Economic update

§Bench mark interest rate ( Repo rate )  reduced by 25 bps to 7.75% after 9 Months  .  Objective :- To boost  Investment  &  GDP Growth  .   Impact :-  Bank  likely  to charge  less  interest  on loan  . Housing  ,Auto  , Consumer Durable  sector  may get  benefit

  

§ Cash Reserve  ratio  (CRR )  cuts by 25 bps  to 4%  . Impact :-  Will add  liquidity  to the Banking sector by  INR  18000 Crores .  More  Credit  flow to Industry  to boost Economy .  

§ GDP growth projection for FY 13  revised to 5.5% and inflation  target reduced to  6.8% by March 13

§  Foreign Direct Investment (FDI )  to India touched two year  low  in Nov 12 .  FDI  received during April ~Nov 12  is  only  USD 15.84 Billion  ( down  31%  YOY )

§ Indian Central Bank ( RBI )  has removed the restriction  it had imposed  one year back on Dollar Buying  by  Indian Companies .  (Indian  Companies  had o use the  Dollar  balance   in    EEFC A/c  completely before buying Dollar  from market .before  this  relaxation )

§Indian Government has deferred  the controversial   GAAR rules  by two year  ( to be effective  from Assessment year  2016~17 )

§  Positive  development  in GST  implementation  in India  as  Center & State Government  reaching  to consensus  on  key  differences  during the  State  Finance Ministers  meeting . 

§  China  January Month Purchasing Manger Index  (PMI ) has touched  two year high  to 51.9  level  due to improved Manufacturing activity

 

§ China  December quarter  GDP Growth à 7.9%  ( 2012  overall  GDP growth   7.8%  à  This is the slowest growth since  the year 1999 

 

§ South Korea   December Quarter GDP Growth  à 1.5%

 

§ UK   registered  negative GDP  growth  of 0.3%  in December  12 Quarter 

 

§INR  has remained  range bound  between  53.50 ~ 54 level .  RBI  rate cut decision  had positive  impact  to INR  .  Budget  outcome  will  be next   trigger  for INR 

 

§Euro has   maintaining its strength  due to return of  investor confidence in Euro Zone Assets  ( 1.34  against  USD )

 

§Pound  sterling  has touched  5 Month  low against  US Dollar and  13 Months low against Euro 

 

§Japanese  yen   has  weakened  against  USD  and touched  low  of 91 . This  is   as per the  currency  strategy  of Japan Government