Financial Daily from THE HINDU group of publications
Tuesday, Aug 31, 2004
Financial Daily from THE HINDU group of publications Tuesday, Aug 31, 2004 |
||
|
|
||
|
Home Page
-
Forex Industry & Economy - Economy Money & Banking - RBI & Other Central Banks RBI may dip into forex kitty to combat inflation Our Bureau
Mumbai , Aug. 30 THE Reserve Bank of India may tap the foreign exchange reserves to combat inflationary pressures, if necessary. Indicating this, the RBI in its annual report for 2003-04, released today, said: "The comfortable level of foreign exchange reserves provides the wherewithal for ensuring adequate supplies and for moderating inflationary pressures on the common man."The hardening of inflation in 2004-05 has been mainly on account of the influence of international price movements in respect of crude oil and metals, particularly iron and steel. Over the rest of the year, pressures from international prices on domestic inflation are expected to moderate although considerable uncertainty surrounds the short-term movements in international crude oil prices, which would influence the domestic inflation outlook. "The impact of the northward movement of international interest rates is likely to have some impact on domestic interest rates and financial markets would have to manage these challenges," the RBI has said. The apex bank noted that the outlook for headline inflation is currently `less than optimistic' than what was envisaged at the beginning of the year. Price pressures could also be a cause for concern, though it remains to be seen how the imported price shocks would evolve globally and be absorbed domestically. The progress of the monsoon after taking into account the shortfalls and uneven spread of rainfall in July, which is the sowing month of the kharif season, will be another important factor that would determine inflation outlook in the country. In its report, the central bank has observed, that the industrial climate reflects a revival of investment demand and building up of capacity. Industrial activity has gathered strength, rising by 7.6 per cent in April-June 2004. All constituents - manufacturing, electricity and mining - have shared in this expansion although with some slowdown in electricity generation in May and June. Seven manufacturing groups - wool, silk and man-made fibre textiles, basic chemicals and chemical products, machinery and equipment, leather and fur products, cotton textiles and textile products and metal products and parts - are leading the acceleration of activity. The growth of the services sector is expected to build upon the momentum achieved in the preceding year and be sustained above trend levels. Prospects for GDP growth continue to be bright, despite a downward bias to the estimates of GDP growth made at the beginning of the year. Inflation, measured by year-on-year changes in the wholesale price index (WPI), has been edging up since May 15, 2004 driven up by prices of iron and steel, mineral oils, coal and vegetables.
More Stories on : Forex | Economy | RBI & Other Central Banks
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|