15 Jul 2014
India's new budget sets stage for needed reforms - J.P.Morgan
FXStreet (Łódź) - Sara Yates, Global Head of FX Strategy at J.P. Morgan Private Bank describes the India's new budget, presented last Thursday, as a fiscally sensible one, setting the stage for reforms.
Key quotes
"Key initiatives included measures to benefit India’s capital account, such as raising the limit on FDI in defence and insurance sectors from 26% to 49% and extending the 5% withholding tax on corporate bonds until the 30th June 2017."
"In other positive news, the fiscal deficit target was kept at 4.1% of GDP (the market had expected it to increase)."
"What was missing from the budget was how India’s subsidies would be tackled."
"However, with the monsoon rain already substantially below normal (which may cause crops to fail and put upward pressure on food prices), we think there was little room for the government to address this just yet."
"Despite our positive reaction, the rally in USDINR suggested the market was disappointed by the budget."
"However, a more recent flow of positive interpretations helped the INR regain some ground as the weekend approached."
"We continue to think that the INR is a great currency to hold for carry. Our 1y forecast remains 60."
Key quotes
"Key initiatives included measures to benefit India’s capital account, such as raising the limit on FDI in defence and insurance sectors from 26% to 49% and extending the 5% withholding tax on corporate bonds until the 30th June 2017."
"In other positive news, the fiscal deficit target was kept at 4.1% of GDP (the market had expected it to increase)."
"What was missing from the budget was how India’s subsidies would be tackled."
"However, with the monsoon rain already substantially below normal (which may cause crops to fail and put upward pressure on food prices), we think there was little room for the government to address this just yet."
"Despite our positive reaction, the rally in USDINR suggested the market was disappointed by the budget."
"However, a more recent flow of positive interpretations helped the INR regain some ground as the weekend approached."
"We continue to think that the INR is a great currency to hold for carry. Our 1y forecast remains 60."