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Central banks around the world have been raising interest rates continuously for five months. Despite this, inflation remains high. Inflation remains above 8 percent in most countries of the world. In the US, it stood at 8.3% in August. 9.1 percent in the euro area, 9.9% in the UK and more than 8% in the BRICS countries.
Experts said, from developed countries to developing countries, to fight high inflation, interest rates are increasing. China, Japan, India and other countries including the US have raised rates by one to two per cent. A dozen countries are planning to raise rates this month as well.
Repo rate may increase by 0.50%
Keeping inflation in view, the RBI is left with no option but to increase the policy rate by 0.50% next week. The repo rate may be taken up to 6.25% by December. SBI Group Chief Economist Soumya Kanti Ghosh said, “In view of the current foreign shocks, the repo rate is set to increase by half a percentage point. In December also there may be an increase of 0.35%.
7.6% inflation in South Africa
Inflation rate in South Africa is 7.6 percent, while in the Philippines it is 6.3 percent, in France 5.8 percent, in South Korea it is 5.7 and in Indonesia it is at 4.7 percent. America is the worst. Here student debt has increased by $ 1.7 trillion and the US administration is preparing to bring a package to reduce the burden of middle class debt.
Whereas home buyers in China are continuously boycotting the project. In 119 cities, 342 projects are on the target of boycott. In August this year, 320 projects were boycotted across 100 cities.
Foreign exchange reserves at the low level of October 2, 2020, decrease for the seventh consecutive week
The country’s foreign exchange reserves have fallen for the seventh consecutive week. For the week ended September 16, it declined by $5.22 billion to $545.65 billion. According to RBI data, this is the lowest reserves since October 2, 2020. This time its foreign currency was $ 4.70 billion while gold reserves decreased by $ 458 million and it stood at $ 38.19 billion. Analysts believe that India’s forex reserves may come down further this year, as the current account deficit is widening rapidly. At the same time, to prevent the fall of the rupee, the RBI is continuously releasing the dollar.
Reserves can go up to $ 510 billion
According to estimates by IDFC First Bank, if the current account deficit exceeds 4 per cent in FY2023, India’s foreign exchange reserves could fall to $510 billion. However, it will still be higher than the dollar sold in May 2013. Foreign reserves at that time stood at $300 billion.