| The rupee breached the 46 level today to go down to 46.05 but ended the day at 45.95 to a dollar today. |
| With the global economy slowing down, consumption of oil may fall and this could lead to India's current account deficit narrowing and help the rupee to appreciate, Gerard Lyons, chief economist and global head of research of the bank said today. Lyons was speaking on the status of global and Indian economy. |
| "There has been a gradual change in the nature of capital flows to India.The share of foreign direct investments has grown substantially which makes us more confident of the future of the rupee in the medium term. However, the rupee will continue to be an under performer against the yen, euro, and pound sterling as these countries have a current account surplus," Lyons said. |
| According to him, if the Fed rate goes beyond 5 per cent it will give new support to the weakening dollar. |
| Referring to the hawkish view of the Indian central bank, he hinted that the local interest rates must rise to slow down the credit growth to around 20 per cent level from the current level of over 30 per cent. |
| "The Indian economy has done phenomenally well. However, it is more focused on the domestic market and it and should go global with specific focus on trade in the south Asian region. The intra-regional trade in south Asia is comparatively low compared to the other regional blocks. Also, the trade should pick up between India and Africa, India and the West Asia and India and Latin America. This increase in trade should not only be in commodities but also in terms of service," he said. |
| India, he said, must generate jobs for its growing young population which might not be possible only from the growth in the service sector. |
| "The emphasis of India should be on the knowledge economy and on the infrastructure development," he said. |
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