Last Updated : GMT 10:16:21
Arab Today, arab today
Arab Today, arab today

Rupee plunges to record low of 62.03 to US dollar

India suffers worst economic crisis in decades

Arab Today, arab today

Arab Today, arab today India suffers worst economic crisis in decades

Indian economy hits a crisis level all time low
New Delhi – Arab Today

Indian economy hits a crisis level all time low New Delhi – Arab Today Indian policymakers are looking increasingly panicky as they battle the worst currency crisis in more than two decades, and more worryingly there is no sign their remedies are working .
The rupee lurched to a new lifetime low of 62.03 to the US dollar on Friday, while the benchmark share index posted its biggest one-day fall since September 2011.
\"None of the policymakers\' Band-Aid measures (from capital controls to tightening liquidity) seems to be working. They have not been able to turn the tide,\" Rajeev Malik, economist at investment house CLSA, told AFP.
\"The government and the Reserve Bank of India are taking fire-fighting measures.\"
The rupee has lost 57 percent of its value against the US currency since it peaked at 39.40 rupees to the dollar in February 2008.
The currency\'s strength began unravelling when Lehman Brothers collapsed later that year, triggering the global financial crisis.
But pressure on the rupee has mounted in the past two years as investor alarm over a slowing economy and a ballooning current account deficit, the widest measure of trade, has grown.
Part of the reason for the currency\'s most recent slide, it has fallen 13 percent this year against the greenback, lies outside Indian policymakers\' remit.
The currencies of emerging markets globally have fallen on expectations that an increasingly buoyant United States will soon roll back stimulus responsible for funnelling big investments overseas in quest of high yields.
But other reasons for the rupee\'s drop are home-made -failure to move fast enough on economic reform, a series of government corruption scandals, perceptions of policy paralysis and the record current account deficit, analysts say.
Since June 1, overseas funds have pulled out US $11.58 billion from India\'s stock and debt markets.
Investors worry that despite the long-term growth potential of the country of 1.2 billion people, \"things are not in shape in the interim period\", said investment house IDBI research head Sonam Udasi.
As the rupee\'s woes have deepened, authorities have responded with a clutch of measures to try to stem its decline and avert a balance-of-payments crisis.
India has painful memories of its 1991 balance of payments crisis when it failed to attract enough foreign currency and was forced to fly 47 tonnes of gold as collateral for an International Monetary Fund loan in what was seen as a national humiliation.
Indian Prime Minister Manmohan Singh, who was finance minister at the time, was moved Saturday to rule out a repeat, saying: \"There is no question of going back to the 1991 crisis.\"
In the past few weeks, Indian policymakers have hiked short-term interest rates, announced plans to allow state firms to raise foreign funds abroad and curbed gold imports.
They have also threatened to impose higher duties on imported electronic appliances such as fridges, which are made locally.
But it is their most recent step, stealthily announced late Wednesday on the eve of a national holiday, that has fanned the deepest consternation.
The central bank sharply tightened controls on the amount of money firms and individuals can send abroad.
The move looked to observers like a disturbing throwback to the days before India unleashed its economic liberalisation drive in the early 1990s when Indians\' access to foreign exchange was strictly limited.
Confederation of Indian Industry president Kris Gopalakrishnan criticised the move as \"retrograde\".
While the capital controls only apply to local individuals and firms, the restrictions may raise worries among overseas investors that they could be extended to foreign companies operating in India, analysts say.
Under the new policy, Indian individuals can send just $75,000 out of the country annually, down from $200,000 -making it tougher to pay children\'s overseas university fees, for example.
Companies can invest abroad only 100 percent of their net worth, down from 400 percent -- though the central bank says firms can ship out more money if they give authorities a good reason for doing so.
\"While the authorities aim to reduce foreign-exchange volatility, we fear they may end up sending a panic signal,\" Nomura economist Sonal Varma said.
There have been no signs so far of domestic capital flight but analysts say the controls may have been tightened to avert one in the face of India\'s troubles.
The economy expanded last year at a decade-low of five percent and indicators this year have been grim with economists warning about \"stagflation\" -- a combination of high inflation and low growth.
With an election to be held by May 2014 and pro-market reforms divisive, there is no way the Congress government can undertake root-and-branch reforms needed to put the economy back on track, economists say.
\"There is a complete lack of faith in the markets\" about India\'s outlook, said Param Sarma, chief executive at consultancy firm, NSP Forex.
\"We are slowly, but surely, likely to enter a phase of a crisis,\" he said.
Source: AFP

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today india suffers worst economic crisis in decades Arab Today, arab today india suffers worst economic crisis in decades


Arab Today, arab today
Arab Today, arab today Adidas Originals ‘reinterpreted’

GMT 14:52 2016 Thursday ,01 December

Adidas Originals ‘reinterpreted’
Arab Today, arab today Holiday magic is everywhere

GMT 13:04 2016 Saturday ,03 December

Holiday magic is everywhere
Arab Today, arab today Paris's matchbox apartments

GMT 10:37 2016 Saturday ,24 September

Paris's matchbox apartments
Arab Today, arab today As nearly 20,000 children flee Aleppo

GMT 07:50 2016 Saturday ,03 December

As nearly 20,000 children flee Aleppo
Arab Today, arab today What next after landmark

GMT 09:01 2016 Saturday ,03 December

What next after landmark

GMT 10:35 2016 Saturday ,03 December

In rural Cuba, economy stuck in time after Castro

GMT 10:14 2016 Saturday ,03 December

Venezuela fury at Mercosur suspension

GMT 09:41 2016 Saturday ,03 December

Sout Africa dodges junk credit rating

GMT 09:08 2016 Friday ,02 December

Gazans hope Coca-Cola plant refreshes economy

GMT 10:37 2016 Thursday ,01 December

Happy Brexit Christmas! Prices stay even for now

GMT 10:30 2016 Thursday ,01 December

Energy firms lead Asian equities rally on OPEC deal

GMT 08:45 2016 Thursday ,01 December

Trump vows to put aside doubts over business empire
View News in Arabic - Business: أخبار الأعمال
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Dino-killing crater shows clues

GMT 14:43 2016 Thursday ,24 November

Dino-killing crater shows clues
Arab Today, arab today For Yazidi women left behind

GMT 08:00 2016 Saturday ,03 December

For Yazidi women left behind
Arab Today, arab today Green groups pressure Spain

GMT 13:01 2016 Thursday ,01 December

Green groups pressure Spain
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Hyundai allows Saudi journalists

GMT 15:14 2016 Thursday ,01 December

Hyundai allows Saudi journalists
Arab Today, arab today Latest Infiniti QX to compete

GMT 13:16 2016 Saturday ,26 November

Latest Infiniti QX to compete
Arab Today, arab today Austria's race against time

GMT 11:44 2016 Thursday ,01 December

Austria's race against time
Arab Today, arab today Car manufacturers to power Europe

GMT 13:01 2016 Tuesday ,29 November

Car manufacturers to power Europe

GMT 12:45 2016 Tuesday ,29 November

To find German funny bone

GMT 13:52 2016 Monday ,28 November

Punk memorabilia torched

GMT 04:15 2016 Thursday ,30 June

World's largest uncut diamond fails

GMT 12:39 2016 Friday ,25 November

Arctic 9-12C above normal

GMT 15:59 2015 Wednesday ,27 May

Seoul elevates gardening to high art

GMT 12:39 2016 Saturday ,26 November

Skin patch could help kids

GMT 13:19 2016 Monday ,21 November

New nationalism stoking fears

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 09:53 2016 Sunday ,15 May

OMEGA official timekeepers
Arab Today, arab today
Arab Today, arab today
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Powered and Developed by FilmMatters

Copyright © 2016 Arabtoday

Developed by FilmMatters

© 2016 Arabtoday

arabtoday arabtoday arabtoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabtoday, Arabtoday, Arabtoday