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Panic in emerging markets: Why India's the big worry
You've got the conditions for a real crisis in India; so says John Hardy, Saxo Bank's Head of FX Strategy. The rupee has fallen to record lows in recent weeks amid widespread selling in equity and forex markets across numerous emerging market countries. John says it has a huge fiscal deficit and a big trade deficit. The county may have no option but to raise interest rates and that could lead to some sort of recession.
John explains why so many countries' currencies have fallen so far, from India to Brazil to the Philippines. He says it's part of a flow cycle that has been exacerbated by concern about the US Federal Reserve ending its bond buying programme. He says for some countries this is merely pressure but for others a crisis response may be needed.
However, John says there are no quick fixes. India in particular has to take "tough medicine" which will crush still further their economic prospects.
02:38 minutes
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