“The rupee should be one of the best performers in Asia as it will benefit from India’s good macro fundamentals and a high carry”, said Rajeev De Mello, head of Asian fixed income at Schroder Investment Management Ltd.in Singapore.
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Besides, the 30-share BSE Sensex rose 131.43 points at 25,625.80 in opening trade.
As for whether gold prices would fall as a result of the rate hike, he pointed out that prices of the precious metal have been falling for quite some time and the Fed’s decisionis not likely to have any impact on them.
Asserting that Indian markets is well “fortressed” to deal with any major volatility, the government today said the long-awaited rate hike by the US Federal Reserve will have minimal impact here and should not lead to any large-scale outflow of foreign funds.
The Markets across the world have welcomed the US Fed’s decision as global indices opened strong.
There are obvious issues of concern for emerging economies like India since there has been an exodus from all emerging markets over the past few months in preparation for the United States beginning to tighten liquidity in order to get rates up.
“Just putting it in perspective, the implied move is around 2.5 percent, that’s basically twice of what we’ve seen around Fed meetings over the last five years”, she said, adding, “Albeit this is by far the biggest implied probability there is a rate hike”.
Chief Economic Adviser Arvind Subramanian said: “We are really well cushioned”.
“End of uncertainty and accommodative outlook for future will help policy makers in emerging economies”, Das said. The impact was positive on the Indian financial markets, with equities, bonds and the rupee rallying across the board on Thursday.
“The rate hike also signals a stronger USA economy, which augurs well for demand pick-up globally and hence, for Indian exports of goods and services”. “US Fed confidence on recovery is good news for our exports, especially from IT sector”.
But, what does the hike mean for India and should we be anxious.
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“This rate hike was widely anticipated, so I think markets should have priced this in and there shouldn’t be much of an impact of this per se (on markets)”, he told reporters here. “We are adequately prepared”.
