The Hindu Business Line : `Oil prices have boosted rupee'

There were some interesting changes that happened in the US a couple of days back. Mr Rajeev Malik of JPMorgan Chase Bank discusses the repercussions of the recent developments in the US on the Indian economy.

As far as US growth is concerned, he says that the first half of next year is expected to be better than the second half of this year. Excerpts from CNBC-TV18's exclusive interview with Mr Malik:

How have you read the political changes? Are there any ramifications at all that you see on global markets, whether it is money or equity?

Straight off the bat, it does show that a miracle can happen. Democrats have both houses of Congress now, after a period of 12 years. Very broadly, the three key areas in which any kind of political change would have an impact would obviously be in terms of the fiscal position as far as the US is concerned.

What is happening as far as foreign trade relations are concerned and separately foreign policy as such, is that for all practical purposes, all three issues get underscored by the health of the US economy.

Have you changed your year-end target on the rupee given the way it has muscled up although you haven't been a big fan of it?

I think we have definitely been caught short on that front. I think oil prices coming off quite substantially and then staying low, has been one important factor. The other obviously is just a resilience in terms of foreign inflows.

We still would flag the risk in terms of any kind of corrections, especially in terms of flows or a global event that impacts those flows. Let's say a shift in US interest rate outlook does leave India vulnerable. But one has to admit that these flows and the lower oil prices are having a significantly greater boost to the strength of the rupee than we had anticipated.