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India rate hike will not stem outflows, leaving central bank in a bind
MUMBAI: India’s first rate hike in four years is unlikely to slow or reverse record high capital outflows, leaving the central bank battling the vicious cycle of a weakening currency and higher inflation in a hostile global environment. The modest hike of 25 basis points, even with signs of more to come, will do little to curb pressure on the rupee, while expectations for a weaker currency and a sharp jump in hedging costs are set to weigh on returns from both debt and equities. “It’s a good start. But is it enough? Probably not,” said Carl Vermassen, a portfolio manager with the emerging mark...
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