That sinking feeling – India

Currency wars are a global contagion.

The butterfly effect of Countries desperately attempting to adjust their currencies to offset a global trade downturn – the all important export performance.

Global demand is soft – will continue to get weak over ensuing months.


Charts courtesy of Deutsche Bank. Click on to emblazon.

The Reserve Bank of India released its CPI forecasts for FY17, and suggests a declining path for inflation.

While the CPI forecast for January, 2016 is at 5.8%, only a shade lower than its August projection of 6%, the CPI forecast for early 2017 has been given as 4.8%.

This suggests that the RBI expects inflationary pressures to continue to come off over the next 18 months, despite GDP growth accelerating from 7.4% in FY16 to 8% by Q4, FY17.

The basis for the larger-than-expected rate cut seems to be this decline in the new CPI forecast for FY17.

Indications of the path ahead for all emerging economies.

A nice drop of 50 basis points – it is not going to get better.

What did anyone really expect?




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