inr

Bernanke reaffirms ultra-loose policy stance

Yesterday’s remarks by Fed Chairman Bernanke have put paid to the recent hypothesis that the Fed might be reversing its commitment to an extended period of ultra-loose monetary policy any time soon. His suggestion that wages growth remains subdued because of the weak labour market scuppered speculation that the Fed might need to start raising rates as soon as 2014. Although Bernanke acknowledged the better news on both the labour and housing market fronts, he reaffirmed that the Fed would stay cautious. Read more

27/03/2012 @ 06:45 GMT

Asian currencies enjoying a better time

After a dreadful wobble in the final months of 2011, Asian currencies are enjoying a better time as fresh capital is attracted by the prospect of buying cheaper assets. A tentative improvement in risk appetite has stimulated demand for investment in the emerging world. The Indian rupee, which fell more than 20% vs. the dollar in the five months to end December, is up an impressive 5.1% already for the year-to-date. International investors have been especially keen to purchase Indian bonds in recent weeks. Read more

19/01/2012 @ 10:40 GMT

Disappointment takes over hope

The Financial Times leads today with the cracks in the EU Treaty agreement, but these were already evident even at the start of the week. It seems remarkable that the other eurozone ‘outs’ (such as Denmark, Sweden, as well as UK and others) are only now asking themselves the obvious questions, such as whether budget rules will apply just to eurozone members or all EU members. It’s even more remarkable that there was not greater debate and questioning of this before the EU summit was agreed by all but one of the EU members. Read more

14/12/2011 @ 06:35 GMT

The Indian rupee’s dramatic collapse

At a time when the global investment community is completely transfixed by Europe’s debt crisis and the potentially adverse consequences for the single currency, what has largely escaped attention up until now is the increasing pressure on Asia’s major currencies. Particularly noteworthy is the continuing collapse of the Indian rupee, which overnight fell further to a new record low against the dollar. Since the end of July, the rupee has lost more than 20%; since last Monday, the rupee is down nearly 4%. Read more

13/12/2011 @ 08:43 GMT

Synchronicity concerns

With the latest PMI reading in China back below the crucial 50 level, overnight markets have become more concerned at the increasingly synchronous nature of the global business cycle. During the period 2007-2010, G7 output contracted by 1% in real terms. Meanwhile, the BRICs (Brazil, Russia, India, China) saw output increase 24% over this period. In other words, the emerging world managed to successfully de-couple. Read more

23/11/2011 @ 08:09 GMT

The Indian rupee’s alarming fall from grace

The remarkable collapse of the Indian rupee evident over recent weeks continued overnight with the currency falling to a record low against the dollar. The INR has declined almost 20% since the end of August, by far the greatest fall amongst Asia’s major currencies. International investors, worried by contagion from Europe’s sovereign debt and banking crisis, have been abandoning Indian assets this year. For instance the Sensex has fallen by 22% in 2011 making it one of the worst-performing emerging equity markets. Read more

22/11/2011 @ 10:00 GMT

The emerging reversal

It started with Turkey cutting rates early in August then Brazil cutting its benchmark rate at the end of the month. Earlier this week Indonesia cut its benchmark interest rate by 0.25% to 6.5%. The August moves were easier to dismiss as one-off events, especially Brazil where the central bank is less than independent of the government which was pushing for lower rates in the wake of fiscal concessions. In terms of emerging markets cutting rates, there could well then be more to come. Read more

12/10/2011 @ 11:06 GMT

A welcome sigh of relief

After the volatility of recent days, there is a welcome better tone developing in markets today, with stocks around 3% higher and the Aussie rising for the third consecutive day. This fits with what we were talking of yesterday (see below), namely very stretched short positions in a number of markets. What we are seeing now is some stabilisation and covering of positions. Read more

27/09/2011 @ 06:35 GMT

India’s rate hike typifies Asia’s inflation dilemma

In a surprise move, India’s central bank lifted the repurchase rate by a greater-than-expected 50bp overnight to 7.25% in response to continuing concerns about rising inflation. In March, wholesale-price inflation jumped to 9%, well above the central bank’s target. In comparison, China’s inflation rate is currently 5.4%, although it is widely accepted that this is an under-estimate. If it were not for price caps on diesel and gasoline, India’s inflation rate would be much higher. Indian Oil has been unable to raise diesel prices since last June and gasoline prices since mid-January. Read more

03/05/2011 @ 06:57 GMT

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