RBI expects euro crisis to trigger fresh wave of capital inflows
12 Jun 2010
The falling euro is likely to stoke a fresh wave of capital flow into India, as investors seek safer markets in the face of a generally uncertain global markets, Usha Thorat, deputy governor of the Reserve Bank of India, said today.
"From the point of view of capital flows, you do have the likelihood of more uncertainty in the rest of the world and therefore more money coming to India," Thorat said.
Indian stock markets have received $5 billion in foreign institutional investments so far in 2010 against $17.45 billion it received in the whole of 2009.
Thorat's comments come in the wake of the looming crisis in the euro zone that is expected to accelerate the decline of the European common currency.
In fact, the Centre for Economics and Business Research expects the euro to drop to parity with the US dollar in 2011 before the 16-nation currency unit "inevitable" breaks up.
The decline of the euro, which started alongside the Greek debt crisis, has been accelerated with some weaker economies in the euro zone also showing signs of fatigue.