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By Abin Daya The US Fed hiked interest rates by 25 bps this week, and also signalled that they would be increasing rates at least twice more this year. The Fed rate hike was on expected lines, and there were more than enough signals from officials about the intended decision. They are feeling good about the economic growth, and are worried more about inflation than about growth. However, whether all those expectations will come to pass, we have to wait and see. Closer home, inflation concerns are raising their head again and this will impact monetary policy going forward. The general perception is that RBI will hold the rates at the current level in the next monetary policy announcement in April. Again, need ...

Source: PTI In a major relief to India and other developing countries, US Federal Reserve has decided to keep the interest rates unchanged at near zero. "To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 per cent target range for the federal funds rate remains appropriate," the Federal Reserve said in a statement after the meeting of its committee. In determining how long to maintain this target range, the Committee will assess progress -- both realised and expected -- towards its objectives of maximum employment and two per cent inflation, it said. The Federal Reserve said it anticipates that it will be appropriate to raise the target range ...

Sai Nikesh | The Dollar Business The devaluation of Chinese currency by more than 3% in the past two days has become a major concern for Indian manufacturers and traders who have already been facing tough fight against cheap imports from China. According to Indian government officials, the fall in Chinese currency value will affect India’s exports. Indian authorities are also concerned about its possible impact on the country’s Foreign Direct Investment (FDI), as China may become an attractive destination for foreign investors. The International Monetary Fund (IMF), on Tuesday, said, “The new mechanism for determining the central parity of the Renminbi announced by the People’s Bank of China (PBC) appears a welcome step, as it should allow market forces to ...

The Dollar Business Bureau With the vast depth and size of its market, India's ability to absorb international shocks is far stronger and this was reflected in the relative stability shown by the Indian Rupee. This was stated by the Union Finance Minster Arun Jaitley, on Saturday in response to the US Federal Reserve’s move towards increase of rates this year, say the reports. “International factors obviously have an impact and considering the vast depth, size of the Indian market, our ability to absorb those shocks is far stronger,” said Jaitley, according to the reports. Referring to the similar cases in the past, the Union Finance Minister said the domestic markets helped the Indian economy in remaining relatively stable, in ...

 The Dollar Business Bureau By leaving the key policy rates under the liquidity adjustment facility unchanged in is first bi-monthly monetary policy statement for FY16, the Reserve Bank of India (RBI) has taken a right step in the right direction, said India Ratings & Research rating agency. The repo rate, reverse repo rate and marginal standing facility rate will remain at 7.5%, 6.5% and 8.5%, respectively. The rating agency went on to add that the government is trying to improve the ease of doing business through various policy and legislative initiatives; however, the real impact on ground in the form of an investment pick-up is not visible. The two policy rate cuts (25bp each) in 2015 have not resulted ...

The Dollar Business Bureau “India cannot be complacent though its foreign exchange reserves are a comfortable level of $330 bn,” said H R Khan, RBI Deputy Governor. “Though we would be the last affected in any kind of crisis or vulnerabilities, India cannot afford to lose the momentum of being in a favourable position among emerging economies,” said Khan and added “no amount of foreign exchange reserves can cushion when there is extreme volatility or external shocks." With an over $6 bn jump India’s forex is at an all-time high as the macro-economic vulnerabilities have significantly receded due to the fall in prices of oil and low inflation. Sources said that the apex bank has been engrossed in hoarding ...