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India on the brink of its own financial crisis

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India on the brink of its own financial crisis

In a reprise of the 1997-98 Asian crisis, India's stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country

India's financial woes are rapidly approaching the critical stage. The rupee has depreciated by 44% in the past two years and hit a record low against the US dollar on Monday. The stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country.

In a sense, this is a classic case of deja vu, a revisiting of the Asian crisis of 1997-98 that acted as an unheeded warning sign of what was in store for the global economy a decade later. An emerging economy exhibiting strong growth attracts the attention of foreign investors. Inward investment comes in together with hot money flows that circumvent capital controls. Capital inflows push up the exchange rate, making imports cheaper and exports dearer. The trade deficit balloons, growth slows, deep-seated structural flaws become more prominent and the hot money leaves.

The trigger for the run on the rupee has been the news from Washington that the Federal Reserve is considering scaling back - "tapering" - its bond-buying stimulus programme from next month. This has consequences for all emerging market economies: firstly, there is the fear that a reduced stimulus will mean weaker growth in the US, with a knock-on impact on exports from the developing world. Secondly, high-yielding currencies such as the rupee have benefited from a search for yield on the part of global investors. If policy is going to be tightened in the US, then the dollar becomes more attractive and the rupee less so.

But while the Indonesian rupee and the South African rand are also feeling the heat, it is India – with its large trade and budget deficits – that looks like the accident most likely to happen. On past form, emerging market crises go through three stages: in stage one, policymakers do nothing in the hope that the problem goes away. In stage two, they cobble together some panic measures, normally involving half-baked capital controls and selling of dollars in an attempt to underpin their currencies. In stage three, they either come up with a workable plan themselves or call in the IMF. India is on the cusp of stage three.

India on the brink of its own financial crisis | Business | The Guardian

The INR is now at 63,75 to the USD.
 
In stage three, they either come up with a workable plan themselves or call in the IMF.

- Elections are coming and Congress won't go to IMF as it will give opposition a chance. Similarly Congress won't take any hard measures to control the economy which means this burden will be transferred to the next Govt. Meanwhile economy will sink more.
 
- Elections are coming and Congress won't go to IMF as it will give opposition a chance. Similarly Congress won't take any hard measures to control the economy which means this burden will be transferred to the next Govt. Meanwhile economy will sink more.

India will carry huge budden when purchase weapons from overseas. Some projects importation will be set aside due to budget problem.

anyway, its a good chance for India to enhance export volume.
 
Congress should step down, it put India economy in a totally mess. Now the new emerging markets face a big challenge, India might have to face a credt rating downgrade.
 
India will carry huge budden when purchase weapons from overseas. Some projects importation will be set aside due to budget problem.

anyway, its a good chance for India to enhance export volume.

Indian military will continue arms import to bolster its military capability even if it means at least 50 million Indians will die out of starvation.

Nobody is gonna stop them... nobody is gonna mess with armed men.

Congress should step down, it put India economy in a totally mess. Now the new emerging markets face a big challenge, India might have to face a credt rating downgrade.

are you Chinese or Indian?

If you are Chinese, then think about developing your own country... let the Indians take care of their own country.

keep silence and watch the show.
 
Indian military will continue arms import to bolster its military capability even if it means at least 50 million Indians will die out of starvation.

Nobody is gonna stop them... nobody is gonna mess with armed men.



are you Chinese or Indian?

If you are Chinese, then think about developing your own country... let the Indians take care of their own country.

keep silence and watch the show.

Well we don't have to import all the time if our government was serious about national development.

We are indeed in the most perilous of situations after 1990.

Thanks to Mauni Baba and his Madam.
 
Still remember a India member posted a thread about China economy collapse expectation, but he fails to forsee the future of his own country. Still i don't wanna see India economy collpase because it will reduce BRICS's influence in the world, you arrogant guys should learn a lesson from this.
 
Guess it's time for early elections. About time we settled the question of governance. I suspect Congress will get slaughtered in large sections. I also suspect BJP will come nowhere close to majority- effectively a hung parliament. Pfffffffffffffffff...

Still remember a India member posted a thread about China economy collapse expectation, but he fails to forsee the future of his own country. Still i don't wanna see India economy collpase because it will reduce BRICS's influence in the world, you arrogant guys should learn a lesson from this.

Shoo magoot
 
India is one of the biggest trading partner with China, may other BRICS member countries provide help in some extent.
 
India is one of the biggest trading partner with China, may other BRICS member countries provide help in some extent.

We need to stabilize the currency, investment flow and a host of other things.

The economy has been weakened due to appalling mismanagement by the incumbent and indifferent government in the country.

However, we will stabilize back to growth path in the medium run and BRICS business will continue. :cheers:

The biggest fear ultimately is the fear itself. We need to cautiously tread before we can do major business.
 
India is one of the biggest trading partner with China, may other BRICS member countries provide help in some extent.

Didn't know you cared about India that much!

Dude... most Indians don't care about India, who the hell are you?

Or, are you planning to migrate to India and contest in elections?

I request you to please shut your mouth and get out of India economy related threads!

If possible also take your country out of the BRICS before its too late...
 
Indian Rupee Collapses - Worst Day In 20 Years

Presented with little comment (over our earlier detail) but just to note that around the world there are significant events occurring (even as the US equity market slumbers). So much for the gold coin ban - gold now trades at 4 month highs in Rupee terms.

Today's 1.46 Rupee slump is the largest in absolute terms since 1993... (the largest single-day percentage depreciation since 9/22/2011)...

20130819_INR.jpg


and the last 4 weeks' move is the largest since 1991...

20130819_INR1.jpg


And just for fun, since May 2nd, holders of paper Rupee have lost 18% of their purchasing power while those that held gold instead have seen their 'wealth' appreciate 13% in local purchasing power.
 
kuch nhi hoga indian economy ko. great future ahead for india aftr 2014

We need to be cool headed and make rational decisions in the time of troubles. Because only if we make the rational decisions (I know what you're indicating to :) ), we will come out with bumper benefits later.

Let's not lose hope.

We have been in worse situations earlier and come out of them with flying colours.

I hope the people punish this regime for such anti-national governance.
 
We need to be cool headed and make rational decisions in the time of troubles. Because only if we make the rational decisions (I know what you're indicating to :) ), we will come out with bumper benefits later.

Let's not lose hope.

We have been in worse situations earlier and come out of them with flying colours.

I hope the people punish this regime for such anti-national governance.

agree with you
 
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