India is soon to have a Hindu nationalist for a prime minister. The Bharatiya Janata party has won a decisive election in the largest democracy in the world. The soon-to-be prime minister is said to be a pro-business type and his party will replace the Indian National Congress party which has ruled India for nearly all of the years since the country gained independence from Great Britain in 1947. Our concern regards Forex and a Hindu Nationalist India. In this regard what will happen to the Indian rupee and will a Hindu nationalistic India stir up problems with Pakistan bringing the two nuclear powers to the brink of destruction? Read on for our thoughts about Forex and a Hindu Nationalist India in regard to how this change in Indian politics could change both local and international foreign currency exchange rates.
A Bit of History
India is one of the original seats of human civilization with evidence of humans living there 75,000 years ago. The Indus Valley civilization dates back to more than 3000 years before the Common Era. India is where the Hindu religion started and where it still practiced by the majority of the people. Local governance was interrupted in the 17th century when the British East India Company annexed large parts of India. India only gained its independence as a sovereign nation after WWII with independence in 1947. Because the Northwest region of India and the extreme Southeast were predominately Muslim they were partitioned off as East and West Pakistan. India subsequently conquered East Pakistan which is today Bangladesh. The leaders of India in the post-colonial era were those who fought for independence from Great Britain. The Indian National Congress has been the continuing leader across the years with its leader being prime minister. Current dissatisfaction with economic and political conditions has led to a resurgence of Hindu nationalism which may result in a more religious-based society and potentially a society more hostile to its Muslim neighbors in Pakistan. This later issue is our concern with Forex and Hindu Nationalism.
The most worrisome issue on the Indian sub-continent is that both India and Pakistan are nuclear powers. Both have missiles capable of delivering nuclear warheads. Both are still engaged in occasional armed conflict over the Kashmir, the mountainous region between the two countries. There have been three wars in 1947, 65, and 99 and there are still troops facing each other across their shared border. When things heat up along the border both the Indian and Pakistani Rupee suffer. And, if tensions mount sufficiently, Forex markets in general will react. With civil war in Syria, Russian annexation of Crimea and tensions in the South China Sea a substantial flight to safe haven currencies might be in the offing to the detriment of both Rupees, the Ruble, Yuan and currencies of virtually all nations doing business with and bordering those with problems. India may do well with a new prime minister but our concern regarding Forex and a Hindu nationalist India lies with their ability to finally achieve a peace with Pakistan. The beneficiaries of this scenario would be the USD, EUR, YEN, CHF, CAD and AUD providing that Australia can stay out of the fray in their back yard.