India’s gamble spooking the markets | GulfNews.com:
"It’s time to tighten the seat-belts and brace for a roller-coaster ride in Indian shares as a bumbling government, caught off guard by the rupee’s slump, shifts its priority to salvage the currency by tightening the availability of short-term funds.
In an unexpected move the Reserve Bank of India raised the short-term borrowing cost by a whopping 200 basis points to 10.25 per cent on Monday under a margin standing facility and initiated moves to drain cash from the banking system, both aimed at restricting speculation on the currency.
The measures spooked financial markets, sending bond yields soaring, and pulled stocks down. The rupee momentarily strengthened in the immediate aftermath but by the week’s end it remained vulnerable to another bout of weakness, suggesting there were more fundamental factors than speculation in play."
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