THE rupee’s tumble continues to grip India. On August 29th Duvvuri Subbarao, the departing boss of the central bank, told an audience in Mumbai of the widespread “dismay about the ferocity of the depreciation”. Today, on August 30th, I spoke to the boss of a big hotel in the city who says he is preparing to dollarise his business. The rupee is too flaky to operate in, he said. “It’s just like Russia and Indonesia in the 1990s.” Shortly after this, Manmohan Singh, the prime minister, addressed parliament on the matter. While part of the currency slump is a “natural” correction to reflect high inflation, he said, “foreign exchange markets have a notorious history of overshooting. Unfortunately this is what is happening”. That statement looks correct on a three-day time horizon. The rupee almost breached 69 per dollar earlier this week. On August 30th it bounced back to 65.7, making it the best-performing big currency worldwide that day, though still leaving it down 16% year-to-date. The vote by Britain’s parliament against military action in Syria has helped push down oil prices. That is helpful for India, a big energy importer. And some of the Reserve Bank of India’s tweaks have calmed nerves. On August 28th the central bank said it would provide dollars directly to India’s big oil-importing firms. That will stop them having to sell rupees in the spot market. It ...
It is rare for officials to admit that their policies have been less than perfect, but India’s central bank governor Duvvuri Subbarao did just that late Thursday, in his last public speech as head of the Reserve Bank of India.
Central Banking Outgoing governor Duvvuri Subbarao makes no apology for acting decisively in 2008, but says the RBI should have tightened policy faster in 2009; says bank is not targeting a level for the rupee
The India rupee has recovered a bit after yesterday touching another record low of 65.561 to the dollar. The USD-INR is now 64.6, +0.1% on the day, while shares are +0.5%. Finance Minister Palaniappan Chidambaram and Reserve Bank of India Governor Duvvuri Subbarao sought to calm markets by pledging that India has no intention of introducing capital controls, including on repatriation. The comments came after the RBI last week imposed restrictions on Indians' movement of money outside the country, which helped spark a rout in the already weak rupee. In its annual report, the RBI painted a rather grim picture of India's situation, although Chidambaram expressed confidence that growth will pick up and that the country's huge current account deficit - a major cause of concern - will fall. ETFs - Stocks: INDY, EPI, PIN, INP, INDA, INXX, SCIF, SCIN, INDL, SMIN. Currency: ICN, INR Post your comment!
UK Only Article: standard article Issue: How India got its funk Fly Title: India in trouble Rubric: Why India is particularly vulnerable to the turbulence rattling emerging markets Location: MUMBAI Main image: 20130824_FND001_0.jpg ON THE morning of August 17th most of India’s economic policymakers gathered in the prime minister’s house in Delhi. They were there to launch an official economic history of 1981-97, a period which included the balance-of-payments crisis of 1991. The mood was tense. India, said Manmohan Singh, the prime minister, faced “very difficult circumstances”. “Does history repeat itself?” asked Duvvuri Subbarao, the outgoing head of the Reserve Bank of India (RBI). “As if we learn nothing from one crisis to another?” The day before Indian financial markets had had their rockiest session for many years. The rupee sank and stockmarkets tumbled. Money-market rates rose. The shares of banks thought to be ...
Индийский центробанк ввел ограничения на инвестиции и денежные переводы за рубеж, чтобы остановить падение курса рупии и отток капитала. Страна переживает тяжелейший с 1990 года финансовый кризис: темпы роста ВВП опустились до минимальных за десять лет, рупия рекордно подешевела, а инфляция подскочила до 10%. Объявив об ограничениях накануне своей отставки, глава ЦБ Дуввури Суббарао позволит своему преемнику Рагураму Раджану сосредоточиться на реформах для ускорения экономического роста.
Председатель Резервного банка Индии Дуввури Суббарао предупредил об опасности создания системно значимых банков (слишком больших, чтобы обанкротиться, too-big-to-fail) в стране. Об этом пишет индийское издание The Hindu. «Стране не нужны банки-монополисты, которые увеличивают риск недобросовестной деятельности (moral hazard), - заявил Суббарао, выступая на банковской конференции в Мумбаи. - Стране достаточно четырех-пяти крупных кредитных организаций». Глава индийского Центробанка убежден, что слишком большие банки создают дополнительные сложности в работе с ними и усиливают негативное влияние на финансовую стабильность страны. Кроме того, председатель ЦБ Индии видит трудности с регулированием системно значимых банков. «Большие банки концентрируют слишком крупные финансовые потоки, используют в своей деятельности монополистические практики, что ведет к ослаблению рыночной конкуренции», - говорит Суббарао. Он считает, что это может привести к рассогласованию трансмиссионного механизма и некорректному распределению финансовых ресурсов в стране.
UK Only Article: standard article Issue: How is Britain’s economy really doing? Fly Title: Raghuram Rajan joins the RBI Rubric: A star economist is put in charge of India’s central bank Location: MUMBAI Main image: Rub gently for prophesies Rub gently for prophesies RAGHURAM RAJAN is often described as one of the few economists to predict the financial crisis. In a speech in 2005 to the world’s top central bankers he said innovation had made finance more dangerous. At the time his view was dismissed by Larry Summers, now a front-runner to become chairman of the Federal Reserve (see article), as “slightly Luddite”. Mr Rajan has also been right about India. In 2010, as hubris in the country soared, he warned that “growth can never be taken for granted” and that “self-delusion is the first step towards disaster.” As he prepares to succeed Duvvuri Subbarao at the helm of the Reserve Bank of India (RBI) in September that caution ...
Markets cheered the appointment of Raghuram Rajan to head the Reserve Bank of India after current governor, Duvvuri Subbarao, retires early next month. Mr. Rajan’s biggest challenge in the near term is the Indian rupee.
Central Banking Duvvuri Subbarao will leave the RBI this year after five years at the top; no clear favourite as yet to replace him, as three external candidates attract speculation
Central Banking Governor Duvvuri Subbarao says India is caught in an 'impossible' trilemma, forcing the bank to maintain rates in spite of sluggish growth and ebbing inflation
Central Banking Reserve Bank of India governor Duvvuri Subbarao speaks out against plans to give Financial Stability and Development Council responsibility for regulating systemic risk
STOCKS ----------------------- India's main BSE index down 0.87 percent and the broader NSE index 0.97 percent lower, as rate-cut hopes dented after Reserve Bank of India Governor Duvvuri Subbarao's comments on inflation. GOVERNMENT BONDS -------------------------------- The old 10-year bond yield up 1 basis point (bp) at 7.45 percent after rising to 7.49 percent in early trades. The new 10-year bond 2 bps higher at 7.21 percent, after the central bank chief said re
STOCKS ----------------------- India's main share index up 2.01 percent, while the broader 50-share NSE index also up 2.03 percent, with lenders such as ICICI Bank Ltd gaining after RBI Governor Duvvuri Subbarao said he would take note of falling inflation when discussing potential interest rate cuts. GOVERNMENT BONDS -------------------------------- The 10-year bond yield down 5 basis points (bps) to 7.42 percent on Wednesday, after earlier falling as low as 7.3
STOCKS ----------------------- India's main share index up 1.18 percent while the broader 50-share NSE index also up 1.16 percent, with lenders such as ICICI Bank Ltd gain after RBI Governor Duvvuri Subbarao said he would take note of falling inflation when discussing potential interest rate cuts. GOVERNMENT BONDS -------------------------------- The 10-year bond yield fell 4 basis points (bps) to 7.43 percent on Wednesday, the lowest since May 25 2010, after RBI
That's the title of an IMF conference taking place starting tomorrow (April 16-17). The program is below, and the live webcast will be available here (and follows up on a 2011 conference on the same subject). Five years into the crisis, the contours of the macroeconomic policy of the future are only slowly coming into focus. From macroeconomic to financial stability, policy makers have realized that they have to watch many targets. They have also realized that they have potentially many more instruments at their disposal, from macro prudential tools to unconventional monetary policy. But how to map instruments to targets remains very much a work in progress. -- Olivier Blanchard Below is the agenda. SESSION I: Monetary Policy, Chair: Janet Yellen Discussants Lorenzo Bini-Smaghi Mervyn King Mike Woodford SESSION II: Macroprudential Policies, Chair: Chair Andy Haldane Discussants Claudio Borio Stanley Fischer Choongsoo Kim SESSION III: Financial Regulation, Chair: Sheila Bair Discussants Jeremy Stein Jean Tirole John Vickers SESSION IV: Fiscal Policy, Chair: Janice Eberly Discussants Anders Borg Roberto Perotti Nouriel Roubini SESSION V: Exchange Rate Arrangements, Chair: Agustín Carstens Discussants Jay Shambaugh Martin Wolf Gang Yi SESSION VI: Capital Account Management, Chair: Duvvuri Subbarao Discussants Philipp Hildebrand Márcio Holland de Brito Hélène Rey PANEL DISCUSSION George Akerlof Olivier Blanchard David Romer Joseph Stiglitz Some of Olivier Blanchard's views on the subject were recounted in this WSJ article. For me, one key lesson from the last five years regarding macro policy relates to the plausibility of expansionary fiscal contraction at the zero lower bound (see , and this post). And one graph suffices to summarize that lesson. Figure 1: Log real GDP for US (blue), and for UK (red), rescaled 2008Q1=0. Dashed line at election of Conservative/Liberal government. Source: BEA and ONS, and author’s calculations.