The relentless rise in coronavirus infections in India is likely to derail the economic recovery and prompt the Reserve Bank of India (RBI) to delay the exit from easy monetary policy, India economists at HSBC noted.
Key quotes
“The gradual exit from the loose monetary policy may be delayed, but can’t be ignored. We continue to believe the Reserve Bank of India (RBI) will embark on a gradual exit (raise the reverse repo rate and change its stance to neutral) in 4Q2021, when the number of individuals vaccinated reaches critical mass.’
“The growth cost of these lockdowns could be around 1% of the country’s GVA in the June quarter and could rise further if they are extended or replicated by other states.”
“Fiscal finances may face a three-front challenge, led by a rise in the demand for social welfare schemes, weaker tax revenues, and uncertainties about asset sales.”
This comes after India recorded a surge of over 300,000 fresh coronavirus cases on Wednesday, making it the highest single-day count recorded in any country so far.
USD/INR holds below 75.50
USD/INR consolidates its recent advances to nine-month tops of 75.57, as the Indian rupee remains undermined by the unprecedented covid crises hitting the country yet again.
The spot currently trades at 75.43, almost unchanged on the day.
Share
