China & East Asia 01 Dec 2015 by Tojo Jose

Happy China assures continuation of renminbi reforms; but rules out sudden depreciation

Happy China assures continuation of renminbi reforms; but rules out sudden depreciation

The new hero in the international currency market- renminbi (RMB) will not undergo sudden changes according to its manager the People’s Bank of China (PCB). Speaking after the acquisition of RMB’s international status, Mr Yi Gang, deputy governor of PCB, said that the IMF decision was a validation of his country’s reform efforts. He ensured that the reforms will continue though there will not be sudden changes in renminbi. “There is no basis for continued yuan depreciation,” he added. China is following some sort of a managed floating of its currency and controls the value of renminbi vis a vis the US Dollar. The PCB allows RMB to move within 2% on e

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China & East Asia 30 Nov 2015 by Tojo Jose

IMF adopts China’s Renminbi as an international reserve currency

IMF adopts China’s Renminbi as an international reserve currency

The International Monetary Fund has decided to include China’s Renminbi (RMB) as a reserve currency under the SDR basket of currencies. RMB’s inclusion in the SDR currency basket gives a symbolic status to the China currency. A debate about the inclusion of RMB in the currency basket was going on over the last few years. In the IMF, the Quota review about the currency composition of the SDR basket was made few months ago and the Fund has postponed the decision on RMB, urging China to make further reforms on the currency and financial liberalization front. Beijing has devised many political measures to promote the internationalization of RMB. It has adopted pressure ta

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Emerging Markets 30 Nov 2015 by Tojo Jose

Developed world benefited hugely from fossil fuel; and they should pay more to save the planet–says Modi

Developed world benefited hugely from fossil fuel; and they should pay more to save the planet–says Modi

Prime Minister Narendra Modi who is supposed to bear the symbolic leadership of the third world at Paris COP 21 has made a strongly worded statement that the developed world should shoulder more responsibilities to save the planet. In an article with the Financial Times of London, Prime Minister provided heat to the Paris Conference saying that “Developed countries benefited from fossil fuel and they should shoulder the burden of climate protection more.” Modi’s aggressive and yet bold stand may influence the outcome of the Paris Conference. According to him, the advanced countries that “powered their way to prosperity on fossil fuel” must continue t

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China & East Asia 29 Nov 2015 by Tojo Jose

Chinese economy may shock the world in its deceleration - says the IMF

Chinese economy may shock the world in its deceleration - says the IMF

The IMF in its Asia Economic Outlook predicts that Chinese economy’s more than expected deceleration is an economic risk for developing Asia including India. At the Asia’s Economic Outlook Conference speech made by Mitsuhiro Furusawa, Deputy Managing Director of the IMF says that Renminbi regime shift will have ripple effects. China’s downward correction of its currency may produce competition to exports from rest of Asia. Trade volumes are coming down across Asia. India last month has reported consecutive decline in its export for the eleventh month. According to the Commerce Ministry, exports from the country may fall below $300 bn mark for the first time sin

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IMF and WTO 23 Nov 2015 by Tojo Jose

WTO’s Nairobi MC may hit by trade conflicts

WTO’s Nairobi MC may hit by trade conflicts

The upcoming Nairobi Ministerial Conference (MC) of the WTO may not produce any substantial achievements given the trends of pre-MC meetings. Usually preparatory discussions are conducted by members. There are groups within WTO just like-minded formations on each issue. Current trends on trade discussions before the Nairobi MC show that agricultural trade liberalization continues to be the prime area of conflict. There are several pressure groups in agricultural trade. The G33, Cairns Group, EU and the USA are the leading ones. Reports indicate that the G33, including India has come with a hard stand on the use of Special Safeguard Duties. G33, which is also called   &

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IMF and WTO 12 Oct 2015 by Tojo Jose

India demands governance reforms at the World Bank

India demands governance reforms at the World Bank

India has demanded governance reform of the World Bank (WB) by raising the shareholding by the developing countries at the Plenary Meeting of the WB-IMF Development Committee. The World Bank is facing fund shortages to implement its ambitious development programmes including climate financing and realizing the Sustainable Development Goals. Development Committee is the ministerial-level forum or decision making body of the World Bank Group and the IMF together, for intergovernmental consensus-building on development issues. India has a multi country representation as the Finance Minister represented a constituency consisting of -- Sri Lanka, Bangladesh and Bhutan besides India

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IMF and WTO 11 Oct 2015 by Tojo Jose

End of corporate tax avoidance: Governments coming to the final stage of ratifying the BEPS project

End of corporate tax avoidance: Governments coming to the final stage of ratifying the BEPS project

The much anticipated biggest rules in international taxation- the OECD designed and G20 promoted BEPS (Base Erosion and Profit Shifting) Project is coming into the final stages. World’s leading finance ministers at the leadership of the G20 agreed on Friday to create international and domestic laws for taxing profits; giving warning to MNCs that they should end tax avoidance practices. BEPS project is a set of international tax rules proposed to counter the widespread tax avoidance practices by big MNCs. The companies use tax loop holes, concessions and Double Taxation Avoidance Treaties (DTATs) to escape from taxation. This has frustrated governments and more than that, cit

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China & East Asia 05 Oct 2015 by Tojo Jose

US and its Pacific friends agrees on the biggest trade bloc in twenty years

US and its Pacific friends agrees on the biggest trade bloc in twenty years

The mega trade bloc that the world was continuously talking on during the last few years – the Trans Pacific Partnership (TPP) is going to be materialized. The New York Times has reported that the Obama administration and the partnering countries have reached consensus on TPP. If implemented, the TPP will be the largest trade bloc in recent history, comprising 40 per cent of the world GDP in twelve countries, but remarkably excluding China. The TPP is a WTO plus trade alliance that aims to liberalise trade to advanced level between the US and eleven other members of the group. Besides economics, the TPP bears considerable value as it is considered as an alliance betwee

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Emerging Markets 27 Aug 2015 by Tojo Jose

Emerging markets have to fight currency risks and currency wars

Emerging markets have to fight currency risks and currency wars

When the world’s biggest exporter -China has devalued its currency to stimulate export and growth, there is little option for other EMEs. They also have to produce devalued currencies to remain competitive in the international market. At the same time, the EMEs have to evade any potential currency crisis. Declining exports and evading foreign investors may make currencies double weaker. Already, fall in commodity prices are causing currencies of many EMEs, especially that of Brazil and Turkey weaker. Thus, policy makers in EMEs have to carefully balance measures to make currencies competitive at the same time by avoiding currency crisis. For India, it is difficult for

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China & East Asia 26 Aug 2015 by Tojo Jose

China’ stock market defies Central Bank support

China’ stock market defies Central Bank support

Chinese equity market continued to fall today despite the rate cut stimulus package extended by the People’s Bank of China yesterday. Leading index, the Shanghai Composite Index (SCI) fell by 1.3 %, which is a smaller dip compared to near double digit fall registered on the previous day. For the first time in this year, the SCI fell below 3000 mark and closed at 2927. Yesterday, the PBOC (People’s Bank of China) has cut its policy rate by 25 bps and the reserve ratio by 50 basis points. The continuing decline in stock prices indicates that the market is in an auto correction mode in the context of falling GDP growth. Stock prices that doubled in the last one year are

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