Ciao to the Rupee - buying opportunity coming

I have been one of the earliest rupee bulls - called the turn about 5 years ago.

Now, all and sundry are carrying on about how the rupee will keep rising. It won't for one simple reason:

The price of oil will continue to be high and our pusillanimous politician's will not raise the price to the people. One has to assume that foolish foreigners will continue to indefinitely buy expensive Bombay real estate on a nutty promote to boot (see Unitech et al vs. Goldman and Lehman) so we can import oil. Nuttiness is not forever.

Look for a reversal with the rupee cratering sometime around this time in 2009 when the penny will drop on a lot of silly investments and new managers will sweep out the good with the bad.

Want a precedent? It took till the late 90's for the first lot of private equity investment to reveal its returns and till the mid 2000's for the second lot. There was a lot of turmoil within the PE and investing community and new managers did not at all like what their predecessors had done. This lead to a lot of stock being tossed, the good, the bad and the ugly alike. This was more so when the sponsoring institution had also changed hands back in NY, London, Zurich or wherever. Back then, the industry was playing for tiddly winks. Not any more, and this time, when 'discovery' of the real return is made the parent may be going through some hard times as well.