2014: Predictions for rupee, inflation


It is that time of the year when stock market analysts churn out predictions for 2014. Goldman Sachs, a US-based global investment bank, predicts a faster economic growth for India next year but expects challenges in terms of inflation and high interest rates.
 
Here are five expectations of the bank on India in 2014:
 
1. Better Growth:  Goldman Sachs predicts India’s economy to grow at 5.5% in 2014-15 due to high exports and increase in investment demand. India’s economy represented by the GDP is expected to grow at 4.3% in 2013-14. GDP is calculated by tallying all the expenses and investments in the country, be it at the individual, organisational or government levels. It represents the total value of all the goods and services produced in the quarter. It is reported in two ways – at current and constant prices.

2. Lower inflation: The consumer inflation represented by CPI index is forecast at 8.3% (9.7% forecast for 2013-14) and wholesale prices are expected to rise at 6.3% in 2014-15 (6.5% in the year ago period) due to rising administered prices and an elevated inflation expectation. WPI is measured by calculating the increase in wholesale prices of goods. This is generally lower than retail or market prices. CPI is also called retail inflation as it measures any rise in the prices at which goods are bought by the end consumer.

3. High interest rates:  Goldman Sachs expects the Reserve Bank of India to continue to hike rates due to persistent inflation. “We see the repo rate moving up to 8.5% by mid-2014, as the central bank moves to targeting the CPI,” the investment bank predicts. For the year 2013-14, the repo rate is lower at 7.75%. RBI decides the lending rates as part of its ‘monetary policy review’. It does so by setting the repo rate – the rate at which RBI lends to commercial banks. No loan rate can fall below the benchmark repo rate.

4. Lower current account deficit: Goldman Sachs predicts the current account deficit to remain under 3% of GDP in FY14-FY16, close to sustainable levels, driven by better exports alongside weaker oil and gold imports. India is battled a wide current account deficit (CAD)– the amount it owes to the world. Trade deficit is a major part of the current account deficit. A wide CAD puts pressure on the rupee and fuels inflation.

5. Rupee to fall: Goldman Sachs predicts the rupee to continue to depreciate gradually due to higher inflation than trade partners, the improvement in the current account and balance of payments may limit the magnitude of depreciation. The bank predicts the rupee to hover around Rs 65 to US dollar in 2014-15. The rupee has been making headlines the past few months after it dropped to its lifetime-low of 68-to-a-dollar levels.

Related Video



This work is produced by Simplus Information Services Pvt Ltd. Customer engagement through content. Like this article? Click here for more articles from the same provider.

Latest News

  • ONGC calls Boots and Coots experts from US to control Olpad blow out

    New Delhi, Apr. 19 (ANI): The ONGC has called the globally renowned oil and gas blow out control experts Boots and Coots from the US to contain the crisis at well Olpad-31, which caught fire during repair ... …

  • Rajasthan CM to visit Kolkata to draw investment

    Kolkata, April 19 (IANS) Rajasthan Chief Minister Vasundhara Raje will undertake a two-day visit to Kolkata from Tuesday to meet potential investors and showcase the business opportunities in her state. Raje will lead a delegation comprising Minister for Higher Education Kali Charan Saraf, Minister for Public Works Department and Transport Yunus Khan and Principal Secretary Small Industries and Khadi Gramodyog Rajeeva Swarup, an official statement said here. The event is part of a number of …

  • Cellular operators reaffirm support for net neutrality

    New Delhi, April 19 (IANS) The Cellular Operators Association of India (COAI) on Sunday reaffirmed its support to the principle of net neutrality, making a strong pitch for the government's vision of "net equality" that will enable access to the internet for a billion Indians. Our job is to enable consumers to benefit from that freedom," COAI said in a statement here. Network neutrality, or open inter-working, means that in accessing the World Wide Web one is in full control over how to go …

  • India's investment climate better than other BRICS nations: Report

    New Delhi, April 19 (IANS) Though India has a better investment climate among BRICS nations, its regulatory and tax system-related challenges are impacting immediate investment plans, over 90 corporate leaders of German high-tech companies have said in a survey. The survey, conducted by global accounting consultancy firm EY and research agency Delphi, timed with the recently concluded Hanover Messe 2015 industrial fair where India was partner country. "(A total of) 94 percent of the surveyed …

  • China makes big cut in bank reserve requirement to fight slowdown
    China makes big cut in bank reserve requirement to fight slowdown

    China's central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to the world's second-biggest economy to help spur bank lending and combat slowing growth. The People's Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for all banks by 100 basis points to 18.5 percent, effective from April 20, the central bank said in a statement on its website www.pbc.gov.cn. "Though the growth in the …

  • Now, make 5-second video calls to friends using Quickie

    Washington, April 19 (ANI): Apple iPhone users who detested the idea of long phone calls that dragged on endlessly and rarely used FaceTime can now turn to Quickie, a nifty little iOS app that allows users ... …

  • Now, Yahoo Mail's 'contact cards' get support for Twitter, LinkedIn

    Washington, April 19 (ANI): Yahoo Mail's smart "contact cards" now include support for Twitter and LinkedIn information and will allow users to see a contact's most recent tweets in addition ... …

  • UAE telecoms company Etisalat's quarterly profit up 7.6 pct

    Abu Dhabi-listed Etisalat reported a 7.6 percent rise in first-quarter profit on Sunday, with its acquisition of a majority stake in Maroc Telecom having helped to lift revenue by nearly a third and its subscriber base by a fifth. Etisalat, which operates in 19 countries across the Middle East, Africa and Asia, made net profit of 2.18 billion dirhams ($593.6 million) in the three months to March 31, the company said in a statement, against 2.02 billion dirhams a year earlier. The United Arab …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    27.65-0.20-0.72%
    SUZLON.BO
    14.49+0.69+5.00%
    DRDATSONS.BO
    62.05+4.80+8.38%
    SANGHIIND.BO
    16.81+1.57+10.30%
    MOREPENLAB.BO
    310.10-2.15-0.69%
    ICICIBANK.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    108.90+18.15+20.00%
    KANDAGIRI.BO
    106.65+17.75+19.97%
    KALPACOMME.BO
    32.75+5.45+19.96%
    FILATEX.BO
    61.30+10.20+19.96%
    CANTABIL.BO
    28.35+4.55+19.12%
    SANDUPHQ.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    68.45-16.75-19.66%
    BEEKAY.BO
    44.70-10.45-18.95%
    HPCBL.BO
    18.25-3.15-14.72%
    CONART.BO
    25.70-4.25-14.19%
    CAMEXLTD.BO
    10.00-1.34-11.82%
    JOINDRE.BO

QUOTES

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

Yahoo Cricket