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

  • India's $20 billion refinery expansion to cut fuel oil output

    NEW DELHI/SINGAPORE (Reuters) - India may turn into a net importer of fuel oil as its state-owned refiners are making multi-billion dollar investments to upgrade their refineries and produce more profitable refined products such as gasoline or diesel. India has traditionally been a net exporter of fuel oil, the residue oil left after initial crude refining that is typically used in shipping and power generation. Three state-run energy firms -- Indian Oil Corp, Bharat Petroleum and Hindustan …

  • Gold unchanged as Asia stocks ease; U.S. GDP data in focus
    Gold unchanged as Asia stocks ease; U.S. GDP data in focus

    Gold held steady on Friday amid an easing dollar and subdued Asian stocks, staying on course for a second straight weekly gain ahead of U.S. third-quarter GDP data expected later in the day. Spot gold was little changed at $1,268.05 an ounce at 0715 GMT. U.S. gold futures slipped 0.1 percent at $1,268.80 per ounce. …

  • Sensex edges higher; Tech Mahindra, Tata Group gain
    Sensex edges higher; Tech Mahindra, Tata Group gain

    Indian shares edged higher on Friday boosted by a recovery in Tata Group companies such as Tata Motors, while software maker Tech Mahindra Ltd jumped after reporting a surge in quarterly revenue. The Sensex was up 0.1 percent at 27,946.66 as of 0642 GMT, while the Nifty traded 0.3 percent higher at 8,640, on track for its first gain in four sessions. Tech Mahindra was the top percentage gainer on the NSE index, rising as much as 7.2 percent, after reporting the biggest revenue growth among …

  • Consumers, exports seen buoying U.S. third-quarter GDP growth

    U.S. economic growth likely accelerated in the third quarter as consumers maintained a strong pace of spending and exports surged, potentially keeping the Federal Reserve on track to raise interest rates in December. In addition to support from consumer spending and exports, the economy is also expected to have received a boost from a rebound in mining activity and inventory investment. "As long as you have consumer spending, some stabilization of capital spending, trade kicking in and …

  • BOJ loses bark and bite under humbled Kuroda

    As his term winds down, Bank of Japan Governor Haruhiko Kuroda has retreated from both the radical policies and rhetoric of his early tenure, suggesting there will be no further monetary easing except in response to a big external shock. This new approach will be on show next week, when the BOJ is set to keep policy unchanged despite an expected downgrade in forecasts that could show Kuroda won't hit his perpetually postponed 2 percent inflation target before his five-year term ends in April …

  • Oil prices set for weekly drop on doubts OPEC can coordinate output cu …

    Oil prices were steady on Friday, but on track for a weekly loss of more than 2 percent on uncertainty over whether OPEC would be able to coordinate a production cut big enough to curb a global glut that has dogged markets for two years. U.S. West Texas Intermediate (WTI) crude was down 1 cent at $49.71 a barrel. Traders said there was reluctance in the market to move prices too far in either direction given the uncertainty over a output cut by the Organization of the Petroleum Exporting …

  • UBS ups reserves for U.S. mortgage case, forecasts tough markets
    UBS ups reserves for U.S. mortgage case, forecasts tough markets

    UBS increased reserves for penalties tied to mis-selling residential mortgage-backed securities (RMBS) by more than $400 million to $1.405 billion as it posted an 11 percent rise in third-quarter pre-tax profit. The Swiss bank made the disclosure in its quarterly report on Friday, following news last month that the U.S. Department of Justice had demanded a $14 billion fine from Deutsche Bank in a similar investigation. UBS's pre-tax profit for the three months to end-September rose 11 percent …

  • Tata Steel to continue European consolidation strategy

    Mumbai, Oct 28 (IANS) Tata Steel on Friday said that it would continue to pursue its European consolidation strategy and talks are "ongoing and progressing" for a potential joint venture of its European steel business. "...Tata Steel would also like to clarify that it continues to pursue its European consolidation strategy and the talks with ThyssenKrupp AG for a potential joint venture of its European steel business are currently ongoing and progressing. …


  • This is the sector PM Modi believes can be India's job machine

    In June 2016, Modi took the initial steps towards fulfilling his promise of creating mass jobs for the young, close to two years after taking over as prime minister. A lot of pieces need to fall in place ... …

  • Innovation at a Price

    The new Moto Z is a fine phone, but its projector module is far from perfect. …

  • OPEC's Slippery Road

    Its diminishing influence and internal differences suggest that low oil prices will continue. …

  • Worth a Watch

    While similar in looks to the previous apple watch, this one is packed with new features. …

  • The Politics of Black Money

    The decisive role money plays in polls is a catalyst for the rampant corruption and unchecked black money in the country. …

  • You're Hired

    Companies are increasingly turning to social media to hire talent. …

  • Forced Merger

    State Bank of India seems to be biting off more than it can chew by merging five associate banks with itself. …


  • Most Actives
    Most Actives
    NamePriceChange% Chg
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg


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.
to view quotes in your portfolios.

Yahoo Cricket