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It is a real problem. If the rupee freefalls, it has a domino effect. Sure, it will help exports eventually. But you have to understand that when it happens sharply and suddenly, it has negative consequences. A lot of corporate India has taken loans over the past decade in foreign currency [which will now be harder to reimburse].
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From Friday it "is launching products at 90-95pc loan-to-value, available for both first time buyers and homemovers." It did not describe the full range, but said: "The rates, available up to a maximum loan to value of 95pc, include a 2 year fixed rate at 5.19pc with a £995 product fee. Further product detail will be available in due course." In other words its two-year deal is slightly worse than RBS's.
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But the sell-off gripping emerging foreign exchange and equity markets this week has exposed an Asia that, despite amassing huge currency reserves and devising policies to insulate it from the kind of fund flight that triggered the Asian financial crisis in 1997 and 1998, has once again become susceptible to the rapid reversal of capital inflows.
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“There’s no doubt that foreign boots on the ground could play into the hands of some of the most extreme groups that are creating problems in Libya right now,"Â said RAND Corporation’s Christopher Chivvis. "But I think we have to do what we can in order to steer the situation in a direction that averts the worst case scenario. Which is a complete collapse of Libya and also, frankly, Tunisia, and potentially Algeria.”