Economic crisis in India 2013 | ALL Updates & News

[Guynextdoor2]

The FOREX reserves are in some Swiss Bank.

Stop being simplistic

 

[Secur]

@Chinese-Dragon

Mate , would the outcome be different if the Indian economy was export based and the Govt didn't implement all those strict and stringent measures for foreign investors doing business in India ?

 

[Chinese-Dragon]

@Chinese-Dragon

Mate , would the outcome be different if the Indian economy was export based and the Govt didn't implement all those strict and stringent measures for foreign investors doing business in India ?

If India was a trade surplus nation, they wouldn't have this problem of having to fund their deficits with Foreign inflows and debt. Since they wouldn't have a deficit to begin with.

And in order to take advantage of a falling currency, you need a large manufacturing base, with (importantly) most of the supply chain within the country itself. So you don't need to import components and raw materials from overseas, which will be more expensive with a weaker currency.

There is no way to substitute oil, that will always need to be imported. If oil is more expensive due to a falling currency, prices in the economy will increase all over, there is not much way to avoid that.

Making it easier for foreign investors would certainly help to finance the deficit in the short-term, but doesn't get rid of the structural problem that is leading to the deficit in the first place. For that you need reforms.

 

[Beast]

Last updated: August 19, 2013 7:28 pm

Rupee tumbles as India concerns grow and emerging markets turmoil builds

By Amy Kazmin in New Delhi, Robin Wigglesworth in London, and James Crabtree in Mumbai

Rupee tumbles as India concerns grow and emerging markets turmoil builds - FT.com

The 20 biggest emerging market currencies tumbled against the US dollar on Monday with India’s rupee particularly badly hit amid mounting market turmoil in the developing world.

The rupee slumped to a fresh all-time low against the backdrop of deepening concerns over the government’s economic management. The 2.4 per cent fall to a record 63.2 to the dollar took the currency’s slump against the US dollar this year to 12 per cent.

Monday’s moves in India came alongside grim news from emerging economies and further evidence of how the US Federal Reserve’s plan to end its monetary stimulus has continued to hit stocks, bonds and currencies across the developing world.

Over the past six months, China’s heavily managed renminbi is the only significant emerging market currency to have managed to hold its ground against a resurgent dollar.

Fears over the impact of the Fed’s plans to scale down its bond purchases have been compounded by slowing economic growth and deteriorating fiscal fundamentals in many countries. Investors are particularly concerned by states with current account deficits that have been plugged by inflows of more flighty investor capital, rather than stickier foreign direct investment.

“It’s the current account deficit countries that are in the most trouble,” said Angus Halkett, a bond fund manager at Stone Harbor Investment Partners. “The market is becoming a lot choosier where it puts its money, and some countries are going to find it tough.”

Indonesia provided evidence of that on Monday as its main equities index fell by 5.6 per cent after the country’s central bank reported on Friday that its current account deficit had widened sharply in the second quarter of this year.

New numbers on Monday also showed how the growth equation is changing for emerging economies with Thailand’s economy slipping into a technical recession thanks to weak exports and sluggish domestic demand.

But India remains the biggest concern for many investors with the pessimism there driven by questions about the government’s economic management following its introduction of a number of failed measures to support the currency, some of which appear to have exacerbated the country’s problems.

Only the Brazilian real and the South African rand have recorded bigger declines than the rupee in 2013. India’s benchmark Sensex share index also fell by nearly 2 per cent while 10-year bond yields pushed above 9 per cent, their highest level since the 2008 financial crisis.

The burgeoning crisis in India has also become increasingly political with senior figures from the opposition Hindu nationalist Bharatiya Janata party declaring on Monday that the only way out was for the government to call early elections, now due to be held by May 2014.

“The government seems to have lost control over the economy. Nothing they are doing is helping,” Yashwant Sinha, a former BJP finance minister and party leader, told the Financial Times. “There is a trust deficit, a crisis of confidence that can only be sorted out through the political process.” Calling for new elections would “stabilise the markets”, he said.

The call for an early poll was echoed by some close to the Congress party. Sanjaya Baru, a former adviser to Prime Minister Manmohan Singh, said early elections would remove the sense of drift hanging over the economy.

“People are just watching and waiting. What India needs is to revive investment, but I don’t see that investment revival until a new government is in place,” he said.

Mr Singh, an economist, over the weekend sought to soothe nerves by insisting that India was far from a replaying of the 1991 balance of payments crisis. His supporters argue that, with foreign reserves now able to cover six months of imports versus just two months on the cusp of the 1991 crisis, India is in a much better place than it was then to handle market turmoil.

But analysts said the government response remained insufficient.

Jahangir Aziz, chief Asia economist for JPMorgan, said the government needed to do much more to win over the markets. “They are giving a sense that they don’t have any options left when in reality they do have options and they need to put them on the table,” he said.

The government last week issued capital controls on overseas investments by Indian companies and individuals to staunch currency outflows. But it needed to attract capital, Mr Aziz said, through measures including liberalising restrictive rules that prevent long-term foreign investors from buying Indian government and corporate bonds.

“They have only taken steps to stop money from going out. They have to worry about bringing money in,” he said.

China rmb is able to hold its ground against the US dollar becos we got 3 trillion reserves while Indian got nothing..

 

[rockstarIN]

Damn, with people like George Soros around, it makes me happy that the RMB is on a "managed floating" exchange rate, rather than a free-floating one.



People lost confidence in the Rupee, due to poor economic fundamentals such as a large and persistent current account deficit, high debt-to-GDP ratio and a massive fiscal deficit. Not to mention slowing growth and rising unemployment.

The worst thing though, is when the Indian government tried to save the Rupee using half-measures. That just looked desperate, and the markets took it as a sign of panic and a chronic inability to fix the problems.

When trying to intervene in currency markets, you really have to go full-measures, and the Indian Congress government doesn't seem to be able to do that. More importantly you need structural reforms to fix the economic fundamentals.

@CD

You only put few stuff only.

-One of the main reason Rupee is falling just because Dollar is gaining aka US economy. If you look, several other currencies such as Brazil currency is down more than Indian currency.
-EU also picking up, the pressure is on on INR.
-Butterfly capital aka inflow thru FIIs is going back to USA and EU.
-Current Account deficit.
-Wrong policies by the govt.
-Scams like coal etc. Due to this India had to import coal which we have enough reserves. Due to S.court order, we were not able to produce from locally let to import which lowered foreign reserves. I would put this reason as govt. inefficiency.
-Indian demand (greed) for gold, no other national have such madness.
-Gas price going up, we ere not able to cash on the lower demand few years ago.
-Lack of political will to help/improvise the domestic production and consumption.

the list is on.

 

[drunken-monke]

Dear @Chinese-Dragon , Yesterday I was watching a debate on the Depreciation of Rupee on NDTV.. The reporter argued that though many of the currencies falling agaist dollar due to american economy getting strong.. I need to ask you is it so? Another question, he also mentioned about Chinese Yuan getting more and more stronger since late 2010 till date and still continue to grow.. Is it the current account balance and more export making yuan sustain the growth??

Please let me get your response..

 

[by78]

Boon in disguise , now things will be manufactured in India , instead of import. like mobile, TV , and tablets and laptops.

What is wrong with you?

Has India reformed her land acquisition regulations so that manufacturers can easily obtain land on which to build factories?
Has India reformed her education system to produce qualified workers to man factories?
Has India address her electricity shortage to provide continuous supply to factories?

Things don't fall into your lap by magic or wishful thinking.

Manufacturing FDI has to be earned through building good infrastructure, setting up business friendly regulations and favorable taxation regimes, providing readily available land, making available an efficient transport network, and providing literate and trained workers to man the factories.

India has done none of the above.

India cannot afford any of the above.

India has again missed an important boat.

India is f.u.c.k.e.d by her incompetent government.

Until all of the above change, India remains f.u.c.k.e.d.-up-beyond-all-repair (FUBAR).

END OF.

 

[BDforever]

the real competition is seeing who gets back to 50 first..

wtf is going on with rupee ?

Dear @Chinese-Dragon , Yesterday I was watching a debate on the Depreciation of Rupee on NDTV.. The reporter argued that though many of the currencies falling agaist dollar due to american economy getting strong.. I need to ask you is it so? Another question, he also mentioned about Chinese Yuan getting more and more stronger since late 2010 till date and still continue to grow.. Is it the current account balance and more export making yuan sustain the growth??

Please let me get your response..

yes chinese yuan is getting stronger but china is holding the growth rate by pegging it with US dollar.

 

[Ayush]

wtf is going on with rupee ?

http://www.defence.pk/forums/indian...is-rupee-suffers-worst-single-day-fall-4.html

 

[SarthakGanguly]

I am a simple man. My ideas are simplistic.

Stop being simplistic

 

[by78]

@CD

-One of the main reason Rupee is falling just because Dollar is gaining aka US economy. If you look, several other currencies such as Brazil currency is down more than Indian currency.

WRONG. Indian Rupee is the worst performing currency out of all major developing economies in the past two years.

 

[BDforever]

http://www.defence.pk/forums/indian...is-rupee-suffers-worst-single-day-fall-4.html

the thread has been closed

 

[Ayush]

the thread has been closed

actually merged..

 

[Chinese-Dragon]

yes chinese yuan is getting stronger but china is holding the growth rate by pegging it with US dollar.

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.

 

[rockstarIN]

WRONG. Indian Rupee is the worst performing currency out of all major developing economies in the past two years.

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.