 08 – happens in Jan 08. Fed rate was 3.5% and USD LIBOR at 3.74%
5. Write up as to why the trend in India is sustainable much like china on 21st sept 07

Mar 7, 2007 8:04 PM
subject Fwd: India and the Reversal of the Yen Carry Trade/views/analysis/food for thought
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I feel that the japanese banking and also investment banking have matured in last 5 years and are now at par with best of trading systems and securities laws. npa is down to 2% level from 10% and economoies of scale have also been achieved. japanese central bank have also done a superb job of actively involving public and private clearing systems. large debt of 6 trillion dollars(in last 5 years) is actually supporting carry trade.To under stand as a matter of symptom -First ever redumption took place last year and that now longer maturity bonds are being issued 15 yrs plus, short dated t bills, finance bills, 2/5/10 are being considered less). This is a healthy sign from the ALM perspctive as this proves the fact that japanese banks are also now wanting to earn more and they are actually trying to test the waters as to how much they are loosing as an opportunity - even a 0.5 percent gain can give billions of dollars of profits to japanese banks. Imagine a 2% level would do wonders for the japanese banks. Also There are around 10-15 european and US investments banks looking forward to start the operations in equity and debt markets in Japan(market sources).
Strategically, its the right time for the japanese banks to increase the rates at least to 2% levels as still the differential will be there considering 15 yrs of 0% interest rate policy is not the solution and that practically liquidity premium theory is also getting defeated.
Dinesh