สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 6 กันยายน 2556

BRICS warns against US monetary stimulus withdrawal

Echoing the views articulated by Prime Minister Manmohan Singh, the BRICS nations today warned that imminent withdrawal of monetary stimulus by the US could have "unintended negative spillovers" on the global economy. Prime Minister Singh had emphasised the need for an "orderly exit" from unconventional monetary policies being pursued by the developed world to avoid "damaging" growth prospects of the developing world. Later addressing the G-20 summit, Singh attacked the developed countries for unconventional monetary expansion and sudden moves for its reversal triggering currency volatility in countries like India. He asked the G-20 to show collective commitment for restoring robust growth in emerging markets.He also called for extensive consultations within the G-20 grouping to tackle the current currency crisis. Singh declared that India has been affected by currency volatility in the past few weeks and was taking steps to finance the current account deficit (CAD) in an environment that is seen to be friendly for stable foreign capital flows. The Prime Minister announced that India would continue to work within the framework of an open economy to restore growth to earlier levels. With the five countries in the BRICS bloc hard hit by slow economic growth, host Russia and China, also articulated their concerns separately about the planned 'tapering' of the US Federal Reserve's multi-billion dollar monetary stimulus policy.

(Source: Business Standard)

As bond yields rise in the US, RBI under pressure to raise rates in India

The yield on 10-year US government bonds have risen to two-year highs and are just shy of the 3% mark as investors worry about a likely withdrawal of monetary stimulus by the Federal Reserve. Including the 5 basis point rise on Friday, bond yields in US are now up 131 basis points from their lows in May this year. Yields refer to the interest income that a bond holder receives if they buy it at current price and hold it to maturity. Experts say that this will put pressure on the Reserve Bank of India to raise interest rates so as to maintain the spread between the bond yield in India and US. The yield spread –the difference in the interest rate that a Indian bond pays over US government bond – has narrowed in recent weeks as yields in India have failed to keep pace with the rise in US.

(Source: Business Standard)

Politicians have mismanaged Indian economy for the last 50 years: Marc Faber

India has pursued poor economic policies and the politicians have mismanaged economy for the last 50 years, said Swiss investor and editor of the 'Gloom Boom & Doom' report Marc Faber. According to Faber, India needs to take some tough decisions to pull itself out of the slowdown. "India is underperforming significantly in dollar terms," he said. While attacks on Syria could lead to higher crude oil prices, Faber said that the pain of higher oil prices is magnified by rupee weakness in India.

Asked about the Indian stock markets, Faber said, "The bearish trend in Indian equities may last longer." Indian stocks have fallen because of rupee weakness, he added. Faber is of the opinion that one is 'approaching a buying range for Indian equities'. On the idea of investing in gold, Faber said that he does not advise investors to get into the precious metal. "Gold isn't a very good investment option for a long period of time," Analysts feel GDP growth in second quarter slowed more than expected and things are likely to get worse in the third quarter when government spending, which maintained a blistering pace, will probably slow down as concerns about fiscal slippage increase. They say the benefits of good monsoon are likely to be more than offset by the sharp depreciation of the rupee.

(Source: Economic Times)

Rupee will correct, fiscal deficit target will be met, assures Chidambaram

Finance minister P Chidambaram said on Thursday the rupee will correct over a period of time as steps were being taken to stabilise it. In a discussion on the demand for grants in the Lok Sabha, Chidambaram also said that India's fiscal deficit target of 4.8% of the GDP for FY14 was a ‘red line’ and will not be breached. The rupee, one of the worst-performing currencies in emerging markets over the past few months, has been volatile and on a constant slide since the US Federal Reserve announced the tapering off of its quantitative easing programme. It touched an all-time low of 68.80 to a dollar last month, but has strengthened since then.

(Source: Financial Times)

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