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

  • Former teenage soldier hatches millions from Chinese egg futures

    A decade ago Zhang Xiongjie was a teenage infantryman patrolling China's bleak border with North Korea. Now he stays in swanky hotels and drives a Mercedes Benz CLS - a remarkable rags-to-riches journey achieved in part by dominating one of the most obscure corners of China's unruly financial markets: egg futures. The story of how he earned so much money, so fast - 600 million yuan ($96.63 million), he says, in 2014 - highlights the casino-like nature of China's nascent futures markets, and …

  • Hopes of rate cut, more rainy days to support equity markets

    Mumbai, Aug 2 (IANS) A positive bias is expected to rule the Indian equity markets in the coming week, with investors hoping for a rate cut by the apex bank, passage of key bills in parliament and more rainy days ahead, experts said on Sunday. "The most important trigger for the markets is the Reserve Bank of India's (RBI) monetary policy review. A cut in interest rates will restore investors' confidence and open the flood gates of funds," Devendra Nevgi, chief executive of ZyFin Advisors, …

  • Telangana moots Data Analytics Park in Hyderabad

    Hyderabad, Aug 1 (IANS) The Telangana government on Saturday proposed to set up here a Data Analytics Park, which will be the first of its kind facility in the country. State Information Technology Minister K. Tarakarama Rao floated the proposal while inaugurating the office of Techwave Consulting Inc, a US headquartered global system integrator. He said that they propose to set up the park as data analytics is an emerging technology and has a good future, noting companies are flooded with …

  • Modi pushes exports, ethanol fuel to lift sugar economy

    New Delhi, Aug 1 (IANS) Prime Minister Narendra Modi on Saturday called for higher ethanol content in petrol and a concerted effort to push exports in a bid to lower the current sugar surplus and protect the interests of farmers to whom factories owe an estimated Rs.15,000 crore in cane arrears. …

  • Automobile manufacturers report healthy July sales

    Passenger automobile major Maruti Suzuki's July sales grew by 20.1 percent to 121,712 units from an off-take of 101,380 units in the corresponding month of 2014. The company's domestic sales rose by 22.5 percent at 110,405 units. Chennai-based Hyundai Motor India's sales rose by 5 percent to 50,408 units - up from 48,014 units sold in the corresponding month of 2014. …

  • Delhi slashes VAT rates on cutlery, wax and wood

    New Delhi, Aug 1 (IANS) The Arvind Kejriwal-led Delhi government on Saturday slashed VAT rates on all cutlery items made of metal from the existing 12.5 percent to five percent, an official statement said. VAT rates on wax, wood and timber items were also reduced. "In keeping with the Delhi government's agenda of implementing pro-people tax reforms, the finance department has notified more than seven per cent reduction in the Value Added Tax (VAT) charged on the items falling in three …

  • Explore possibilities of sugar export, says Modi

    New Delhi, Aug 1 (IANS) Prime Minister Narendra Modi on Saturday called for exploring all possibilities for export of sugar to address the current supply-demand issues with regard to the sector. At a high-level meeting to review the issues related to the sugar sector, he took note of the current supply-demand issues with regard to sugar and called for assiduous efforts to increase ethanol blending of fuel, an official release said here. He also called for exploring all possibilities for …

  • Textile sector seeks sops, reliefs to spur exports

    New Delhi, Aug 1 (IANS) The textile sector on Saturday sought from the government more funds for technology upgrade, duty reduction on man-made fibres (MMF) and interest subvention to spur exports. "We have urged Finance Minister Arun Jaitley to allocate adequate funds for technology upgradation, cut duties on MMF and restore interest subvention for exporters," a trade body representative said in a statement here. In a representation to Jaitley, the Federation of Indian Chamber of Commerce …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    27.25+1.45+5.62%
    SPICEJET.BO
    21.900.000.00%
    SUZLON.BO
    151.20-1.60-1.05%
    IDFC6.BO
    302.50+11.55+3.97%
    ICICIBANK.BO
    26.70+4.45+20.00%
    ANDREWYU.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    116.75+28.75+32.67%
    PALRED.BO
    35.40+5.90+20.00%
    PRANAVSP.BO
    26.70+4.45+20.00%
    ANDREWYU.BO
    27.00+4.50+20.00%
    MRSS.BO
    114.65+19.10+19.99%
    PUNJCOMMU.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    2,662.05+402.90+17.83%
    BSX.BO
    35.60-8.90-20.00%
    SKFL.BO
    51.65-10.25-16.56%
    WALLFORT.BO
    283.70-55.00-16.24%
    NUCLEUS.BO
    23.00-3.90-14.50%
    CAMEXLTD.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