TradeNext, the Indian owned, London based FX and CFD broker is reducing its Dollar/Rupee spread by five per cent.
The move comes after the Central Bank cut Interest rates for the third time this year earlier this month, to 7.25 per cent from 7.5 per cent. This comes despite India becoming the fastest growing major economy, recently overtaking China.
Mohsin Jameel, CEO of TradeNext, said: “Our decision to reduce our USD/Rupee rate comes as a result of increased volumes and greater volatility we have seen over recent weeks in the emerging markets, especially in India as their economy continues to swing like a pendulum.
“The rate cut is seen as a pre-emptive move to try and avoid Inflation falling further within the 2-6% C.B. target range, as Consumer’s are seen losing confidence with the economy.
“Along with the low capacity utilisation within the economy, the rate cut is hoped to help stimulate investment within the economy. The RBI will watch factors affecting inflation for the rest of the year as a wait and see period on rates is expected from the Central Bank,” said Jameel.
Since Narendra Modi came to power many have criticised him for only making cosmetic policy changes, although the numbers paint a different story, for example:
• Industrial Production was at -0.1 per cent in 2012-2014, now it is at 2.8 per cent.
• Growth in Electricity generation has increased to 8.4 per cent compared to just six per cent in 2013-2014.
• India has benefitted from a 13 per cent rise in Forex reserves compared to May 2014, up to US$352.1 billion.
• FDI inflows have risen by 39 per cent to US$28.813 million to keep India at the forefront of BRIC nations to attract foreign companies.
• The government has curbed WPI Inflation which was rampant at 5.55 per cent in April 2014, but now stands at -2.65 per cent in April 2015. CPI inflation is also significantly lower, falling to 4.87 per cent from 8.48 per cent.
• The government has used rate cuts and subsidies to help reduce the prices of basic household items, overall food and beverage inflation fell to 5.36 per cent from 9.89 per cent a year earlier.
Mohsin, added: “These statistics may seem paltry but India is changing for the better. And, of course this is only year one and much of his agenda is still evolving but progress is the key word as some improvement has definitely been made.”
fii-news.com
