beijingwalker
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They've been increasingly chanting about China's crash in recent weeks,and it turns out that their economy is one soon to crash.lol..
Economic crisis in India 2013 | ALL Updates & News
- Thread starter beijingwalker
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They've been increasingly chanting about China's crash in recent weeks,and it turns out that their economy is one soon to crash.lol..
Lightningbolt
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India is being totally humiliated.
It's great to see that country go down the drain. For all the boasting they do, they deserve every bit of it.
It's great to see that country go down the drain. For all the boasting they do, they deserve every bit of it.
Kompromat
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Al Bhatti
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August 20, 2013
Indians call flat-screen TV import duty useless
Government will gain nothing as people will stop importing TVs, they say
Saljith Mohan bought a 32-inch LED television worth more than Dh1,000 last week to take to India ahead of his vacation home early next month.
But a Government of India decision to impose a 35 per cent customs duty on flat-screen TVs has posed a problem.
I cannot pay that much customs duty and I dont know what to do with this TV because we already have one at our home in Abu Dhabi, the 34-year-old accountant told Gulf News on Tuesday.
India will impose the new import duty from August 26 to prop up the weak rupee. Mohan said such rules should not be implemented at such short notice.
The government should have given at least two to three months notice before implementing such rules, he said. He doubted the electronics dealers lobby in India had influenced the government to impose the duty.
Roy Mathew, 45, a designer, is also in a similar situation. He bought a 40-inch television worth more than Dh3,000 recently so he could take it home when he goes on vacation. He bought it in advance when there was an offer.
But I wont take it to India if the new import duty is in place. If it is not withdrawn before my vacation, I will use it at home here, Mathew said.
Other Indian expatriates Gulf News spoke to also said people will stop buying televisions from the UAE because of the ruling.
Dheeraj Shetty, 36, a health and safety manager, said even if somebody takes a television to India, it may not benefit the government. A corrupt customs officials could take a bribe to avoid the import duty, he said.
Echoing the same opinion, Aslam Khan, 40, a public relations officer, who has been working in the UAE for around 20 years, said this new regulation will not help the weakened rupee. He said the government should take other concrete measures to save the rupee. He has taken two flat-screen televisions to India in the past.
Mohammad Rafeeq, 35, a sales executive, also said expatriates will stop buying TVs from here.
I have taken a 47-inch television to India and sent a 42-inch one for my friend last week. But no more.
The Indian rupee has weakened due to mismanagement on the part of the political class, he said.
Expatriates are paying the price for it in the form of this customs duty, Rafeeq said.
V. V. Navas, 33, an engineer, had taken three flat-screen TVs to India for his family members in the past. Now I will not, he said.
All expatriates will think like this and it will end up as a useless regulation, Navas said.
Meanwhile an expatriate organisation has submitted a memorandum to the Government of India to withdraw the new import duty.
Earlier, Non-resident Indians (NRIs) could carry one flat TV (plasma/LED/LCD) for personal use, worth up to Rs35,000 (Dh2,026) as part of their baggage allowance, without paying any customs duty, the UAE-based Pravasi Bandhu Welfare Trust said.
NRIs remitted more than $70 billion (Dh257 billion) to India last financial year. The foreign currency-starved India government is planning to raise foreign currency bonds from NRIs to overcome the crisis.
Instead of encouraging such NRIs, the Government of India is punishing them by imposing duty on gifts such as flat-screen televisions. Those who are carrying a TV, would have remitted millions of rupees in previous years.
As a courtesy to them the Government of India should permit NRIs to take flat-screen televisions, it said.
Indians call flat-screen TV import duty
Indians call flat-screen TV import duty useless
Government will gain nothing as people will stop importing TVs, they say
Saljith Mohan bought a 32-inch LED television worth more than Dh1,000 last week to take to India ahead of his vacation home early next month.
But a Government of India decision to impose a 35 per cent customs duty on flat-screen TVs has posed a problem.
I cannot pay that much customs duty and I dont know what to do with this TV because we already have one at our home in Abu Dhabi, the 34-year-old accountant told Gulf News on Tuesday.
India will impose the new import duty from August 26 to prop up the weak rupee. Mohan said such rules should not be implemented at such short notice.
The government should have given at least two to three months notice before implementing such rules, he said. He doubted the electronics dealers lobby in India had influenced the government to impose the duty.
Roy Mathew, 45, a designer, is also in a similar situation. He bought a 40-inch television worth more than Dh3,000 recently so he could take it home when he goes on vacation. He bought it in advance when there was an offer.
But I wont take it to India if the new import duty is in place. If it is not withdrawn before my vacation, I will use it at home here, Mathew said.
Other Indian expatriates Gulf News spoke to also said people will stop buying televisions from the UAE because of the ruling.
Dheeraj Shetty, 36, a health and safety manager, said even if somebody takes a television to India, it may not benefit the government. A corrupt customs officials could take a bribe to avoid the import duty, he said.
Echoing the same opinion, Aslam Khan, 40, a public relations officer, who has been working in the UAE for around 20 years, said this new regulation will not help the weakened rupee. He said the government should take other concrete measures to save the rupee. He has taken two flat-screen televisions to India in the past.
Mohammad Rafeeq, 35, a sales executive, also said expatriates will stop buying TVs from here.
I have taken a 47-inch television to India and sent a 42-inch one for my friend last week. But no more.
The Indian rupee has weakened due to mismanagement on the part of the political class, he said.
Expatriates are paying the price for it in the form of this customs duty, Rafeeq said.
V. V. Navas, 33, an engineer, had taken three flat-screen TVs to India for his family members in the past. Now I will not, he said.
All expatriates will think like this and it will end up as a useless regulation, Navas said.
Meanwhile an expatriate organisation has submitted a memorandum to the Government of India to withdraw the new import duty.
Earlier, Non-resident Indians (NRIs) could carry one flat TV (plasma/LED/LCD) for personal use, worth up to Rs35,000 (Dh2,026) as part of their baggage allowance, without paying any customs duty, the UAE-based Pravasi Bandhu Welfare Trust said.
NRIs remitted more than $70 billion (Dh257 billion) to India last financial year. The foreign currency-starved India government is planning to raise foreign currency bonds from NRIs to overcome the crisis.
Instead of encouraging such NRIs, the Government of India is punishing them by imposing duty on gifts such as flat-screen televisions. Those who are carrying a TV, would have remitted millions of rupees in previous years.
As a courtesy to them the Government of India should permit NRIs to take flat-screen televisions, it said.
Indians call flat-screen TV import duty
Guynextdoor2
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I was COMPLEMENTING you. You couldn't get even that? Maybe you're too focused on trolling.
Who are you?
I was COMPLEMENTING you. You couldn't get even that? Maybe you're too focused on trolling.
Hmmm... perhaps by 'complementing' you meant 'complimenting'? I was right: you are not intelligent enough to take the most basic of instructions. Let me simplify this even more: F.U.C.K. off.
Ok, maybe that was too simple. Try this one on for size: F.U.C.K. off and DIE.
Surely that was comprehensible even to you.
Guynextdoor2
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Sure A$$wipe- in your case 'complementing' (like an aid to TP) and 'complimenting' (an upgrade on your intellect to TP level) can be the same. ANd just because this a public forum doesn't mean you can spew. No one asked you, so don't post...this thread is not for you.
Whatever you say, Rapistnextdoor2.
The spike in sovereign bond yield? Check...
The Argentinians have some horror stories to share.
Early elections should be called to stave off the confidence crisis. Will that happen?
http://www.businessweek.com/news/2013-08-20/asia-s-biggest-yield-jump-threatens-singh-goals-india-credit
Asia’s Biggest Yield Jump Threatens Singh Goals: India Credit
Asia’s biggest increase in sovereign debt costs is threatening Indian Prime Minister Manmohan Singh’s plan to cut the budget deficit and fueling the fastest surge in credit risk since 2008.
Ten-year yields rose 72 basis points this month to 8.92 percent, the most among 14 regional markets tracked by Bloomberg. The Reserve Bank of India said yesterday it will buy long-dated notes after the rate surged to a 12-year high of 9.48 percent, imperiling economic growth. Government debt in Indonesia added 66 basis points to 8.49 percent.
Singh’s pledge to reduce the shortfall in public finances to a six-year low of 4.8 percent looks more difficult to keep as borrowing costs soar amid an economic slowdown that would erode revenue. The rising costs of India’s 6.3 trillion rupee ($100 billion) borrowing program for the year through March 2014 will be apparent when the government sells 150 billion rupees of notes at an auction on Aug. 23.
“India’s macroeconomic situation appears to be nothing short of a train wreck,” Tirthankar Patnaik, a strategist in Mumbai at Religare Capital Markets Ltd., said in an interview yesterday. “Higher yields will make incremental borrowing expensive at a time when we expect a significant drop in tax revenue due to slow economic growth. The government might be forced to raise its borrowing target.”
Extending Losses
Indian bonds are headed for a third monthly loss, with 10-year yields rising 168 basis points since May, as the prospect of the U.S. cutting stimulus fueled a plunge in the rupee. That’s equivalent to about 1.7 billion rupees in extra interest costs on every 100 billion rupees of such securities the government would auction.
The price to insure the notes of State Bank of India (SBIN), a proxy for the nation, against non-payment for five years climbed 113 basis points in August to 372, headed for the largest advance since October 2008, according to data provider CMA.
The rupee tumbled 14 percent since March in Asia’s worst performance and touched a record 64.12 per dollar yesterday. Its slide prompted the central bank to raise two of its interest rates and tighten cash in the financial system since mid-July, reversing an earlier policy bias for monetary easing.
The RBI said yesterday said it is important the liquidity-tightening measures don’t harden long-term yields, and announced steps to ease some curbs, including an open-market purchase of 80 billion rupees of long-dated notes on Aug. 23 and “thereafter calibrate them both in terms of quantum and frequency” based on market conditions.
‘Under Pressure’
Indian stock-index futures traded in Singapore rose after the RBI’s statement on planned bond purchases. SGX CNX Nifty Index futures for August delivery advanced 1.3 percent to 5,447.5 in Singapore.
“Indian government bonds continue to remain under pressure,” analysts at ICICI Bank Ltd. (ICICIBC), including Mumbai-based L. Subramanian, wrote in a research note yesterday. “Continued weakness in the rupee has led to paring of bets of any further monetary easing by the Reserve Bank.”
At the last sovereign debt auction on Aug. 16, India sold 10-year notes at 8.74 percent, up from 7.28 percent on May 31. At this week’s sale, the government will offer securities due in 2020, 2025, 2032 and 2042. The nation’s budget gap in the first quarter of the fiscal year that started April 1 was 2.63 trillion rupees, or 48.4 percent of the target for the 12-month period, according to official figures released July 31.
Fiscal Weakness
Fiscal policy is the weakest aspect of Asia’s third-largest economy, Moody’s Investors Service said this week, while keeping its stable outlook on India’s Baa3 rating, the lowest investment grade. Standard & Poor’s last year cut the sovereign credit outlook to negative and a step closer to a junk ranking.
India’s growth slowdown is adding to hurdles faced by Singh as he seeks to improve public finances. Gross domestic product expanded 5 percent in the year ended March 31, the least in a decade, and is forecast by the central bank to increase 5.5 percent in the current period. Religare Capital estimates this fiscal year’s GDP gain may be as little as 4.5 percent.
Increasing public spending ahead of national elections in 2014 is also adding strain on the budget. Last month, Singh’s government enacted the Food Security Bill, which proposes to spend $21 billion a year to provide subsidized grain to about two-thirds of India’s 1.2 billion people. The policy could put at risk plans to cut the budget gap, according to Morgan Stanley.
Economic Turmoil
“I’ll be surprised if the government manages to restrict the budget deficit to target without any economic or accounting arrangements,” Killol Pandya, senior fund manager in Mumbai at LIC Nomura Mutual Fund Asset Management Co., which manages 68 billion rupees of local assets, said in an interview yesterday. “At a time when India is going through an economic turmoil and immediately facing an election year, I don’t see how expenses can be cut down, and how revenues are going to be raised. We are under strain, let’s make no bones about it.”
Finance Minister Palaniappan Chidambaram has pledged to pare the budget deficit to 3 percent of GDP by 2017, part of wider policy changes since September to avert a rating downgrade and revive India’s economy. The shortfall declined to a revised 4.9 percent in 2012-2013 from 5.8 percent in the previous year.
The surge in yields provides an opportunity to buy Indian bonds, which would rally on any sign that the RBI will reverse its recent tightening measures, according to Mumbai-based Kotak Mahindra Asset Management Co. Ten-year (GIND10YR) yields dropped 32 basis points yesterday in the biggest decline since May 2010.
‘Extremely Abnormal’
“This is an extremely abnormal scenario as nobody expected yields to shoot up to these levels,” Lakshmi Iyer, head of fixed income at Kotak Mahindra Asset, which manages 377 billion rupees of assets locally, said in an interview yesterday. “Of course, there will be bouts of near-term volatility, but investors should stay put and invest more rather than redeeming at this point. We should see genuine value buying with yields at such levels.”
There’s no sign of an immediate rebound in the bond market, according to LIC Nomura’s Pandya. Global funds have pulled out an unprecedented $10 billion from local-currency bonds since holdings touched a record $38.5 billion in May. Indian debt lost 2.4 percent so far in August, compared with a 1.25 percent decline in Chinese notes, JPMorgan Chase & Co. indexes show.
“It’s difficult to find a reason to be bullish,” he said. “The credit-default swap numbers are reflective of the stress the economy and India’s finances are experiencing.”
To contact the reporters on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net; Kartik Goyal in Mumbai at kgoyal@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
Oh my, more liquidity at this point is going to do little good. The inflation is already near double digit.
India Eases Cash Curbs as Surging Bond Yields Imperil Growth - Bloomberg
India Eases Cash Curbs as Surging Bond Yields Imperil Growth
India’s central bank said it will buy long-dated government debt after cash-supply curbs to support the rupee prompted a surge in yields. Bonds and shares of lenders jumped the most in four years.
The Reserve Bank of India will conduct open-market debt purchases of 80 billion rupees ($1.3 billion) on Aug. 23 and “thereafter calibrate them both in terms of quantum and frequency” based on market conditions, it said in a statement yesterday. The earlier liquidity-tightening steps must not “harden longer term yields sharply” and hurt lending, it said.
Enlarge image
Passengers hold onto handles as they ride on a train during the morning rush hour in Mumbai. The nation is suffering as Asia’s role as the world’s growth engine wanes and investors pull out billions of dollars. Photographer: Dhiraj Singh/Bloomberg
Enlarge image
The Reserve Bank of India (RBI) said a review of the measures since mid-July suggests the “immediate objective of raising the short-term interest rates has substantially been achieved.” Photographer: Kuni Takahashi/Bloomberg
Enlarge image
A vendor displays kidney beans for a photograph at a pulse store in a wholesale market in Mumbai. Consumer prices rose 9.64 percent in July from a year earlier. Another gauge based on wholesale prices advanced 5.79 percent, a five-month high that exceeded the central bank’s comfort zone of about 5 percent. Photographer: Dhiraj Singh/Bloomberg
India’s 10-year bond yield touched 9.48 percent yesterday, the highest since 2001, as the nation struggles to curb capital outflows spurred by risks such as a record current-account deficit and speculation the U.S. Federal Reserve could taper stimulus. The RBI since mid-July raised two interest rates and capped cash injections into the banking system to aid the rupee, steps that risk hurting expansion in Asia’s No. 3 economy.
“The long-end yields reacted too much and that was, probably, not the objective,” said Prasanna Ananthasubramanian, an economist at ICICI Securities Primary Dealership Ltd. in Mumbai. “There are other objectives that the RBI has to worry about, like government borrowing costs and the impact on the economy.”
Bank Shares
Ten-year government bonds rallied the most since March 2009, with the yields plunging 60 basis points to 8.30 percent today, according to data compiled by Bloomberg. The S&P BSE Bankex index, a gauge of 13 lenders, surged 5.2 percent as of 10:10 a.m. in Mumbai, the biggest gain since May 2009.
The rupee weakened 0.2 percent to 63.335 per dollar and has tumbled about 15 percent in the past six months to a record low. The S&P BSE Sensex index climbed the most in a week.
The central bank said a review of the measures since mid-July suggests the “immediate objective of raising the short-term interest rates has substantially been achieved.”
The issue of cash management bills will be calibrated going forward, “including scaling it down as may be necessary,” the RBI said. The central bank last month increased both the marginal standing facility rate and the bank rate by 200 basis points to 10.25 percent. It has also tightened daily reserve requirements.
Overnight Rate
The interbank overnight lending rate has surged more than 300 basis points, or 3 percentage points, to 10.25 percent since the end of June. The 10-year yield has jumped 86 basis points in the same period, while that on the two-year securities soared 2.34 percentage points, according to data compiled by Bloomberg.
The RBI also allowed lenders to move a larger portion of their government bond holdings to the so-called held-to-maturity category so they won’t have to show losses when prices of the securities fall.
State Bank of India, the country’s largest, led the rally in lenders’ stocks in Mumbai.
“Investor sentiment got a boost from the measures,” said Jisha Nair, Mumbai-based banking analyst at BoB Capital Markets Ltd. “The surge in shares may not be sustainable as they are staring at losses on government and company bond holdings for the year even after the relaxation.”
State Bank of India (SBIN) advanced 4.1 percent to 1,617.30 rupees, while Yes Bank Ltd. jumped 15 percent to 278.80 rupees and IndusInd Bank Ltd. rallied 12 percent to 376.50 rupees.
Sustainable Level
The current-account gap widened to 4.8 percent of gross domestic product in the 12 months ended March. The RBI estimates the sustainable level is 2.5 percent of GDP.
The plunge in the rupee threatens to stoke the cost of imports such as oil, adding to price pressures.
Consumer prices rose 9.64 percent in July from a year earlier. Another gauge based on wholesale prices advanced 5.79 percent, a five-month high that exceeded the central bank’s comfort zone of about 5 percent.
India’s economy may expand 5.5 percent in the year through March 2014, compared with 5 percent in the previous 12-month period, the central bank estimates. That lags behind the 10-year average of about 8 percent.
The nation is suffering as Asia’s role as the world’s growth engine wanes and investors pull out billions of dollars.
Raghuram Rajan, the top adviser in the Finance Ministry since 2012 and a former International Monetary Fund chief economist, becomes the Reserve Bank governor in September. He succeeds Duvvuri Subbarao. The next scheduled monetary-policy review is on Sept. 18.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
India Eases Cash Curbs as Surging Bond Yields Imperil Growth - Bloomberg
India Eases Cash Curbs as Surging Bond Yields Imperil Growth
India’s central bank said it will buy long-dated government debt after cash-supply curbs to support the rupee prompted a surge in yields. Bonds and shares of lenders jumped the most in four years.
The Reserve Bank of India will conduct open-market debt purchases of 80 billion rupees ($1.3 billion) on Aug. 23 and “thereafter calibrate them both in terms of quantum and frequency” based on market conditions, it said in a statement yesterday. The earlier liquidity-tightening steps must not “harden longer term yields sharply” and hurt lending, it said.
Enlarge image
Passengers hold onto handles as they ride on a train during the morning rush hour in Mumbai. The nation is suffering as Asia’s role as the world’s growth engine wanes and investors pull out billions of dollars. Photographer: Dhiraj Singh/Bloomberg
Enlarge image
The Reserve Bank of India (RBI) said a review of the measures since mid-July suggests the “immediate objective of raising the short-term interest rates has substantially been achieved.” Photographer: Kuni Takahashi/Bloomberg
Enlarge image
A vendor displays kidney beans for a photograph at a pulse store in a wholesale market in Mumbai. Consumer prices rose 9.64 percent in July from a year earlier. Another gauge based on wholesale prices advanced 5.79 percent, a five-month high that exceeded the central bank’s comfort zone of about 5 percent. Photographer: Dhiraj Singh/Bloomberg
India’s 10-year bond yield touched 9.48 percent yesterday, the highest since 2001, as the nation struggles to curb capital outflows spurred by risks such as a record current-account deficit and speculation the U.S. Federal Reserve could taper stimulus. The RBI since mid-July raised two interest rates and capped cash injections into the banking system to aid the rupee, steps that risk hurting expansion in Asia’s No. 3 economy.
“The long-end yields reacted too much and that was, probably, not the objective,” said Prasanna Ananthasubramanian, an economist at ICICI Securities Primary Dealership Ltd. in Mumbai. “There are other objectives that the RBI has to worry about, like government borrowing costs and the impact on the economy.”
Bank Shares
Ten-year government bonds rallied the most since March 2009, with the yields plunging 60 basis points to 8.30 percent today, according to data compiled by Bloomberg. The S&P BSE Bankex index, a gauge of 13 lenders, surged 5.2 percent as of 10:10 a.m. in Mumbai, the biggest gain since May 2009.
The rupee weakened 0.2 percent to 63.335 per dollar and has tumbled about 15 percent in the past six months to a record low. The S&P BSE Sensex index climbed the most in a week.
The central bank said a review of the measures since mid-July suggests the “immediate objective of raising the short-term interest rates has substantially been achieved.”
The issue of cash management bills will be calibrated going forward, “including scaling it down as may be necessary,” the RBI said. The central bank last month increased both the marginal standing facility rate and the bank rate by 200 basis points to 10.25 percent. It has also tightened daily reserve requirements.
Overnight Rate
The interbank overnight lending rate has surged more than 300 basis points, or 3 percentage points, to 10.25 percent since the end of June. The 10-year yield has jumped 86 basis points in the same period, while that on the two-year securities soared 2.34 percentage points, according to data compiled by Bloomberg.
The RBI also allowed lenders to move a larger portion of their government bond holdings to the so-called held-to-maturity category so they won’t have to show losses when prices of the securities fall.
State Bank of India, the country’s largest, led the rally in lenders’ stocks in Mumbai.
“Investor sentiment got a boost from the measures,” said Jisha Nair, Mumbai-based banking analyst at BoB Capital Markets Ltd. “The surge in shares may not be sustainable as they are staring at losses on government and company bond holdings for the year even after the relaxation.”
State Bank of India (SBIN) advanced 4.1 percent to 1,617.30 rupees, while Yes Bank Ltd. jumped 15 percent to 278.80 rupees and IndusInd Bank Ltd. rallied 12 percent to 376.50 rupees.
Sustainable Level
The current-account gap widened to 4.8 percent of gross domestic product in the 12 months ended March. The RBI estimates the sustainable level is 2.5 percent of GDP.
The plunge in the rupee threatens to stoke the cost of imports such as oil, adding to price pressures.
Consumer prices rose 9.64 percent in July from a year earlier. Another gauge based on wholesale prices advanced 5.79 percent, a five-month high that exceeded the central bank’s comfort zone of about 5 percent.
India’s economy may expand 5.5 percent in the year through March 2014, compared with 5 percent in the previous 12-month period, the central bank estimates. That lags behind the 10-year average of about 8 percent.
The nation is suffering as Asia’s role as the world’s growth engine wanes and investors pull out billions of dollars.
Raghuram Rajan, the top adviser in the Finance Ministry since 2012 and a former International Monetary Fund chief economist, becomes the Reserve Bank governor in September. He succeeds Duvvuri Subbarao. The next scheduled monetary-policy review is on Sept. 18.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
And now even the Germans are weighing in...
Indian rupee may crash to 70 per dollar in a month: Deutsche - NDTVProfit.com
Indian rupee may crash to 70 per dollar in a month: Deutsche
The Indian rupee could crash to 70 against the U.S. dollar in a month or so, Deutsche Bank said in a report on Wednesday. The ominous forecast comes at a time when the partially convertible rupee has breached 64 to the dollar to a record low.
"We continue to believe that fundamentally the rupee is undervalued and has overshot its equilibrium level substantially, but as numerous episodes of past currency crises have amply demonstrated, under a scenario of deep pessimism, currencies can overshoot substantially and remain so for a long time," economists at Deutsche Bank wrote in the report.
"India, we fear, is entering such a zone".
Many analysts had forecast in July that the rupee is headed to 65-70 levels, so in a sense the Deutsche Bank's forecast does not ring alarm bells in the current scenario.
In the last week of June, when the rupee was still trading around 60 levels, Nomura's forex valuation analyst had said the rupee can slide all the way to near 70. (Read: Why the rupee may fall to 70 against dollar)
Mohammed Apabhai of Citi had told NDTV in early July that the rupee might stabilize around the mid-60s levels.
But these predictions were supposed to come true over the course of several months and not days. The rupee has crashed nearly 15 per cent since the U.S. Fed first hinted about a possible tapering of its massive bond buying programmed on May 22.
It's no surprise that it's the worst performing currency in Asia and among the worst performing currencies in emerging markets.
Arvind Narayanan, head of sales (treasury & markets) at DBS told NDTV on Tuesday that the depreciation is not a surprise, but the pace of fall in the rupee certainly has stumped economists.
With the rupee trading in an unchartered territory, analysts refuse to put out a specific level. However, considering the over 5 per cent depreciation in the rupee over the last one month, there just might be a case when the rupee overshoots even the 70 mark against the greenback.
In a surprising move, the Reserve Bank on Tuesday said it would buy long-dated government bonds worth Rs. 8,000 crore through an open market operation on August 23 and would decide after that on the amount and frequency of further operations as warranted.
The bond buying comes after a series of liquidity-tightening measures failed to support the rupee although these steps sent interest rates surging.
RBI's latest move helped the rupee post mild gains in the morning and the Sensex soared over 300 points in early trade. However, the rupee slipped soon and markets pared gains.
The rupee dropped to a record low of 64.13 per dollar on Tuesday and was trading at 63.38/45 on Wednesday, weaker than its close of 63.25/26.
Sanjeev Sanyal, global strategist at Deutsche Bank AG told NDTV today that the Reserve Bank should stabilize the rupee and prevent it from spiraling down.
"The danger is you get back into a rupee spiral, with inflation rising because of rupee fall and then rupee weakening further because of the inflation," he added.
Other analysts say unless the government takes steps to address the bigger worries -- a record current account deficit and stuttering growth - it will be difficult to prevent the slide in the rupee.
(With inputs from Reuters)
Indian rupee may crash to 70 per dollar in a month: Deutsche - NDTVProfit.com
Indian rupee may crash to 70 per dollar in a month: Deutsche
The Indian rupee could crash to 70 against the U.S. dollar in a month or so, Deutsche Bank said in a report on Wednesday. The ominous forecast comes at a time when the partially convertible rupee has breached 64 to the dollar to a record low.
"We continue to believe that fundamentally the rupee is undervalued and has overshot its equilibrium level substantially, but as numerous episodes of past currency crises have amply demonstrated, under a scenario of deep pessimism, currencies can overshoot substantially and remain so for a long time," economists at Deutsche Bank wrote in the report.
"India, we fear, is entering such a zone".
Many analysts had forecast in July that the rupee is headed to 65-70 levels, so in a sense the Deutsche Bank's forecast does not ring alarm bells in the current scenario.
In the last week of June, when the rupee was still trading around 60 levels, Nomura's forex valuation analyst had said the rupee can slide all the way to near 70. (Read: Why the rupee may fall to 70 against dollar)
Mohammed Apabhai of Citi had told NDTV in early July that the rupee might stabilize around the mid-60s levels.
But these predictions were supposed to come true over the course of several months and not days. The rupee has crashed nearly 15 per cent since the U.S. Fed first hinted about a possible tapering of its massive bond buying programmed on May 22.
It's no surprise that it's the worst performing currency in Asia and among the worst performing currencies in emerging markets.
Arvind Narayanan, head of sales (treasury & markets) at DBS told NDTV on Tuesday that the depreciation is not a surprise, but the pace of fall in the rupee certainly has stumped economists.
With the rupee trading in an unchartered territory, analysts refuse to put out a specific level. However, considering the over 5 per cent depreciation in the rupee over the last one month, there just might be a case when the rupee overshoots even the 70 mark against the greenback.
In a surprising move, the Reserve Bank on Tuesday said it would buy long-dated government bonds worth Rs. 8,000 crore through an open market operation on August 23 and would decide after that on the amount and frequency of further operations as warranted.
The bond buying comes after a series of liquidity-tightening measures failed to support the rupee although these steps sent interest rates surging.
RBI's latest move helped the rupee post mild gains in the morning and the Sensex soared over 300 points in early trade. However, the rupee slipped soon and markets pared gains.
The rupee dropped to a record low of 64.13 per dollar on Tuesday and was trading at 63.38/45 on Wednesday, weaker than its close of 63.25/26.
Sanjeev Sanyal, global strategist at Deutsche Bank AG told NDTV today that the Reserve Bank should stabilize the rupee and prevent it from spiraling down.
"The danger is you get back into a rupee spiral, with inflation rising because of rupee fall and then rupee weakening further because of the inflation," he added.
Other analysts say unless the government takes steps to address the bigger worries -- a record current account deficit and stuttering growth - it will be difficult to prevent the slide in the rupee.
(With inputs from Reuters)
US Dollar / Indian Rupee FX Spot Rate - INR= - Stock Quotes
Oh, it just crashed through 64, now trading at 64.02.
Oh, it just crashed through 64, now trading at 64.02.
CNBC real time data on the value of the Rupee can be found here.
US Dollar / Indian Rupee FX Spot Rate - INR= - Stock Quotes
US Dollar / Indian Rupee FX Spot Rate - INR= - Stock Quotes
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