Sunday, July 10, 2022

India's Forex Reserves Fall As Foreign Investors Head For The Exits

India's foreign exchange reserves are falling rapidly as foreign investors flee and the country's trade and current account deficits widen. More than $267 billion worth of India's external debt of the total $621 billion is due for repayment in the next nine months. This repayment is equivalent to about 44% of India's foreign exchange reserves. This combination of investors' exodus, widening twin deficits and short-term debt repayments has caused the Indian rupee to hit new lows. Unlike China and other nations that have accumulated large reserves by running trade surpluses, India runs perennial trade and current account deficits. The top contributor to India's forex reserves is debt which accounts for 48%. Portfolio equity investments known as “hot” money or speculative money flows account for 23% of India's forex reserves, according to an analysis published by The Hindu BusinessLine

India's Declining Forex Reserves. Source: Business Standard


Investor Exodus: 

Foreign portfolio investors have pulled out a whopping $33.5 billion from equity and $2.1 billion from debt segments of Indian financial markets, for a total net outflow of $35.6 billion from October 2021 to June 2022,  according to data compiled by the National Securities Depository Limited. In the first half of this calendar year, the total net outflows were $29.7 billion. 

It's not just the FPIs leaving India; a number of multinational companies are also pulling foreign direct investment (FDI) from India. Several big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US motorcycle manufacturer Harley-Davidson and US banking behemoth Citibank have chosen to pull the plug on their operations in India or downsize their presence in recent years. 

Widening Deficits: 

India's finance ministry has warned of a growing twin deficit problem, with higher commodity prices and rising subsidy burden leading to an increase in both the fiscal and current account deficits. India's June trade deficit widened to a record high of $25.63 billion, mainly due to a rise in crude oil and coal imports, from $9.61 billion a year earlier.  India's April-May fiscal deficit was $25.8 billion. 

Summary:

India's current level of forex reserves is enough for less than 10 months of imports projected for 2022-23. But the country has had a structural current account deficit which has been funded by large capital inflows. The accumulation of forex reserves has been due to surplus in the capital account. Since late February, the foreign exchange reserves have declined by $36 billion. India still has large forex reserves but its economy is in the same boat as other emerging markets that run large and worsening trade and current account deficits. With declining forex reserves, India is likely to face headwinds as the US Federal Reserves raises interest rates to fight inflation. 

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43 comments:

Yang M. said...

Inflation in India is now soaring. The CPI has reached 7.8%, which is close to the inflation rate of the USA.

The Indian Rupee exchange rate is accelerating its decline. In just six months, the Indian rupee has fallen from 73 in January to 79 in June. It fell faster than the euro.

India's external trade environment is also deteriorating rapidly. In the first five months of 2022, India's trade deficit reached a record $101 billion. In May this year alone, India's trade deficit reached US $24billion.

India's foreign exchange reserves are only $570billion. In addition, India still has US $620billion in external debt, with a total debt of more than US $1.4 trillion.

Global investors are losing confidence in the Indian economy. In 2021, a record $32billion of investment was withdrawn from the Indian market. In 2021, the loss rate of foreign investment in India was second only to Malaysia and Indonesia.

The unemployment rate in India is gradually rising, with the total unemployment rate exceeding 8% and the urban youth unemployment rate exceeding 22%.

The Indian stock market is also collapsing. The Mumbai 30 index fell by 15% in the first five months of this year, which is the lowest point after the Indian epidemic in 2020.

Shams said...

India still is #4 in the countries with highest foreign exchange reserves, after China, Japan, and Switzerland. Other big names like the UK, France, Germany, and the USA are quite far down the list. Russia is # 5, Saudi Arabia #8, and the US is #13, with the UK at # 15.

Bangladesh is at #45 with $42 billion in FE reserves.

Where is Pakistan? It is at #77, with $9.8b in reserves.

Riaz Haq said...

Shams: "UK, France, Germany, and the USA are quite far down the list"

What you don’t understand is this basic economic fact: US, UK, EU can print hard currencies that will buy them anything whatever they want. India does not have that luxury, nor do other emerging economies.

Indos said...

Indonesia FDI keep increasing in 2021, even in 2020 the FDI still increased. Within this first Q12022, FDI increases about 38 % compared to the same period last year.

Unlike Indian economist who keep talking their economy growth will be about 7-8 percent while the reality their GDP in the last 6 months (Q4 2021 and Q1 2022) are just 5.4 and 4.2 %, Indonesian economist projection on Indonesia economy is so far match with the last 6 months GDP data around 5 % (Q4 2021 and Q1 2022 are stable at 5.02 and 5.2 % )

Shams said...

Riaz

you shifted the focus to a fact irrelevant to this discussion. Your comparison ought to be that India is #4 after China, Japan, and the Swiss, while Pakistan is # 77 right after Nepal. These are all "non-hard-currency" countries.

Riaz Haq said...

Shams: "you shifted the focus to a fact irrelevant to this discussion. Your comparison ought to be that India is #4 after China, Japan, and the Swiss, while Pakistan is # 77 right after Nepal. These are all "non-hard-currency" countries"


What I pointed out about forex reserves is absolutely relevant to the discussion.

Countries outside of the US and EU have to EARN or BORROW or attract FOREiGN INVESTMENTS in US$ or Euro to build their forex reserves.

While China has earned its forex reserves by running trade surpluses, India has borrowed about half of them and got the rest through foreign investors.

India runs huge trade and current account deficits. It exports are a lot less than its imports.

With imports costing a lot more and foreign investors fleeing, India, like Pakistan, runs the risk of running out of its forex reserves.

Bilal said...

The magic of Modi strong-arming Indian "experts" in IMF (Gita Gopinath), World Bank etc.

Too many Indians fudging numbers globally.

It's okay, we shall see how far this fudging goes.

At some point there will be hell to pay for all the lies.

Riaz Haq said...

#India population to surpass #China's in 2023. Over half of global population increase up to 2050 will be in just 8 countries: Dem Republic of #Congo, #Egypt, #Ethiopia, #India, #Nigeria, #Pakistan, #Philippines & #Tanzania. https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/wpp2022_summary_of_results.pdf

For 10 countries, the estimated net outflow of migrants exceeded 1 million over the period from
2010 through 2021. In many of these countries, the outflows were due to temporary labour
movements, such as for Pakistan (net flow of -16.5 million), India (-3.5 million), Bangladesh
(-2.9 million), Nepal (-1.6 million) and Sri Lanka (-1.0 million). In other countries, including
Syrian Arab Republic (-4.6 million), Venezuela (Bolivarian Republic of) (-4.8 million) and
Myanmar (-1.0 million), insecurity and conflict drove the outflow of migrants over this period.
• All countries, whether experiencing net inflows or outflows of migrants, should take steps to
facilitate orderly, safe, regular and responsible migration, in accordance with SDG target 10.7.

------------------

Between 2010 and 2021, 40 countries or areas have experienced a net inflow of more than
200,000 migrants; in 17 of those, the total net inflow exceeded 1 million people.
In 2020, Türkiye hosted the largest number of refugees and asylum seekers worldwide (nearly 4 million),
followed by Jordan (3 million), the State of Palestine (2 million) and Colombia (1.8 million). Other major
destination countries of refugees, asylum seekers or other persons displaced abroad were Germany,
Lebanon, Pakistan, Sudan, Uganda and the United States of America (United Nations, 2020b).

Gundroo said...

Total debt burden now exceeds India’s GDP of $ 2.6 trillions and is forcast to exceed $4.6 trillions by 2026. Most of this debt has accumulated only since 2014.
20% of budget for 2022/2023 is allocated as intrest payment just for external debt. India too like so many countries worldwide including European countries is not immune to economic crises like Srilanka .

Ahmed said...

Dear Sir

Asalam Alaikum

Eid Mubarak to you and to your family , Sir I have a question , I was reading a news from Times of India which is a famous Indian news website , it mentions that India is the biggest reciever of economic aid from America since 1955. Sir when I debate with Indians on social networking sites and when I use this news as a source of my argument with Indians and try to prove them that India has received highest amount of economic aid since many decades . In response these Indians say that India is a country which has over 1 billion population and inspite of that India has received only 65 billion US$ But Pakistan a country of just 200 million population has received 44 billion US $ since many decades .

Sir my question is that do you really think that India depending on its huge population has received less economic aid from America since 1955?

Pls Sr throw some light on this

Thanks

Riaz Haq said...

$4.5b bailout for #Bangladesh: #IMF team to arrive tomorrow amid global #commodity price #inflation. If everything proceeds smoothly, the loan deal could be finalized by October this year https://www.thedailystar.net/news/bangladesh/news/45b-imf-loan-delegation-arrive-tomorrow-3068786#.Ys4fFEQEeJU.twitter

A delegation from the International Monetary Fund (IMF) is set to arrive in Dhaka tomorrow on a nine-day trip to discuss the government's request for a $4.5 billion loan in the form of budgetary support.

Rahul Anand, division chief in the IMF's Asia and Pacific Department, will lead the team during talks with the senior officials of the finance ministry, the central bank, the National Board of Revenue and the Economic Relations Division.

If everything proceeds smoothly, the loan deal could be finalised by October this year, said an official of the finance ministry yesterday.

The request for budgetary support comes to shore up the precarious foreign currency reserves, which yesterday stood at $39.8 billion -- the lowest since October 14, 2020.

This is enough to cover about five months' import bills.

Typically, the World Bank and the IMF prescribe an import cover of three months, but in times of economic uncertainty, they advise keeping sufficient reserves to meet 8-9 months' imports.

Going forward, even though imports are slowly contracting, the elevated inflation levels around the world mean the odds of a slowdown in both remittance inflows and export orders, two sources of foreign currency for Bangladesh, are high.

The IMF officials will look into the impacts of the Russia-Ukraine war and escalated global commodity prices on the Bangladesh economy, the status of recovery from the global coronavirus pandemic and the government's large subsidy programme.

They will see whether the subsidy spending is justified and compare it with the other countries. If it is deemed excessive, the IMF mission may suggest ways to trim it.

Subsidy spending in the just-concluded fiscal year is Tk 66,825 crore, 24.1 percent more than the original allocation thanks to the spiral in fuel and fertiliser prices in the global market.

In this fiscal year's budget, Tk 82,745 crore has been earmarked for subsidy.

But considering the price trend of oil, gas, and fertiliser in the international market, the estimated spending can be 15-20 per cent higher than the initial estimates, said Finance Minister AHM Mustafa Kamal in his budget speech in June.

The Washington-based multilateral lender could tie in conditions for the loan package.

The conditions could include measures to increase revenue, lower subsidy expenditure, market-based exchange rate and lending rate, and reforms in the banking sector and tax administration, the finance ministry official said.

The government has already moved to tighten its belts though.

It has unveiled a relatively smaller budget for the current fiscal year, put on hold low-priority projects, suspended foreign tours of government officials, adjusted the prices of gas and diesel to some extent, and loosened the exchange rate policy.

The government has also signalled that it may raise the price of fuel oil and has proposed to the Bangladesh Energy Regulatory Commission to increase the electricity tariff to cut the subsidy burden.

Surjit Bhalla, executive director of the IMF for India, Bangladesh, Bhutan and Sri Lanka, who represented Bangladesh on the board of the Washington-based lender, is also set to visit Bangladesh separately.

Z Bukhari said...

There is a lot of rumour about the interest rate offered by Chinese in latest loan. Please do not believe rumour. According to my sources the rates offered are "friendly" rate and precisely the reason their side has requested rates not be disclosed.

They are willing to put an alternative to IMF package but some "guarantees" have been asked which is pending at agencies desk. Incase IMF package does not happen Chinese package will be accepted.

If you have dollar deposit in Pakistan, please do not withdraw.

Riaz Haq said...

#Pakistan Reaches Agreement With #IMF to Resume Loan. $1.2 billion loan disbursement expected in August 2022. #economy https://www.bloomberg.com/news/articles/2022-07-13/pakistan-said-to-have-reached-agreement-with-imf-to-resume-loan#xj4y7vzkg


---------

ISLAMABAD: In a major development, Pakistan and the International Monetary Fund (IMF) on Wednesday finally reached a staff-level agreement that revived the $6 billion Extended Fund Facility (EFF) programme for the country, Bloomberg reported.

https://www.thenews.com.pk/latest/973365-pakistan-imf-reaches-staff-level-agreement-bloomberg

The move comes after the coalition government adhered to all "tough" conditions set by the global lender, including an increase in the price of petroleum products and energy tariffs, among others.

Sources told Geo.tv that the official announcement in this regard is expected soon.

The staff-level agreement will pave way for a $1.2 billion disbursement, which is expected in August.

Bloomberg reported that the disbursal would offer relief to Islamabad as the country's foreign-exchange reserves are depleting so much so that they can only cover less than two months of imports.

In June, Pakistan and the Fund staff achieved substantial progress to strike a consensus on budget 2022-23 after which the IMF shared a draft Memorandum of Economic and Financial Policies (MEFP).

Zen, Germany said...

Riaz,

you tell critics that they don't understand economics. But you still don't seem to understand the basis of India's stability. There the prosperity matters way less than subsistence and maintenance of equilibrium at lowest level. Hindu society achieved a lowly equilibrium based on caste hierarchy and patriarchy atleast 1000 years ago. Since then, it is based on the value of subsistence.

So if you ever dream that in India, people will protest against food price hikes or high COVID deaths like it happens in North Africa or central Asia, you will be waiting forever. Despite the militant attitude against Muslim minorities, the majority are always willing to tighten the belt and live watching bollywood.

Riaz Haq said...

Shoaib Daniyal
@ShoaibDaniyal
"Hasina’s internal problems are linked to external dependencies. Politically reliant on New Delhi, she is finding it increasingly difficult to manage the ramifications of India’s turn towards Hindu nationalism..." -
@PaliwalAvi

https://twitter.com/ShoaibDaniyal/status/1547304109115469824?s=20&t=0MnwGRI9dEba8r3tmp7i8Q

The ground under Sheikh Hasina’s feet is shifting

With elections in 2023 and debt repayment schedules kicking off in 2024, it seems only a matter of time for the veneer of stability to lose its sheen. The risk of dislocation of this so-called house of cards has only been rising in recent years.


Bangladesh’s foreign minister AK Abdul Momen arrived in India last month to fight political fires. But he found himself dealing with massive floods that hit Sylhet and Assam. Nature has its ways to convey that not all is well in India’s near-east. Far from the glitz about Bangladesh’s economic success, on display during the recent inauguration of the Padma Bridge, clampdown on Islamists, and shrewd management of big power rivalries, is a parallel potent reality of Prime Minister Sheikh Hasina’s authoritarianism, heightened polarisation, and economic distress. As an Indian official mentioned to me, and a Bangladeshi official echoed, Hasina “has built a house of cards”.

https://www.hindustantimes.com/opinion/the-ground-under-sheikh-hasina-s-feet-is-shifting-101657725078715.html

Riaz Haq said...

#India’s #economy can’t compete with #China’s — & that should worry #US policymakers. #Biden administration must be alarmed by the recent decisions by several foreign corporations to either pull out of the Indian market or put their long-term plans on hold https://thehill.com/opinion/international/3557750-indias-economy-cant-compete-with-chinas-and-that-should-concern-us-policymakers/

BY HUSAIN HAQQANI AND APARNA PANDE

The Biden administration must be alarmed by the recent decisions by several foreign corporations to either pull out of the Indian market or put their long-term plans on hold. The U.S. has, for years, hoped to assist India’s rise as a way of checking China’s growing power. But even though India is the world’s fastest growing major economy, its economic policies continue to disappoint American, European and Japanese officials and investors.

Western democracies, which see India as a natural ally, believe that India would be able to deliver on its economic and military potential only if it attains higher growth rates. That, in turn, would only be possible with larger inflows of foreign investment and further opening of India’s markets. Although India’s economy is expected to grow at 8 percent in 2022 and at 6.9 percent in 2023, it is less than the 12.5 percent and 8.5 percent originally forecast by the International Monetary Fund (IMF).

India’s growth is attributed to its large consumer market rather than to increased foreign direct investment (FDI). Indians seem content that India’s exports are high, its stock market is doing well and India’s vibrant middle class is indulging in what economists call post-pandemic “revenge spending.” But India’s Western partners see India as “a challenging place to do business,” according to the U.S. State Department’s 2021 Investment Climate Statement.

According to Heritage Foundation’s 2022 Index for Economic Freedom, India ranks 27 among 39 countries in the Asia–Pacific region, with an overall score below the regional and world averages.

From the perspective of the U.S. and India’s Western partners, it is a matter of unrealized expectations. India cannot catch up with China without overcoming the large gap in the relative size of their economies. China currently has a nominal GDP of $17.7 trillion while India’s GDP stands at only $3.1 trillion. On the other hand, India is expected to surpass China as the world’s most populous country in 2023, raising its domestic challenges of providing food, education and employment for an expanding young population.

Given its economic gap with China, and the needs of its growing population, it would seem reasonable that India would want to attract FDI. But between 2019 and 2021, the share of global FDI inflows to India have shrunk, from 3.4 percent to 2.8 percent. Meanwhile, China’s share of global FDI rose from 14.5 percent to 20.3 percent.

Even though the U.S., Europe, Australia and Japan all see India as their future partner, their corporations are either pulling out or reducing the size of their operations in India. Swiss building-materials firm Holcim, Royal Bank of Scotland, Harley-Davidson and Citibank have already announced plans to downsize or leave India.

German retailer Metro AG is selling off its Indian operation after two decades. Both Ford Motor Company and Tesla announced they had put on hold plans to make electric vehicles (EVs) in India. This decision, at a time when the Indian government is championing renewable energy, is related to India’s high tariff and tax barriers.

This week, French spirits group Pernod Ricard, maker of Chivas and Absolut, announced a decision to place new Indian investments on hold because of “everlasting” tax disputes with local authorities that date back almost 30 years.

Riaz Haq said...

#India’s #economy can’t compete with #China’s — & that should worry #US policymakers. #Biden administration must be alarmed by the recent decisions by several foreign corporations to either pull out of the Indian market or put their long-term plans on hold https://thehill.com/opinion/international/3557750-indias-economy-cant-compete-with-chinas-and-that-should-concern-us-policymakers/

BY HUSAIN HAQQANI AND APARNA PANDE


Some $100 million in assets of Amway, the American multi-level marketing company that sells health, beauty and home care products, have been frozen by Indian law enforcement while the company is investigated for ostensibly “operating a pyramid scheme.” Ironically, the company has done business in India for three decades with the same business model of direct selling.

Moreover, Ricard is not the only international business facing taxation challenges in India. IBM has had $865 million stuck in an escrow account since 2009 while a tax dispute over retroactive tax meanders through India’s legal system. India could have used IBM’s nearly $1 billion if put to productive use.

Two U.K.-based companies – Telecom giant Vodafone and energy company Cairn –were hit with large capital gains tax demands based on legal changes after mergers or acquisitions. The Indian government took one decade to rollback its retroactive taxation policy, only after India lost two cases at the World Bank’s International Center for Settlement of Investment Disputes (ICSID) and The Hague tribunal.

The challenges notwithstanding, India’s large size and location continue to make it a prized market for foreign businesses. Air India, the formerly state-run airline now owned by Tata Group, announced plans to overhaul its entire fleet of 300 narrow-body jets in one of the largest orders in commercial aviation history. Boeing and Airbus are the leading contenders for this deal. Access to the large Indian consumer market is a dream, as is the hope for a stake in the upgradation of India’s civilian and military infrastructure.

But, by and large, Western hopes of a modern, fast-growing, prosperous and free market-oriented India have not been realized at the pace predicted by some in the first few years of the 21st century. India’s current rate of economic growth is woefully inadequate for India’s domestic goals as well as the objective of becoming a serious rival to global economic juggernaut, China. The latter makes India’s economic policies a strategic concern for U.S. policymakers.

Ahmed said...

Dear Sir

I hope you are doing well , can you pls answer my above questions which I posted yesterday or say before yesterday ?

Riaz Haq said...

Ahmad: "Sir my question is that do you really think that India depending on its huge population has received less economic aid from America since 1955?"

Donors do not give aid based on the size of the receiving country's population. If they did, Israel, among the largest recipients of US aid, would get very little aid.

Please read the following for recent status of foreign aid from western nations.

https://www.riazhaq.com/2020/08/have-modis-misguided-policies-turned.html

Anonymous said...

Mike Rubin writes....
https://nationalinterest.org/feature/pakistan%E2%80%99s-coming-collapse-should-worry-world-203545

Riaz Haq said...

Anon: "Mike Rubin writes...."

Pakistan's total collapse has been predicted by a long list of forecasters, particularly Indians, throughout history....starting in 1947.

Asia 2025, a US Defense Department Study produced in summer of 1999, forecast that Pakistan would "disappear" as an independent state by 2015. It further forecast that Pakistan would become part of a "South Asian Superstate" controlled by India as a "regional hegemon". Two Indian-American "South Asia experts" contributed to this study. Much of the forecast in its "New South Asian Order" section appears to be wishful thinking of its Indian contributors.

https://www.riazhaq.com/2018/06/us-dod-1999-forecast-pakistan.html

Anonymous said...

There is an English saying that you can fool some of the people some of the time but you can't fool all the people all the time. Who ever came up with it never met an Indian. Indian public has been fooled for 75 years and they are still buying the same churan. Every few years someone comes with a prediction of Pakistan's demise and Indians start jumping. Panduit Nehru was the first to predict that in less than 50 years Pakistanis would come beginning India to join. Forgot Pakistan, even little brother Nepal doesn't want to join them.

G. Ali

Riaz Haq said...

#Indian Bonds Will Suffer Most In #Asia In A #US #Recession Scenario. “Downside risks to EM Asia currencies mean that foreign investor confidence could be sharply declining.” https://www.bloomberg.com/news/articles/2022-07-14/india-bonds-will-suffer-most-in-asia-in-a-us-recession-scenario#xj4y7vzkg


US recession risks are reverberating across the emerging Asian debt complex and nowhere is this more apparent than in Indian sovereign bonds.

Rupee debt has proven to be the most sensitive to an inversion of the US curve in the past and this time is unlikely to be different, according to a Bloomberg study which analyzed four episodes dating back to 2005. In each instance, India’s benchmark yields climbed an average 11 basis points in the 10 days before longer-term US rates fell below those on shorter-dated maturities.

US recession risks are reverberating across the emerging Asian debt complex and nowhere is this more apparent than in Indian sovereign bonds.
Rupee debt has proven to be the most sensitive to an inversion of the US curve in the past and this time is unlikely to be different, according to a Bloomberg study which analyzed four episodes dating back to 2005. In each instance, India’s benchmark yields climbed an average 11 basis points in the 10 days before longer-term US rates fell below those on shorter-dated maturities.

The threat of a US downturn is the latest risk confronting Indian bonds after a weakening rupee and accelerating inflation propelled benchmark yields to the highest in over two years in June. A slowdown in the world’s biggest economy may exacerbate the pressure from outflows, after global funds sold the notes for five months through June.

There may be little respite for rupee bonds in the near term. Overnight indexed swaps are pricing in another 150 basis points of rate hikes from the Reserve Bank of India over the next 12 months as retail inflation has remained above the central bank’s 2%-6% target for six straight months.

Riaz Haq said...

#India’s World-Beating Growth Isn’t Creating #Jobs. #Unemployment rate is hovering around 7% or 8%, up from about 5% five years ago. The labor force participation rate has dropped to just 40% of the 900 million #Indians of legal age. #Modi #BJP #Hindutva

https://www.bloomberg.com/news/articles/2022-07-15/why-india-s-world-beating-growth-isn-t-creating-jobs-quicktake#xj4y7vzkg


No other major economy has been expanding as fast as India lately, beating both China and the US. But beyond the headlines lies the grim reality of rising unemployment. The nation of 1.4 billion people isn’t creating enough jobs for its growing workforce, despite campaign promises by Prime Minister Narendra Modi to make it a priority. Output is increasing as a result of pandemic-related government spending while the private sector sits on the fence, deterred by dim conditions for new investment. Meanwhile, pandemic-related disruptions and rising inflation are making it harder for everyone to get by. Tensions boiled over in June when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire.

The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy, a private research firm. At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns. The labor force participation rate -- meaning people who are working or looking for work -- has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE. By comparison, the participation rate in the US was 62.2% in June.

Riaz Haq said...

Annual percentage growth rate of GDP at market prices based on constant local currency. Aggregates are based on constant 2010 U.S. dollars. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.
India gdp growth rate for 2021 was 8.95%, a 15.54% increase from 2020.
India gdp growth rate for 2020 was -6.60%, a 10.33% decline from 2019.
India gdp growth rate for 2019 was 3.74%, a 2.72% decline from 2018.
India gdp growth rate for 2018 was 6.45%, a 0.34% decline from 2017.

https://www.macrotrends.net/countries/IND/india/gdp-growth-rate


--------

Annual percentage growth rate of GDP at market prices based on constant local currency. Aggregates are based on constant 2010 U.S. dollars. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.
Pakistan gdp growth rate for 2021 was 6.03%, a 7.36% increase from 2020.
Pakistan gdp growth rate for 2020 was -1.33%, a 3.83% decline from 2019.
Pakistan gdp growth rate for 2019 was 2.50%, a 3.65% decline from 2018.
Pakistan gdp growth rate for 2018 was 6.15%, a 1.72% increase from 2017.

https://www.macrotrends.net/countries/PAK/pakistan/gdp-growth-rate

Riaz Haq said...

#India’s current account #deficit expected to deteriorate in FY23. The country’s #trade deficit widened to USD 45.18 billion in April-June 2022 period as compared to USD 5.61 billion recorded in the corresponding period of last year. #Modi #BJP #economy

https://newsroompost.com/business/indias-current-account-deficit-expected-to-deteriorate-in-fy23-finance-ministry-report/5138583.html

The widening of current account deficit has depreciated the Indian rupee against the US dollar by 6 per cent since January of 2022, and is on the brink of touching 80 mark.

New Delhi India’s current account deficit, meaning a shortfall between the imports and exports, is expected to deteriorate in 2022-23 if recession concerns do not lead to a sustained and meaningful reduction in the prices of food and energy commodities, the Ministry of Finance said in its latest Monthly Economic Review report.

Softening of global commodity prices may put a leash on inflation, but their elevated levels also need to decline quickly to reduce India’s current account deficit.

A sudden and sharp surge in gold imports amid wedding season, as many weddings were postponed to 2022 from 2021 due to pandemic-induced restrictions, is also now exerting pressure on the trade deficit, it said.

The country’s trade deficit widened to USD 45.18 billion in April-June 2022 period as compared to USD 5.61 billion recorded in the corresponding period of last year.

In order to alleviate the impact, the government recently hiked the customs duty on gold from present 10.75 per cent to 15.0 per cent.

“The deterioration of current account deficit could, however, moderate with an increase in service exports in which India is more globally competitive as compared to merchandise exports,” it said.

The widening of current account deficit has depreciated the Indian rupee against the US dollar by 6 per cent since January of 2022, and is on the brink of touching 80 mark.

“The depreciation (in rupee), in addition to elevated global commodity prices, has also made price-inelastic imports costlier, thereby making it further difficult to reduce the CAD,” it said.

A depreciation in rupee typically makes imported items costlier. India’s forex reserves, in the six months since January 2022, have declined by USD 34 billion.

However, the momentum in the Indian economy is holding up better than expected, despite commodity price shocks in the last four months, the report added.

“After a sluggish start, the seasonal rainfall has picked up and it is geographically well dispersed. That is good news too.”

Anonymous said...

The story is relative to other currencies EUR,JPY,AUD,CAD the INR is stronger than 3 months ago.The story is USD rising not INR falling.PKR otoh has fallen against all currencies!

Z Bukhari said...

According to sources China has proposed two models for revival of Pakistan economy. Currently under discussion and decision might depend on government stability.

- 5 model district in each province to be adopted by China. Direct funding and bureaucratic control from China
- 2 model sectors nation wide to be adopted by China. Agriculture and Electricity being their preference

Current thinking is to choose second option to avoid political churn in provinces. Electricity has been agreed but Agriculture is point of contention.

little_saturn said...

https://economictimes.indiatimes.com/news/economy/finance/re-may-face-more-heat-as-repayments-worth-267-bn-of-621-bn-external-debt-come-up/articleshow/92687264.cms?from=mdr

India will have 354 bn$ reserve. India is buying oil from russia and probably it will do with iran in INR. This will further help india to reduce $ deficit.

https://www.livemint.com/news/india/indias-20-ethanol-blending-target-advanced-new-biofuel-policy-approved-11652864636467.html

india has already acheived 10% ethonol blending and will move to 20%. it helps the farmers to get more money and reduce oil bill

https://economictimes.indiatimes.com/industry/renewables/india-to-achieve-50-clean-energy-share-500-gw-re-capacity-targets-before-2030-deadline-singh/articleshow/87604552.cms?from=mdr

solar cost is 1.50 inr where as oil /gas 6.50 inr. india is moving more towards solar which helps to reduce fiscal deficit and handle inflation

https://economictimes.indiatimes.com/industry/energy/oil-gas/india-makes-a-big-push-for-oil-and-gas-exploration-in-andaman/articleshow/92531416.cms

India will start to produce from the arabian ocean oil which will further make it reduce oil bills

pakistan can go which ever way it wants to go ; probably it can keep on asking for assistance and corrupt rulers can loot and run away.

Riaz Haq said...

#India's #Rupee Hits Weakest Level Ever Against the #US Dollar. The #Indian #currency has lost about 7 percent of its value against the #dollar this year, a victim of higher #energy prices and #economic uncertainty. #Russia #Ukraine #Modi #Hindutva #BJP https://www.nytimes.com/2022/07/19/business/economy/rupee-dollar-record.html?smid=tw-share

The Indian rupee touched the weakest level on record against the dollar on Tuesday, another victim of higher energy prices and a stronger greenback.

The rupee has lost about 7 percent of its value against the dollar this year as India has spent more to import sources of energy like crude oil, natural gas and coal. Prices of those commodities have climbed after Russia invaded Ukraine.

Another factor behind the decline of the rupee is uncertainty about the global economy that has, in turn, propelled the dollar to a 20-year high against the currencies of its major trading partners. Investors have pulled money out of India and other developing countries and poured it in to the United States, where the Federal Reserve is raising interest rates aggressively to tame inflation.

“A lot of it is dollar strength rather than rupee weakness,” said Rahul Bajoria, the chief economist for India at Barclays. “It still feels like on a relative basis the rupee has done a lot better,” he said, pointing to the steeper declines in the value of the euro and the British pound against the dollar.

On Tuesday, the rupee briefly crossed 80 to the dollar for the first time. The Reserve Bank of India intervened in the market, as it has in recent months, to bid up the currency, according to local media reports.

Like in much of the world, inflation has slowed economic growth this year in India. Reserve Bank officials responded by unexpectedly raising rates in May, and then again in June, to 4.9 percent. But inflation remains around 7 percent, putting pressure on household budgets.

Prime Minister Narendra Modi’s government has cut taxes on fuel and restricted exports of wheat and sugar. And it has bought more Russian oil, which has become cheaper following sanctions imposed by the United States and Europe.

Riaz Haq said...

#Indian #rupee touches another record low to 80.06 against #US dollar as foreign #investors pull out US $30 billion from the nation’s #StockMarket so far this year amid deteriorating current-account deficit & high #energy prices. #forex #Modi #BJP
https://finance.yahoo.com/news/india-rupee-drops-another-record-035250125.html

The rupee declined to as low as 80.06 per dollar on Tuesday before reversing losses as traders cited possible central bank intervention. The currency has been buffeted by nearly $30 billion of foreign outflows from the nation’s equities so far this year -- a record sum -- and concerns over a deteriorating current-account deficit amid elevated oil and commodity prices.

India policymakers have sought to arrest the currency’s decline with a raft of measures -- from intervention to raising duties on gold imports -- with a weaker rupee adding to imported inflation pressures. Other emerging market currencies are also feeling the heat as a hawkish Federal Reserve lures capital toward the US.

“The risks for the rupee remain to weaken further,” said Dhiraj Nim, economist and FX strategist at Australia & New Zealand Banking Group Ltd. “Oil prices, especially, remain a bit volatile, while external headwinds on account of Fed tightening may continue. The trade imbalance also remains wide.”

India’s central bank sees the rupee as moving toward its fair value and will step in to sell dollars from its reserves when it assesses a genuine shortfall, according to people familiar with the matter. Traders cited RBI intervening in the forex market as the currency breached 80 to a dollar.

The currency has declined 7% this year as a shortfall in India’s current account -- the broadest measure of external finances -- will probably widen to 2.9% of gross domestic product in the fiscal year ending March 31, according to a Bloomberg survey in late June, nearly double the level seen in the previous year. The rupee ended little changed at 79.95 a dollar on Tuesday.

India’s central bank is for an orderly appreciation or depreciation in the currency and is intervening in all market segments to curb volatility, Governor Shaktikanta Das said earlier this month.

Strategists at Nomura Holdings Inc and Morgan Stanley continue to remain bearish on the rupee, forecasting the currency may decline to 82 to a dollar by September. Options pricing suggest that there is 67% probability for the rupee to decline to that level between now and end-December, up from 50% at the start of July.

The Reserve Bank of India has foreign-exchange reserves of almost $600 billion, which it has been deploying to protect the rupee. Authorities have raised duties on gold import and raised levies on petroleum exports. The monetary authority has also announced measures to draw more forex inflows into the country and allowed rupee settlement of trade.

samir sardana said...

India has a monthly trade deficit,of 25 Billion USD

RBI FX reserves are falling by 10 Billion USD every 14 days

Oil prices will NOT fall

If Oil stays at these levels, then in the next 75 days,RBI FX reserves will be DOWN BY 100 BILLION USD AND THEN WHERE WILL BE THE INR ?

The INR DESERVES TO BE AT 120

And if the RBI defends the INR - RBI will lose another 100 Billion USD

SOROS should TARGET THE INDIAN DINDOOOHINDOO

Riaz Haq said...

#US #Dollar is Very Strong Against All Currencies, not Just #Pakistan's. Fortune 500 companies blame the strong US$ for disappointing earnings & lower forecasts: ‘The dollar might have even had a stronger quarter than we did, which is kind of amazing.’ https://fortune.com/2022/07/20/strong-us-dollar-usd-to-euro-corporate-earnings-reports-netflix-ibm-salesforce-johnson-and-johnson/


In earnings call after earnings call, U.S. corporate leaders are delivering the same warning—that the strong U.S. dollar will be a drag on their profits.

“The dollar might have even had a stronger quarter than we did, which is kind of amazing,” said Salesforce CEO Marc Benioff on the company's May 31 earnings call, explaining why the company was lowering its sales guidance.

During the company's second quarter earnings call on Monday, IBM CFO Jim Kavanaugh said it wasn't "immune" to the strong dollar, "especially when currencies move at the rate, breadth, and magnitude that we've seen." IBM said the strong dollar is likely to wipe $3.5 billion off its full-year revenue, sending shares 6.9% lower in early trading on Tuesday.

Netflix CFO Spencer Neumann on Tuesday told investors that "the strengthening of the U.S. dollar is a major outlier, and we just need to kind of work through that." Netflix blamed a strong dollar for their Q2 revenue growth coming in below its forecast; it reported an increase of 8.6% versus a forecast of 9.7%.

On Tuesday, pharmaceutical manufacturer Johnson & Johnson cut its full-year profit guidance, saying that the strong dollar might lower its sales overseas.

Microsoft also trimmed its revenue forecasts based on the strengthening dollar.

An analysis from Bloomberg found that references to “foreign exchange” in earnings calls have hit a three-year high this season.

USD to euro near parity
The U.S. dollar has gained against almost every other currency in recent months. It’s up 11% versus the euro so far this year, with the exchange rate between the two currencies hitting parity for the first time in 20 years. The USD is also up 13% against the British pound, 20% against the Japanese yen, and 6% against the Chinese renminbi. The U.S. Federal Reserve's interest rate hikes are helping drive up the value of the U.S. dollar, and traders are seeking safety in the U.S. dollar and U.S. assets amid geopolitical uncertainty.

The strong U.S. dollar is a windfall for some holders of the currency, like U.S. tourists on shopping sprees in Europe. But it can weigh on corporate earnings, especially at firms that do a sizable share of their business overseas.

Why is a strong USD bad for corporate earnings?
A strong USD makes U.S. manufactured goods more expensive overseas, so foreign buyers need more local currency to pay for the U.S.-made items they bring into other countries. The rising cost of U.S. goods in foreign currencies incentivizes importers to seek goods made elsewhere, disadvantaging U.S. manufacturers. U.S. companies may try to cut costs to keep their prices competitive and preserve their margins.

A strong dollar also deflates the value of revenue generated overseas once it's converted into U.S. dollars. That poor conversion rate can hit the bottom line of U.S. companies that do a lot of their business in foreign markets, like the U.S. tech sector, which generates 60% of its revenue in foreign markets, according to Goldman Sachs.

Together, these factors can exert a small but visible drag on corporate earnings. Credit Suisse estimates that a 8-10% increase in the dollar’s value leads to a 1% fall in U.S. corporate profits.

Anonymous said...

India's external debt rose from 83 billion USD in 1991 to a record high of 620 billion USD in 2022.

That is seven fold increase!

https://m.rbi.org.in//Scripts/BS_PressReleaseDisplay.aspx?prid=53948

Riaz Haq said...

Anon: "India's external debt rose from 83 billion USD in 1991 to a record high of 620 billion USD in 2022. That is seven fold increase"


India's GDP has also grown from $320 billion in 1991 to $3.2 trillion in 2021...that is 10 fold increase, while India's debt has grown 7 fold. That's not bad.


https://www.macrotrends.net/countries/IND/india/gdp-gross-domestic-product

Riaz Haq said...

A US Recession Will Also Come to India’s Tech Hub
Analysis by Andy Mukherjee | Bloomberg

https://www.washingtonpost.com/business/a-usrecession-will-also-come-to-indias-tech-hub/2022/07/25/0e4e899e-0bd6-11ed-88e8-c58dc3dbaee2_story.html

Look closer at the financial results of IT firms, and you’ll see signs of stagflation in plummeting profitability. Infosys managed to boost rupee earnings by just over 3% from a year earlier in the June quarter, even with nearly 24% revenue growth. A 20% EBIT margin — earnings before interest and tax as percentage of revenue — is a 3.6 percentage point drop year on year. In fact, it’s even worse than what the bellwether outsourcing firm was garnering immediately before the pandemic gave a big lift to the business.

At Infosys’s traditional Bengaluru rival, Wipro Ltd., the EBIT margin fell to its lowest since the September 2018 quarter. Partly that was because it signed up 15,000-plus net new employees, including 10,000 fresh graduates in three months through June 30. (Infosys bumped up its headcount by more than 20,000 during the same period.) But then again, competitor HCL Technologies Ltd., which hit the brakes by slashing quarterly net hiring by almost four-fifths to about 2,000, also saw a lower-than-expected EBIT margin of 17%, a multiyear low.

The margin at Tata Consultancy Services Ltd., the biggest Indian IT vendor, was better at 23.1%, but it was still 2.4 percentage points narrower than for the June quarter of 2021. TCS management has indicated that $7 billion to $9 billion worth of quarterly deal wins could be a sustainable rate. That’s “flattish” from a year-on-year growth basis, Nomura says.

Profitability might remain under pressure for the rest of this year — both because of a slowdown in the West, and the way the industry is structured in India. Offshoring is profitable, but the people it employs won’t stay on their jobs forever without onsite postings at client locations and dollar wages. With the pandemic over, travel and visa expenses are adding up. But the Indian vendors will struggle to get paid more — customers will cite the near-7% drop this year in the rupee as a reason to not bump up the dollar price of contracts. The exchange-rate advantage, however, will be insufficient to make up for the rising pressure of rupee costs.

For one thing, salary increases can’t be skimped on: TCS employs more than 600,000 people, but its attrition rate is almost touching 20%, more than double from a year earlier. Employee retention appears to be even more challenging at Infosys, where attrition surged past 28% in the June quarter. Startups that target India’s local e-commerce or fintech markets compete for the same programmers as the software exporters. While small, private-equity-funded firms are turning cautious about burning cash on payroll, an employers’ market for coding talent is perhaps a story for next year. With India’s domestic inflation rate at 7%, IT services firms have little scope for belt-tightening on wage costs.

Ultimately, all of them will resort to “pyramiding” to protect their margins. It basically means putting a lot of inexperienced code-writers under an experienced project manager and hoping that the client will still come out happy. But since rookies’ productivity has its limits, the more complicated programming will have to be sub-contracted to smaller vendors. The costs of doing that are rising as well.

Ahmed said...


Dear Sir

I hope you are doing well , sir I was having a debate with an Indian and I was trying to convience him that SUPARCO (Space Agency of Pakistan ) has already made its satelite called “ BADAR” , after reading my comments ,Indians proudly and confidently claim that developing and designing a satelite is a child’s play , according to them what is more important is to launch those satelite in space and they claim that India has its own launching pad for satelite .

Sir can you pls throw some light on this ?
Is it true that it is easy to design and develope a satelite and is it true that the launching pad of ISRO(Indian Space Research Organization) is indigenously made by them ?

I would appreciate if you could tell me something about it .

Regards

Riaz Haq said...

Ex #RBI Gov R. Rajan: Turning #Muslims Into "2nd Class Citizens" Will Divide #India. Warning against majoritarianism, he cited #SriLanka as an example of what happens when politicians try to deflect a job crisis by targeting minorities. #Modi #Islamophobia https://www.ndtv.com/india-news/turning-minority-into-2nd-class-citizens-will-divide-india-raghuram-rajan-3209792

Former Reserve Bank of India Governor Raghuram Rajan on Saturday said India's future lies in strengthening liberal democracy and its institutions as it is essential for achieving economic growth.
Warning against majoritarianism, he said Sri Lanka was an example of what happens when a country's politicians try to deflect a job crisis by targeting minorities.

Speaking at the 5th conclave of All India Professionals Congress, a wing of the Congress party, in Raipur, he said any attempt to turn a large minority into "second class citizens" will divide the country.

Mr Rajan was speaking on the topic 'Why liberal democracy is needed for India's economic development'.

".What is happening to liberal democracy in this country and is it really that necessary for Indian development? ... We absolutely must strengthen it. There is a feeling among some quarters in India today that democracy holds back India ... India needs strong, even authoritarian, leadership with few checks and balances on it to grow and we seem to be drifting in this direction," Mr Rajan said.

"I believe this argument is totally wrong. It's based on an outdated model of development that emphasizes goods and capital, not people and ideas," said the former chief economist of the International Monetary Fund.

The under-performance of the country in terms of economic growth "seems to indicate the path we are going on needs rethinking," he said.

The former RBI governor further said that "our future lies in strengthening our liberal democracy and its institutions, not weakening them, and this is in fact essential for our growth."

Elaborating on why majoritarian authoritarianism must be defeated, he said any attempt to "make second class citizens of a large minority will divide the country and create internal resentment." It will also make the country vulnerable to foreign meddling, Me Rajan added.

Referring to the ongoing crisis in Sri Lanka, he said the island nation was seeing the "consequences when a country's politicians try to deflect from the inability to create jobs by attacking a minority." This does not lead to any good, he said.

Liberalism was not an entire religion and the essence of every major religion was to seek out that which is good in everyone, which, in many ways, was also the essence of liberal democracy, Mr Rajan said.

Claiming that India's slow growth was not just due to the COVID-19 pandemic, Mr Rajan said the country's underperformance predated it.

"Indeed for about a decade, probably since the onset of the global financial crisis, we haven't been doing as well as we could. The key measure of this underperformance is our inability to create the good jobs that our youth need," the former RBI governor said.

Riaz Haq said...

Ex #RBI Gov R. Rajan: Turning #Muslims Into "2nd Class Citizens" Will Divide #India. Warning against majoritarianism, he cited #SriLanka as an example of what happens when politicians try to deflect a job crisis by targeting minorities. #Modi #Islamophobia https://www.ndtv.com/india-news/turning-minority-into-2nd-class-citizens-will-divide-india-raghuram-rajan-3209792

Citing the strident protests against the Centre's 'Agniveer' military recruitment scheme, Mr Rajan said it suggested how hungry the youths were for jobs.

"Just a while ago you saw 12.5 million applicants for 35,000 railway jobs. It is particularly worrisome when India has a scarcity of jobs even when so many women are not working outside their homes. India's female labour force participation is among the lowest in G-20 at 20.3 percent as in 2019," he pointed out.

Talking about the "vision of growth" of the current government led by Prime Minister Narendra Modi, he said it centres around the term 'atmanirbhar' or self-reliance.

"Now, to the extent it emphasizes better connectivity, better logistics, better roads and devotes more resources to it, in some way this (atmanirbhar vision) seems the continuation of the past reformed decades. And that's good," he said.

But, the former RBI governor said, in many ways a look at what 'atmanirbhar' is trying to achieve takes one back to an early and failed past where the focus was on physical capital and not human capital, on protection and subsidies and not on liberalization, on choosing favourites to win rather than letting the most capable succeed.

Asserting that there was a misplaced sense of priorities, Mr Rajan said the nation was not spending enough on education, with tragic consequences.

"Many (children) not having been to school for two years are dropping out. Their human capital, which is their and our most important asset in the coming years, is something we are neglecting. We are failing them by not devoting enough resources to remedial education," Mr Rajan said.

Riaz Haq said...

Kaushik Basu
@kaushikcbasu
IMF's just-released World Economic Outlook shows, over 3 years, 2020-2, India's annual growth is 2.9%, behind China (4.5%) & low-income country average (3.1%). This is not where India was; its economy has enough strength. This is the price of divisive politics & erosion of trust.

https://twitter.com/kaushikcbasu/status/1552926615662985216?s=20&t=VXI6HwUCK9o_mKUrecMonA

Riaz Haq said...

#India’s #Trade #Deficit Widens to Record On Costly Imports, Weak #Rupee. The gap between #exports and #imports widened to $31.02 billion in July, from $26.18 billion in June. #Modi #BJP #Economy #Inflation #Currency #Forex https://www.bloomberg.com/news/articles/2022-08-02/india-s-trade-gap-widens-to-record-on-costly-imports-weak-rupee#xj4y7vzkg

India’s trade deficit ballooned to a record high in July, as elevated commodity prices and a weak rupee inflated the country’s import bill.

The gap between exports and imports widened to $31.02 billion in July, from $26.18 billion in June, B.V.R Subrahmanyam, India’s trade secretary, told reporters at a briefing in New Delhi Tuesday, citing preliminary data. The trade deficit in June was a record before the latest numbers were released.

Riaz Haq said...

Record #trade deficit adds to #India's external balance challenges, #Indian currency woes. QuantEco Research revised their CAD projections for India higher for the current fiscal year to $130 billion from $105 billion. #Forex #INRUSD #economy #deficit https://www.reuters.com/world/india/record-trade-deficit-adds-indias-external-balance-challenges-rupee-woes-2022-08-03/

India's record high trade deficit in July signals a further deterioration in the country's external balances, which is likely to keep the rupee under pressure, analysts said on Wednesday.

Trade deficit in Asia's third largest economy widened to an all-time high of $31 billion, data on Tuesday showed, prompting concerns about the country's ability to fund its current account deficit and hurting the outlook for the rupee.

"I think after looking at the July trade deficit, we need to re-work on our CAD and BoP number, and thus the view on the rupee", Vikas Bajaj, head of currency derivatives at Kotak Securities, said.

Bajaj pointed out that until now the market consensus for India's current account deficit (CAD) was around $100 billion for the current fiscal year ending in March.

"But this definitely looks out of whack after July's trade number," he said.

In a note on Wednesday, QuantEco Research revised their CAD projections higher for the current fiscal year to $130 billion from $105 billion and the balance of payments (BoP) estimate to $60 billion from $35 billion.

The partially convertible rupee was trading at 79.02 per U.S. dollar in afternoon trade, 0.4% weaker on the day. On Tuesday, the unit had touched 78.49, its highest level since June 28. The local currency hit a record low of 80.0650 on July 19.

Vivek Kumar, a economist at QuantEco, said the recent recovery in the rupee from 80 will prove to be temporary and expects the local unit to fall to 81 to the dollar in the current fiscal year.

Bajaj said the recovery on the rupee was "broadly done" and that the currency "should once again see slow and steady move towards 80+ levels".

Riaz Haq said...

#India, #SriLanka, #Pakistan #debt woes evoke memories of 1997 #Asian currency crisis. Back then, #Thailand’s devaluation led to a #global #market collapse. A sequel might be in the works. #PKR #INR #inflation #economy #rupee https://www.bloomberg.com/news/articles/2022-08-03/india-sri-lanka-pakistan-debt-woes-evoke-memories-of-1997#xj4y7vzkg

Pakistan is scrambling for a bailout to avert a debt default as its currency plummets. Bangladesh has sought a preemptive loan from the International Monetary Fund. Sri Lanka has defaulted on its sovereign debt and its government has collapsed. Even India has seen the rupee plunge to all-time lows as its trade deficit balloons.

Economic and political turbulence is rattling South Asia this summer, drawing chilling comparisons to the turmoil that engulfed neighbors to the east a quarter century ago in what became known as the Asian Financial Crisis.