The credit crisis hits India but it may profit

"How India could benefit in the long termThe global financial crisis has hit Indian stockmarkets hard. By October 13th the country's benchmark indices had fallen some 50% from the record heights they scaled in early January 2008. India's second-largest lender, ICICI Bank, has suffered a sharp drop in its shares following rumours that it is over-exposed to toxic US and UK assets. Equity outflows from foreign institutional investors (FIIs) during 2008 so far are a net US$9.9bn, compared with net inflows of US$17.4bn in 2007.This painful erosion of investor wealth and confidence is not the only fall-out in India of the global panic. The rupee has been depreciating rapidly against the US dollar, owing to the global dollar liquidity shortage, heavy outflows from FIIs looking to transfer funds home, and purchases of dollars by Indian banks to fund their overseas operations. By early October the rupee had slumped to a six-year low, negating the recent fall in crude oil prices and keeping India's oil-import bill high. The continuing depreciation means that the Reserve Bank of India (RBI, the central bank) must keep up its heavy intervention in the foreign-exchange market to stop the rupee from falling too sharply. ..." (2008-10-14)

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