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

  • BSE allocates shares worth Rs 373 crore to Anchor Investors

    Mumbai, Jan 21 (IANS) Just before the launch of its initial public offer on Monday, stock exchange major BSE allocated 4,628,158 equity shares to 'Anchor Investors' worth Rs 373 crore. The company allocated ... …

  • Protectionism fears remain but US, India collaboration to continue: FinMin, …

    New Delhi, Jan 21 (IANS) With Donald Trump taking over the reins of the US, industry stakeholders in India and the government feel that the fears of protectionism and curbs on H1B visas will remain, but that the US will continue its financial and technological collaboration with India. "We believe that US will continue to support global growth with financial and technological collaborations and investments," Finance Secretary Ashok Lavasa told IANS. Nevertheless, industry body Associated …

  • Tata Communications arm invests in Dutch firm

    Mumbai, Jan 21 (IANS) Tata Communications Ltd's Netherlands subsidiary on Saturday announced that it has invested in Teleena Holding B.V., a mobile virtual network enabler, making it the largest investor ... …

  • JK Paper's Q3 net profit up 173%

    New Delhi, Jan 21 (IANS) Branded paper company JK Paper on Saturday reported a surge of 173 per cent in its net profit for the third quarter (Q3) of 2016-17. The company's net profit stood at Rs 35.89 ... …

  • Globus Spirits starts commercial production in West Bengal

    New Delhi, Jan 21 (IANS) Globus Spirits Ltd on Saturday said it started commercial production in its West Bengal unit to cater to the market of the alcohol deficit state. The production unit situated at Panagarh industrial park in Burdwan district has the capacity of producing 1, 20,000 bulk litre per day and a bottling capacity of 15,000 cases of IMFL and country liquor per day. The liquor maker had also announced that it resumed operations and commenced commercial production in its Bihar …

  • Equities tumble as negative global cues spook investors

    Mumbai, Jan 21 (IANS) After three weeks of consistent gains, key Indian equity indices were pulled lower during the trade period ended Friday due to negative global cues, broadly weak quarterly results ... …

  • Petrol prices cross 2013 peaks, but political opposition missing

    New Delhi, Jan 21 (IANS) In February 2013, opposition parties, notably the Bharatiya Janata Party (BJP), took to the streets in protest as the price of petrol in the national capital spiralled to Rs 69.06. The BJP will not take this lying down," the then party spokesperson Rajiv Pratap Rudy had fulminated. Petrol prices in the national capital have shot up to Rs 71.14. …

  • NPCI advises PhonePe App to comply with UPI guidelines

    New Delhi, Jan 20 (IANS) The National Payments Corporation of India (NPCI) on Friday directed mobile phone e-wallet PhonePe to comply with the UPI (Unified Payments Interface) guidelines. The development comes a day after the NPCI advised lending major ICICI Bank to 'open UPI transactions' through the mobile phone e-wallet 'immediately'. "Based on a review by NPCI on ICICI Bank's action to block UPI transactions made through PhonePe App, NPCI has noted that PhonePe and Flipkart Apps are in …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    17.35+0.19+1.11%
    SUZLON.BO
    34.30-4.45-11.48%
    ADANIPOWER.BO
    27.40+3.35+13.93%
    RUCHISOYA.BO
    9.89-0.38-3.70%
    JPASSOCIAT.BO
    71.40+2.05+2.96%
    IDEA.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    24.60+4.10+20.00%
    CHANDRAP.BO
    15.95+2.65+19.92%
    SRL.BO
    40.10+6.65+19.88%
    ARSHIYA.BO
    29.95+4.95+19.80%
    ACFSL.BO
    102.15+15.25+17.55%
    GPIL.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    37.15-9.25-19.94%
    ABHIINFRA.BO
    34.30-4.45-11.48%
    ADANIPOWER.BO
    46.45-4.80-9.37%
    FMNL.BO
    81.05-7.75-8.73%
    KALPACOMME.BO
    17.84-1.68-8.61%
    INVENTURE.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