India says better prepared to deal with Fed tapering
Thursday, 19 December 2013 00:50
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Reuters: India is in a much better position to deal with the impact of the U.S. Federal Reserve’s possible move to reduce monetary stimulus that has supported inflows of cash to emerging markets, a top government official said on Wednesday.
Globally, investors are awaiting the outcome of a Federal Reserve meeting on Wednesday for some clarity as to when the central bank will begin trimming its stimulus.
Worries over the Fed’s possible tapering had triggered massive capital outflows this summer from emerging markets. Saddled with hefty current account and fiscal deficits, India looked the most vulnerable. The rupee went in a free-fall, losing as much as 20% against the dollar before recovering.
Arvind Mayaram, India’s Economic Affairs Secretary, reckons Asia’s third-largest economy is in a much better shape this time, thanks to the measures taken to bolster the forex reserves and control the current account deficit, to handle the fallout of any decision to reduce the stimulus.
“So, all these measures taken together I believe would keep the market stable and there is not going to be a very great impact from the taper on the rupee going forward,” he told reporters on the sidelines of a G20 conference.
“I would not say no impact but I would say there would be little impact and whatever impact is there would be short-term impact on the rupee.”
