Wait...
  1. Home >
  2. Export Import News >
  3. Import News >
  4. Govt steps to boost capital inflow unlikely to reverse Rupee slide: Moody's >
  5. Govt steps to boost capital inflow unlikely to reverse Rupee slide: Moody's

Online Export Import Data Search

Recent Searches: No Recent Searches
Complete Training Video : Click Here

Govt steps to boost capital inflow unlikely to reverse Rupee slide: Moody's.


Date: 24-09-2018
Subject: Govt steps to boost capital inflow unlikely to reverse Rupee slide: Moody's
The five-pronged strategy announced by the government to increase capital inflow into the country is unlikely to reverse the rupee depreciation, Moody's Investors Service said Monday.

The Indian government estimates that the measures, including exempting investors from withholding tax for offshore rupee-denominated (masala) bonds and allowing Indian banks to become market-makers, will increase capital inflows by $8-10 billion, or 0.3-0.4 percent of GDP, in the fiscal year that ends March 31, 2019.

The government also announced its intention to curb imports and reiterated its commitment to this year's fiscal deficit target.

“Although these measures provide credit positive support to India's external account, they are unlikely to reverse the currency's depreciation,” Moody's said.

The rupee has depreciated more than 10 per cent against the US dollar since January 2018 and was at Rs 72.1 against the dollar as of September 21.

Moody's, however, said that strong macroeconomic fundamentals will keep the credit risks of a weaker currency at bay.

“The measures will likely take time to affect capital inflows. Moreover, although the potential removal of hedging requirements could reduce some short-term pressure on the rupee, it could also heighten corporates' exposure to currency fluctuations,” Moody's said.

Concurrently, measures to curb non-essential imports might help to contain the imports bill, but will likely have a lagged effect, it added.

At current levels, India's current-account deficit (CAD) is still much narrower than the near 5 per cent of GDP posted during the “taper tantrum” period in 2013, when the currency depreciated by nearly 20 per cent between May and August.

The CAD, difference between inflow and outflow of foreign exchange, widened to 2.4 per cent of GDP in the April-June quarter.

Moreover, India's External Vulnerability Indicator, the ratio of external debt payments due over the next year to foreign exchange reserves, remains low at 65 per cent when compared with its peers, Moody's said.

Although foreign reserves have declined by 5.7 per cent to USD 376.6 billion since peaking in March 2018, they are significantly higher than their level of around USD 250 billion in 2013, said the US-based rating agency.

“The large foreign-currency reserves provide additional policy space and flexibility for the central bank to manage external shocks and reduce the risk of sustained and large portfolio outflows, as well as pressure on the currency,” Moody's said.

It said oil prices at current levels will raise expenditures and add to existing pressures on India's fiscal position.

“Those pressures include the lowering of goods and services tax rates on a range of consumer goods and a tax cut for small businesses, as well as the relatively high minimum support prices set for this year,” Moody's said.

“We, therefore, see risks that the central government deficit will be wider than targeted and expect the general government deficit (central and states) to be around 6.3 per cent of GDP in fiscal 2019, compared with 6.5 per cent the previous year,” Moody's said.

Source: moneycontrol.com

Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Both
 Buyers
 Suppliers
 Both
OR
 Exim Help
+


What is New?

Date: 22-05-2020
Notification No. 47/2020-CUSTOMS (N.T.)
Appointment of CAA in case of in case of M/s Satnam Steels, Rajkot.

Date: 22-05-2020
PUBLIC NOTICE No. 06/2015-2020
Inclusion of Gopalpur Port, Odisha as a Port of Registration under Para 4.37 of Handbook of Procedures, 2015-2020.

Date: 22-05-2020
TRADE NOTICE NO. 12/2020-2021
Issuance of Preferential Certificate of Origin for India’s exports to Thailand and Vietnam under ASEAN-India FTA

Date: 21-05-2020
Notification No. 24/2020 - Customs
Seeks to amend notification No. 56/2000-Customs dated 05.05.2000, No. 57/2000-Customs dated 08.05.2000 and No. 40/2015-Customs dated 21.07.2015 providing for extension of last date of export by six months, for those cases where the last date of export falls between 01.2.2020 and 31.7.2020 due to the outbreak of COVID-19 pandemic.

Date: 21-05-2020
Notification No. 25/2020 - Customs
Inclusion of Gopalpur Port [INGPR1] as notified port for getting benefits under AA/ EPCG schemes and other export incentive schemes like MEIS/SEIS and other such schemes.

Date: 21-05-2020
Notification No.46/2020 - Customs (N.T.)
Exchange Rates Notification No.46/2020-Custom (NT) dated 21.05.2020.

Date: 20-05-2020
Instruction No. 06/2020-Customs
Instruction Number 06 - Customs on Requirement of Veterinary Certificate

Date: 19-05-2020
Notification No. 45/2020-CUSTOMS (N.T.)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver- Reg.

Date: 19-05-2020
Notification No. 08/2020-Customs (ADD)
Seeks to impose anti-dumping duty on import of Sodium citrate originating in or exported from China PR for a period of further 5 years.

Date: 18-05-2020
A.P.(DIR Series) Circular No.31
Risk Management and Inter-bank Dealings – Hedging of Foreign Exchange Risk-Date of Implementation



Exim Guru Copyright © 1999-2020 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.

EximGuru.com

C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001