drunken-monke
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Economic crisis in India 2013 | ALL Updates & News
- Thread starter beijingwalker
- Start date
J.P. MorganJPM has downgraded Indian shares to neutral from overweight, warning that they will continue to underperform if the rupees slide endures.
Indias rupee and Indonesias rupiah are leading emerging market currencies lower, and currencies are driving equity markets, Adrian Mowat, J.P. Morgans chief Asian and emerging market equity strategist, said in a note.
The rupee has plunged to new lows in recent days, hitting a record 64.04 to the U.S. dollar Tuesday morning. The rupiah fell to a four-year low of 10,520 to the dollar on Monday.
Investors are asking who will fund their current account deficits, Mr. Mowat said, adding that Indias current account deficit is around 5.1% of gross domestic product, while Indonesias is around 2.1%.
Late last week, Indonesias central bank said the current account deficit widened to $9.8 billion in the second quarter through June from $5.8 billion in January-March. In the three months through March, Indias current account deficit was $18.1 billion, according to the Reserve Bank of India, the countrys central bank.
Among emerging markets, J.P. Morgan has a zero weight rating on Indonesia as the risk reward between a lower rupiah against higher equities is so poor. The investment bank has upgraded China to neutral, while Mexico, Colombia, Taiwan, Thailand, the Philippines and Malaysia are overweight. Brazil and South Africa are underweight.
Mr. Mowat said the India downgrade has come late. We acknowledge this is reactive rather than proactive.
Our OW [overweight] case was less fiscal drag and a monetary stimulus leading to a modest cyclical acceleration in 2H13. The move in the rupee has overwhelmed this, he said, adding that Indias policy options are limited and reforms and technical measures to support the currency havent worked.
Part of the problem is Indias general election due by May next year as the government is wary of upsetting voters as polls approach.
The IMF [International Monetary Fund] would typically prescribe higher interest rates to suppress domestic demand and lower imports in order to address the current account deficit. This option is politically unpalatable with next years general election, Mr. Mowat said.
He suggests that India could completely open its bond markets, which would encourage inflows into Indian bonds and signal economic liberalization. If this stabilizes the rupee then Indian equities are likely to rally, led by the banks which are cheap relative to their valuation history, he said.
The strain on emerging market currencies is likely to continue though, as the U.S. Federal Reserve begins its tapering program, or scaling back its stimulus measures. Our base case is the Fed tapers asset purchases from September, Mr. Mowat said.
He added that markets have been pricing in the tapering since May, which was when the Fed started discussing plans to reduce its monthly bond purchases. In that period, the rupee has fallen nearly 16%.
J.P. Morgan Downgrades Indian Shares - India Real Time - WSJ
Indias rupee and Indonesias rupiah are leading emerging market currencies lower, and currencies are driving equity markets, Adrian Mowat, J.P. Morgans chief Asian and emerging market equity strategist, said in a note.
The rupee has plunged to new lows in recent days, hitting a record 64.04 to the U.S. dollar Tuesday morning. The rupiah fell to a four-year low of 10,520 to the dollar on Monday.
Investors are asking who will fund their current account deficits, Mr. Mowat said, adding that Indias current account deficit is around 5.1% of gross domestic product, while Indonesias is around 2.1%.
Late last week, Indonesias central bank said the current account deficit widened to $9.8 billion in the second quarter through June from $5.8 billion in January-March. In the three months through March, Indias current account deficit was $18.1 billion, according to the Reserve Bank of India, the countrys central bank.
Among emerging markets, J.P. Morgan has a zero weight rating on Indonesia as the risk reward between a lower rupiah against higher equities is so poor. The investment bank has upgraded China to neutral, while Mexico, Colombia, Taiwan, Thailand, the Philippines and Malaysia are overweight. Brazil and South Africa are underweight.
Mr. Mowat said the India downgrade has come late. We acknowledge this is reactive rather than proactive.
Our OW [overweight] case was less fiscal drag and a monetary stimulus leading to a modest cyclical acceleration in 2H13. The move in the rupee has overwhelmed this, he said, adding that Indias policy options are limited and reforms and technical measures to support the currency havent worked.
Part of the problem is Indias general election due by May next year as the government is wary of upsetting voters as polls approach.
The IMF [International Monetary Fund] would typically prescribe higher interest rates to suppress domestic demand and lower imports in order to address the current account deficit. This option is politically unpalatable with next years general election, Mr. Mowat said.
He suggests that India could completely open its bond markets, which would encourage inflows into Indian bonds and signal economic liberalization. If this stabilizes the rupee then Indian equities are likely to rally, led by the banks which are cheap relative to their valuation history, he said.
The strain on emerging market currencies is likely to continue though, as the U.S. Federal Reserve begins its tapering program, or scaling back its stimulus measures. Our base case is the Fed tapers asset purchases from September, Mr. Mowat said.
He added that markets have been pricing in the tapering since May, which was when the Fed started discussing plans to reduce its monthly bond purchases. In that period, the rupee has fallen nearly 16%.
J.P. Morgan Downgrades Indian Shares - India Real Time - WSJ
thesolar65
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But your posts reveal something quite opposite to what you are claiming..
He has got dual Personality...and may be got two IDs here on the forum..
Chinese-Dragon
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Having multiple ID's on this forum leads to a "permanent ban".
So if you think I have another account, just report it to the mods and you can get rid of another India-basher right away.
Of course, I'm not that stupid to have multiple accounts, but you can try it anyway. It will take only 5 seconds of your time to submit a report, so you have nothing to lose.
As for dual personalities, I am friendly to everyone, until someone bashes China, after which I am no longer friendly. If you consider that dual personalities then go ahead.
+4vsgorillas-Apebane
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I think that Chinese members here would not revel in schadenfreude had the Indians had not trashed our image I tne first place. According to them we have been ollapsing since this forum opened in 2005.
Chinese-Dragon
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Or India could have a really courageous leader, who will push through politically unpopular but necessary structural reforms in India's economy.
Then India could be running on surpluses instead of deficits. And they won't have to worry about constantly having to cover their deficits every month.
OrionHunter
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StarCraft_ZT
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Where is Turkey? Just BB...
Basic Law of everything, be it love, hate, money, health, economy or anything else you can think of...what goes up must come down
anonymus
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Ok Ok, but you don't have to rub it in!!
We are genuinely Fücked this time.
fallstuff
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Indias rupee plummeted past 64 per dollar for the first time on concern foreign outflows will accelerate as the Federal Reserve prepares to trim monetary stimulus. Stocks and government bonds fell.
Rupee Drops to Record on Fed Tapering Concern - Bloomberg
Rupee Drops to Record on Fed Tapering Concern - Bloomberg
SirHatesALot
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Nice editing of the Title False Flaggers Superior Chinese
India in uproar over rupee’s fall - The Washington Post
India in uproar over rupee's fall
By Rama Lakshmi, Tuesday, August 20, 6:50 AM E-mail the writer
Almost every day, Indians are waking up to alarming headlines about their currency hitting a historic low or a lifetime low. Last week, on what was dubbed Black Friday, the currency sank to a record level, and Indian media carried pictures of workers in Mumbais financial district clutching their heads in dismay.
With the countrys stock market tumbling, the rupee fell further Tuesday. It is down about 15 percent against the U.S. dollar since May from more than 53 rupees to the dollar to more than 63.
The currency has become a powerful metaphor for Indias rapidly sliding economy. The rupee has triggered countless jokes, political mudslinging, and like everything in India, it has generated astrological speculation, too.
Some superstitious Indians have blamed the slump on the new symbol for the rupee, which was unveiled last year. Experts on Vastu Shastra, an ancient Indian design practice like feng shui, say that the symbol debuted on a day inauspicious for the stars and that the horizontal line across the symbol appears to slit the throat of the currency.
Some economists, meanwhile, blame the rupees recent misfortune on plans by the U.S. Federal Reserve to begin scaling back its massive effort to stimulate the U.S. economy, which has tended to keep the dollar weak compared with other currencies.
And some blame the Indian governments mismanagement of the economy.
India is grappling with a huge budget deficit, and the country has foreign exchange reserves to pay for only seven months of imports. Economic growth slowed to a dismal 5 percent last year, the lowest in a decade. Prices are spiraling. Foreign investors are no longer lining up; some are even packing up.
To stem the decline in the rupee, the government raised short-term interest rates, capped overseas investment by Indian companies and announced weekly auction of government bonds, worth about $3.6 billion.
But the government, which is nearing the end of its term, appears to have woken up only after about two years of what critics have called policy paralysis. Even the appointment of a high-profile economist from the University of Chicago and the World Bank, Raghuraman Rajan, as the chief of the Reserve Bank of India this month did not help calm the rupee.
Powerless so far to rein in the wayward rupee, the government even pleaded with gold-obsessed Indians to stop buying the metal because it drains foreign exchange reserves.
If I have one wish which the people of India can fulfill, it is Don't buy gold, Finance Minister P. Chidambaram told reporters in June. Every ounce of gold is imported. You pay in rupees. We have to provide dollars.
Five years ago, the rupees value was rising like never before, propelled by a soaring economy. What was described in the media here as the roaring rupee became a symbol of a proud economy marching toward its ambition of becoming a global powerhouse.
The rupees fall might be harming the countrys collective psyche, but the greatest impact has been felt at the street level, as the countrys poor and middle class are struggling with the resulting inflation in food and fuel prices, as imports become more expensive.
Shankkar Aiyar, an economic commentator, said the governments pursuit of policies that are politically popular but fiscally irresponsible has wrecked the script of the India story, and crippled the potential of what was once touted at Davos as the fastest growing free market democracy.
In the run-up to national elections, scheduled for next year, the rupee has also become a campaign issue.
When India got independence, the rupee was at par with the dollar, one for one, aspiring opposition politician Narendra Modi said at a public meeting last week, launching an attack on the government. Sixty-seven years down the line, where is the rupee now? . . . Today, Indias finance ministers age is equal to one dollar.
Rajdeep Sardesai, the host of a prime-time news debate on CNN-IBN, was equally gloomy Friday. It is increasingly apparent that the falling rupee now mirrors the state of our republic, graying before its time, he said.
India in uproar over rupee's fall
By Rama Lakshmi, Tuesday, August 20, 6:50 AM E-mail the writer
Almost every day, Indians are waking up to alarming headlines about their currency hitting a historic low or a lifetime low. Last week, on what was dubbed Black Friday, the currency sank to a record level, and Indian media carried pictures of workers in Mumbais financial district clutching their heads in dismay.
With the countrys stock market tumbling, the rupee fell further Tuesday. It is down about 15 percent against the U.S. dollar since May from more than 53 rupees to the dollar to more than 63.
The currency has become a powerful metaphor for Indias rapidly sliding economy. The rupee has triggered countless jokes, political mudslinging, and like everything in India, it has generated astrological speculation, too.
Some superstitious Indians have blamed the slump on the new symbol for the rupee, which was unveiled last year. Experts on Vastu Shastra, an ancient Indian design practice like feng shui, say that the symbol debuted on a day inauspicious for the stars and that the horizontal line across the symbol appears to slit the throat of the currency.
Some economists, meanwhile, blame the rupees recent misfortune on plans by the U.S. Federal Reserve to begin scaling back its massive effort to stimulate the U.S. economy, which has tended to keep the dollar weak compared with other currencies.
And some blame the Indian governments mismanagement of the economy.
India is grappling with a huge budget deficit, and the country has foreign exchange reserves to pay for only seven months of imports. Economic growth slowed to a dismal 5 percent last year, the lowest in a decade. Prices are spiraling. Foreign investors are no longer lining up; some are even packing up.
To stem the decline in the rupee, the government raised short-term interest rates, capped overseas investment by Indian companies and announced weekly auction of government bonds, worth about $3.6 billion.
But the government, which is nearing the end of its term, appears to have woken up only after about two years of what critics have called policy paralysis. Even the appointment of a high-profile economist from the University of Chicago and the World Bank, Raghuraman Rajan, as the chief of the Reserve Bank of India this month did not help calm the rupee.
Powerless so far to rein in the wayward rupee, the government even pleaded with gold-obsessed Indians to stop buying the metal because it drains foreign exchange reserves.
If I have one wish which the people of India can fulfill, it is Don't buy gold, Finance Minister P. Chidambaram told reporters in June. Every ounce of gold is imported. You pay in rupees. We have to provide dollars.
Five years ago, the rupees value was rising like never before, propelled by a soaring economy. What was described in the media here as the roaring rupee became a symbol of a proud economy marching toward its ambition of becoming a global powerhouse.
The rupees fall might be harming the countrys collective psyche, but the greatest impact has been felt at the street level, as the countrys poor and middle class are struggling with the resulting inflation in food and fuel prices, as imports become more expensive.
Shankkar Aiyar, an economic commentator, said the governments pursuit of policies that are politically popular but fiscally irresponsible has wrecked the script of the India story, and crippled the potential of what was once touted at Davos as the fastest growing free market democracy.
In the run-up to national elections, scheduled for next year, the rupee has also become a campaign issue.
When India got independence, the rupee was at par with the dollar, one for one, aspiring opposition politician Narendra Modi said at a public meeting last week, launching an attack on the government. Sixty-seven years down the line, where is the rupee now? . . . Today, Indias finance ministers age is equal to one dollar.
Rajdeep Sardesai, the host of a prime-time news debate on CNN-IBN, was equally gloomy Friday. It is increasingly apparent that the falling rupee now mirrors the state of our republic, graying before its time, he said.
India scrambles to stabilize falling rupee as crisis chatter roils markets - The Washington Post
India scrambles to stabilize falling rupee as crisis chatter roils markets
NEW DELHI — Indians returning from abroad bring nearly 3,000 flat screen televisions into the country a day, turning airport luggage belts into revolving electronics displays. A stiff new customs duty aims to sink that popular trade as officials scramble to halt a dizzying plunge in the rupee.
The 36-percent TV tax is the latest in a slew of measures the government has announced to steady the currency and is a sign, critics say, of its increasing desperation. New limits were imposed on the amount of money individuals and companies can invest overseas. Higher taxes were slapped on gold imports. Interest rates on rupee deposits were raised. All to no avail.
The rupee has plumbed new lows against the dollar on a near daily basis, showing the pressure of a current account deficit that has swelled from high import costs. A dollar now buys more than 63 rupees, a decline of 8 percent for the rupee so far this August. The Sensex stock index is down more than 10 percent in the past month. Nearly half that fall was in the past few days.
The government is panicked because the slumping rupee threatens to worsen two important barometers of the nation’s financial standing — its budget, already in deficit because of subsidized oil imports, and the overseas trade account, also deeply in the red.
“These are really piecemeal efforts,” said Anjalika Bardalai, a senior Asia analyst at the London-based consulting firm Eurasia Group. “They haven’t engaged in a big-bang reform to deal with structural problems still affecting the economy.”
Finance Minister P. Chidambaram defended the government’s efforts in parliament on Tuesday. To halt the rupee’s decline, he said the government is trying to stem demand for nonessential imports while also encouraging inflows of money.
Pessimists fear India could suffer a funding crisis like the one it experienced in 1990-91 when international investors took fright at its shaky finances. But with the central bank now stocked with $280 billion of foreign currency reserves, most experts think that scenario is unlikely.
What’s more probable is an extended period of India failing to generate fast-enough growth to either alleviate the poverty that still afflicts many of its 1.2 billion people or create enough new jobs for a population where a majority is under 30 years old and some 13 million Indians reach working age each year.
Some of the fall in India’s stock market stems from jitters about the U.S. Federal Reserve scaling back its unprecedented monetary stimulus. The Fed’s low interest rate campaign drove money into stock markets worldwide in search of higher returns, a phenomenon that is now reversing.
The Indian economy, Asia’s third largest, grew 5 percent in the financial year ended March, its slowest in a decade and well off the 8 percent pace it had averaged over those 10 years.
Growth suffered under the weight of high inflation, weak investment, corruption scandals and low business confidence. Efforts to open the country wider to foreign investment have been applauded but have yet to take deeper root.
“Five percent growth is not adequate for India, that’s for sure,” said Samiran Chakraborty, head of research at Standard Chartered Bank, South Asia. “With the kind of demographic profile we have, it’s quite likely we will not be able to satisfy the population with only 5 percent.”
In a small way, the soon to be squelched trade in flat screen TVs illustrates India’s business and economic challenges. Despite the massive size of its market and high import tariffs, local companies have not become significant players in the consumer electronics manufacturing industry.
Buying an imported 32-inch LED television costs up to $474 in New Delhi compared with $355 in Dubai or $330 in Bangkok, making the duty free exemption for individual air travelers a popular way to get a cheaper TV into India. That loophole closes Aug. 26. The Consumer Electronics and Appliances Manufacturers Association estimated 1 million TVs were brought into the country each year by individuals.
India’s prime minister is insisting the tough times are temporary, and that growth could recover to its previous breakneck levels.
“We are trying our best to remedy the situation,” Manmohan Singh said in last week’s Independence Day address, attributing the economic malaise to the global slowdown.
The growth of past years “shows what we are capable of,” he said.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
India scrambles to stabilize falling rupee as crisis chatter roils markets
NEW DELHI — Indians returning from abroad bring nearly 3,000 flat screen televisions into the country a day, turning airport luggage belts into revolving electronics displays. A stiff new customs duty aims to sink that popular trade as officials scramble to halt a dizzying plunge in the rupee.
The 36-percent TV tax is the latest in a slew of measures the government has announced to steady the currency and is a sign, critics say, of its increasing desperation. New limits were imposed on the amount of money individuals and companies can invest overseas. Higher taxes were slapped on gold imports. Interest rates on rupee deposits were raised. All to no avail.
The rupee has plumbed new lows against the dollar on a near daily basis, showing the pressure of a current account deficit that has swelled from high import costs. A dollar now buys more than 63 rupees, a decline of 8 percent for the rupee so far this August. The Sensex stock index is down more than 10 percent in the past month. Nearly half that fall was in the past few days.
The government is panicked because the slumping rupee threatens to worsen two important barometers of the nation’s financial standing — its budget, already in deficit because of subsidized oil imports, and the overseas trade account, also deeply in the red.
“These are really piecemeal efforts,” said Anjalika Bardalai, a senior Asia analyst at the London-based consulting firm Eurasia Group. “They haven’t engaged in a big-bang reform to deal with structural problems still affecting the economy.”
Finance Minister P. Chidambaram defended the government’s efforts in parliament on Tuesday. To halt the rupee’s decline, he said the government is trying to stem demand for nonessential imports while also encouraging inflows of money.
Pessimists fear India could suffer a funding crisis like the one it experienced in 1990-91 when international investors took fright at its shaky finances. But with the central bank now stocked with $280 billion of foreign currency reserves, most experts think that scenario is unlikely.
What’s more probable is an extended period of India failing to generate fast-enough growth to either alleviate the poverty that still afflicts many of its 1.2 billion people or create enough new jobs for a population where a majority is under 30 years old and some 13 million Indians reach working age each year.
Some of the fall in India’s stock market stems from jitters about the U.S. Federal Reserve scaling back its unprecedented monetary stimulus. The Fed’s low interest rate campaign drove money into stock markets worldwide in search of higher returns, a phenomenon that is now reversing.
The Indian economy, Asia’s third largest, grew 5 percent in the financial year ended March, its slowest in a decade and well off the 8 percent pace it had averaged over those 10 years.
Growth suffered under the weight of high inflation, weak investment, corruption scandals and low business confidence. Efforts to open the country wider to foreign investment have been applauded but have yet to take deeper root.
“Five percent growth is not adequate for India, that’s for sure,” said Samiran Chakraborty, head of research at Standard Chartered Bank, South Asia. “With the kind of demographic profile we have, it’s quite likely we will not be able to satisfy the population with only 5 percent.”
In a small way, the soon to be squelched trade in flat screen TVs illustrates India’s business and economic challenges. Despite the massive size of its market and high import tariffs, local companies have not become significant players in the consumer electronics manufacturing industry.
Buying an imported 32-inch LED television costs up to $474 in New Delhi compared with $355 in Dubai or $330 in Bangkok, making the duty free exemption for individual air travelers a popular way to get a cheaper TV into India. That loophole closes Aug. 26. The Consumer Electronics and Appliances Manufacturers Association estimated 1 million TVs were brought into the country each year by individuals.
India’s prime minister is insisting the tough times are temporary, and that growth could recover to its previous breakneck levels.
“We are trying our best to remedy the situation,” Manmohan Singh said in last week’s Independence Day address, attributing the economic malaise to the global slowdown.
The growth of past years “shows what we are capable of,” he said.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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