iipm think tank
> Currency Crisis!
Daily Indian Media
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Slowdown and crisis together
Everyone seems to be confused about where exactly the Rupee is headed and whether the Chinese currency Renmimbi will ever appreciate or not. The only thing where there is a clear consensus is that the American economy is in trouble and that a slowdown in the American economy will have a definite impact on currency movements and values in Asia.
With US Federal Reserve’s decision to slash the interest rate by 0.75% in order to give a momentum to a sluggish US economy, the global exchange rate seems to get disturbed. This decision will eventually affect the FDI flows in India and China. Moreover, with slashing of interest rates in US, the FDI flow and the Indian currency (as well as the Chinese currency) will get negatively affected.
The Fed Rate cut did spark some relief, but the poor performance of top US investment banks like Goldman Sachs and Lehman Brothers did neutralise the positive effect. However, China’s renminbi gained some ground against the Japanese yen and the Hong Kong dollar to stand at 6.4564 yuan against 100 Japanese yen and 0.96189 yuan against one Hong Kong dollar! seems shocking.. Huh..
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