Economic crisis in India 2013 | ALL Updates & News

[by78]

Reuters) - The Indian rupee plummeted to a record low against the dollar on Monday, leading a rout by Brazil's real and other emerging market currencies seen by investors as the most vulnerable to an exodus of foreign capital.

A fierce selloff in many emerging currencies shows no sign of abating as the expected withdrawal of U.S. monetary stimulus prompts investors to shun markets seen as riskier because of funding deficits, slowing economies and inflation.

The rupee fits that bill, as do the Indonesian rupiah, the South African rand and the Brazilian real. The rupiah plunged to four-year troughs on Monday while the rand lost another 1 percent to bring year-to-date losses to almost 17 percent against the dollar.

Brazil's real extended last week's fall of more than 5 percent fall to trade at its weakest level since March 2009 even as the central bank sold nearly $3 billion worth of currency swaps, which are derivatives that mimic an injection of dollars in the futures market. Like the rupee, it has been hammered by doubts over the efficacy of policy actions to stem the rout.

The rupee and the real, respectively, have been the worst performers in Asia and Latin America since late May when the Fed first signaled that it may begin winding down its monetary stimulus this year. India's currency has lost 13 percent against the dollar this year while the real has plunged 15 percent in the same period.

India, Brazil, other emerging economies hit by currency rout | Reuters

All emerging economies are hit, except China I believe.

I said the Rupee is the worst performing currency out of major developing economies in the past TWO years. Let me repeat: the past TWO years.

 

[BDforever]

Reuters) - The Indian rupee plummeted to a record low against the dollar on Monday, leading a rout by Brazil's real and other emerging market currencies seen by investors as the most vulnerable to an exodus of foreign capital.

A fierce selloff in many emerging currencies shows no sign of abating as the expected withdrawal of U.S. monetary stimulus prompts investors to shun markets seen as riskier because of funding deficits, slowing economies and inflation.

The rupee fits that bill, as do the Indonesian rupiah, the South African rand and the Brazilian real. The rupiah plunged to four-year troughs on Monday while the rand lost another 1 percent to bring year-to-date losses to almost 17 percent against the dollar.

Brazil's real extended last week's fall of more than 5 percent fall to trade at its weakest level since March 2009 even as the central bank sold nearly $3 billion worth of currency swaps, which are derivatives that mimic an injection of dollars in the futures market. Like the rupee, it has been hammered by doubts over the efficacy of policy actions to stem the rout.

The rupee and the real, respectively, have been the worst performers in Asia and Latin America since late May when the Fed first signaled that it may begin winding down its monetary stimulus this year. India's currency has lost 13 percent against the dollar this year while the real has plunged 15 percent in the same period.

India, Brazil, other emerging economies hit by currency rout | Reuters

All emerging economies are hit, except China I believe.

not us, our currency is getting strong now around Tk77 from around TK82 against 1 USD

 

[scorpionx]

not us, our currency is getting strong now around Tk77 from around TK82 against 1 USD

So,Awamy league is doing a good job,isn't it?

 

[BDforever]

So,Awamy league is doing a good job,isn't it?

it is not AL, it is paying off to hard working Bangladeshi people, even BNP will not get credit. Govt. did little for the country, most of the achievements earned by private sectors.

 

[by78]

The RBI is freaking out and has dipped into the meager forex reserves to defend the Rupee. This can't end well.

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Indian rupee falls to record low before central banks steps in | Reuters

Indian rupee falls to record low before central banks steps in

By Subhadip Sircar and Neha Dasgupta

MUMBAI | Tue Aug 20, 2013 1:23am EDT

(Reuters) - The Indian rupee slumped to a record low in early trade on Tuesday and bond yields hit another five-year high as Asia's third-largest economy bore the brunt of growing money flows out of emerging markets.

The rupee slumped as much as 1.6 percent to 64.13 to the dollar, adding to its 2.3 percent rout on Monday, before traders said the central bank was seen stepping in to sell dollars.

Markets are bracing for further losses, with 1-month non-deliverable forward trading at 64.71.

A spate of measures by the central bank and government has failed to halt the slide, with liquidity tightening measures aimed at making it harder to short the currency pushing up borrowing rates and battering corporate and investor sentiment.

The BSE Sensex index .BSESN of shares fell 1.2 percent to an 11-month low. JPMorgan downgraded Indian equities to "neutral" from "overweight", citing strain in the country's balance of payments, while Citi lowered its Sensex target to 18,900 from 20,800.

"India's problems are nowhere near resolution because New Delhi has not done anything - there is no focus on improving productivity, infrastructure or getting FDI (foreign direct investment) back," said Nomura credit analyst Pradeep Mohinani in Hong Kong.

"It's all about stemming the flow of currency and that is not the cause of the problem," he said.

Late on Monday, the Reserve Bank of India increased the foreign direct investment cap in asset reconstruction companies to 74 percent from 49 percent.

Earlier on Monday, India banned the duty-free import of flat-screen TVs from August 26.

The 1-month onshore forward rate for the rupee was at 64.47 while the offshore non-deliverable forward was at 64.71, an unusually wide gap that reflected bearish overseas bets against the partially convertible currency.

Emerging market currencies have been under growing pressure from outflows amid expectations the U.S. Federal Reserve will soon start to wind down its super-easy money policy, possibly as early as next month.

Indonesia's rupiah, Brazil's real and South Africa's rand have also been in retreat as investors eye those countries that are most vulnerable to an exodus of foreign capital.

WEAK GOVERNMENT, WEAK GROWTH

Prime Minister Manmohan Singh's weak coalition government, heading into national elections by next May, has been hamstrung from pushing through reforms to attract more long-term capital.

The rupee's plunge adds to worries about India's ability to fund a record high current account gap and whether Finance Minister P. Chidambaram will be able to meet his goal to pare the fiscal deficit to 4.8 percent of gross domestic product (GDP) this fiscal year.

Rating agency Moody's said that while the rupee depreciation was a new variable for the economy, the factors underpinning it have been incorporated in its investment grade rating for India.

India is at the lowest investment-grade sovereign rating.

"We believe that meeting the fiscal deficit target will be very challenging this year, given lower than anticipated growth holding back revenue growth and steep rupee depreciation raising the subsidy bill on imported goods," analyst Atsi Sheth said in an e-mailed reply to queries from Reuters.

Bond yields remained at pre-Lehman Brothers-crisis levels for a second straight day. The benchmark 10-year yield was up 20 basis points at 9.43 percent.

(Additional reporting by Umesh Desai in HONG KONG and Swati Bhat and Abhishek Vishnoi in MUMBAI; Editing by Tony Munroe & Kim Coghill)

 

[rockstarIN]

Correction buddy, the Chinese Yuan is not pegged to the US dollar. We got rid of the dollar peg back in 2005.

The Chinese Yuan in fact reached a record high against the US dollar just now:

Chinese Yuan hits record high against US dollar - Wall Street Journal

What we have is a "managed float" exchange rate. Which in my opinion is the best thing.

A pegged/fixed exchange rate is too inflexible, whereas a free-floating exchange rate is too volatile, as we have seen with the Rupee which has been hit by currency speculation.

We're taking the "middle path". Which is a good idea and I think India should consider it.

If I correctly interpret the 'managed float', Reserve Bank of India too buy and sell to influence.

 

[Beast]

The RBI is freaking out and has dipped into the meager forex reserves to defend the Rupee. This can't end well.

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Indian rupee falls to record low before central banks steps in | Reuters

Indian rupee falls to record low before central banks steps in

By Subhadip Sircar and Neha Dasgupta

MUMBAI | Tue Aug 20, 2013 1:23am EDT

(Reuters) - The Indian rupee slumped to a record low in early trade on Tuesday and bond yields hit another five-year high as Asia's third-largest economy bore the brunt of growing money flows out of emerging markets.

The rupee slumped as much as 1.6 percent to 64.13 to the dollar, adding to its 2.3 percent rout on Monday, before traders said the central bank was seen stepping in to sell dollars.

Markets are bracing for further losses, with 1-month non-deliverable forward trading at 64.71.

A spate of measures by the central bank and government has failed to halt the slide, with liquidity tightening measures aimed at making it harder to short the currency pushing up borrowing rates and battering corporate and investor sentiment.

The BSE Sensex index .BSESN of shares fell 1.2 percent to an 11-month low. JPMorgan downgraded Indian equities to "neutral" from "overweight", citing strain in the country's balance of payments, while Citi lowered its Sensex target to 18,900 from 20,800.

"India's problems are nowhere near resolution because New Delhi has not done anything - there is no focus on improving productivity, infrastructure or getting FDI (foreign direct investment) back," said Nomura credit analyst Pradeep Mohinani in Hong Kong.

"It's all about stemming the flow of currency and that is not the cause of the problem," he said.

Late on Monday, the Reserve Bank of India increased the foreign direct investment cap in asset reconstruction companies to 74 percent from 49 percent.

Earlier on Monday, India banned the duty-free import of flat-screen TVs from August 26.

The 1-month onshore forward rate for the rupee was at 64.47 while the offshore non-deliverable forward was at 64.71, an unusually wide gap that reflected bearish overseas bets against the partially convertible currency.

Emerging market currencies have been under growing pressure from outflows amid expectations the U.S. Federal Reserve will soon start to wind down its super-easy money policy, possibly as early as next month.

Indonesia's rupiah, Brazil's real and South Africa's rand have also been in retreat as investors eye those countries that are most vulnerable to an exodus of foreign capital.

WEAK GOVERNMENT, WEAK GROWTH

Prime Minister Manmohan Singh's weak coalition government, heading into national elections by next May, has been hamstrung from pushing through reforms to attract more long-term capital.

The rupee's plunge adds to worries about India's ability to fund a record high current account gap and whether Finance Minister P. Chidambaram will be able to meet his goal to pare the fiscal deficit to 4.8 percent of gross domestic product (GDP) this fiscal year.

Rating agency Moody's said that while the rupee depreciation was a new variable for the economy, the factors underpinning it have been incorporated in its investment grade rating for India.

India is at the lowest investment-grade sovereign rating.

"We believe that meeting the fiscal deficit target will be very challenging this year, given lower than anticipated growth holding back revenue growth and steep rupee depreciation raising the subsidy bill on imported goods," analyst Atsi Sheth said in an e-mailed reply to queries from Reuters.

Bond yields remained at pre-Lehman Brothers-crisis levels for a second straight day. The benchmark 10-year yield was up 20 basis points at 9.43 percent.

(Additional reporting by Umesh Desai in HONG KONG and Swati Bhat and Abhishek Vishnoi in MUMBAI; Editing by Tony Munroe & Kim Coghill)

GO GO GO! GO India GO. Go down hill

 

[scorpionx]

it is not AL, it is paying off to hard working Bangladeshi people, even BNP will not get credit. Govt. did little for the country, most of the achievements earned by private sectors.

Ok,but long term government policies are responsible for economic reforms and it's effects. Isn't? Even private sectors need Governments approval and encouragement.

 

[rockstarIN]

not us, our currency is getting strong now around Tk77 from around TK82 against 1 USD

I said emerging economies ?

 

[BDforever]

I said emerging economies ?

Bangladesh is not among emerging economies ?

 

[Chinese-Dragon]

If I correctly interpret the 'managed float', Reserve Bank of India too buy and sell to influence.

Yes India has stepped up the exchange controls significantly, especially after the Rupee started falling.

But that was really a half-measure, and a last resort. Which doesn't really work in currency interventions.

A few years back, both Switzerland and Japan tried to intervene in their currency markets. Both used half-measures, so both failed. And their respective currencies went back to where they were before the intervention.

Currency interventions really require full-measures in order to have a lasting effect. And you need reforms to address the root causes as well.

A "managed floating" exchange rate means that you put upper limits and lower limits on currency movement every day. So basically it can float within a narrow band.

 

[Mr cool]

1$ = 100 yen so indian rupee may stabilize at 80 i guess because of CAD is very high (resources are low)... but if rupee fall drastically people may come to streets so the DEMOCRATIC govt ACT LIKE THEY ARE TRYING TO STOP RUPEE FALL .. repeat ACT until our CAD minimized

 

[BDforever]

Ok,but long term government policies are responsible for economic reforms and it's effects. Isn't? Even private sectors need Governments approval and encouragement.

bro plz, govt. is not facing so much corruption allegation, today's new headline state owned basic bank a tk3,500 crore corruption.

 

[naveen mishra]

why people are crying.............it is consolidation phase ...........natural behavior of world business ...........kya hua system colaps ho gya kya ?......lol......Indonesian Rs IDR reach to 11000 level last year it was at 9200 level..........around 700000 project is pending for approval in central ministry .........government is not taking decision .....election is coming near.......

 

[Chinese-Dragon]

Renminbi - Wikipedia, the free encyclopedia

Read this to see China's "managed floating" exchange rate in action.

Basically it means the value of the currency can float within a narrow band. So the currency moves in the direction that the markets push it in, but slowly.