Asian shares rallied to a three-month high and the euro touched a one-month high against the dollar on Monday, as a stronger-than-expected U.S. jobs data and emerging optimism for European action on the debt crisis bolstered risk appetite. But caution is likely to remain until concrete measures are taken, which may be weeks away. More economists cut India growth forecasts.
More economists slashed their economic forecasts for India, with Citigroup and CLSA cutting their outlooks for growth to 5.4 percent and 5.5 percent respectively in the fiscal year ending March, with a weak summer monsoon adding to economic headwinds. Citigroup said a policy gridlock, recent power outages, weaker exports and falling domestic consumption will take a toll on Asia’s third-largest economy. No end to Euro woes, France faces another recession.
France is headed back into recession for the second time in three years, its central bank warned on Wednesday in a setback for the recovery prospects of the stricken Euro zone. France is also grappling with a trade deficit running at close to record highs, despite shrinking in the first half of the year. CRISIL slashes India FY13 growth forecast to 5.5 pct.
Rating agency CRISIL slashed India’s growth forecast to 5.5 percent for the fiscal year ending March, one of the lowest estimates on the street, just two months after pruning its projection to 6.5 percent from 7 percent. Poor monsoon rainfall in India alongside a weakening euro zone outlook contributed to the latest cut in the growth projection, CRISIL said on Tuesday. RBI wants government to simplify foreign investment regime.
The Reserve Bank of India has dashed off a proposal to the finance ministry to simplify the country’s foreign investment regime. The central bank has suggested any foreign investment in a company in excess of 10% of its shares should be considered FDI and less than that as portfolio investment.