Collapse in commodities
Weak commodity prices are generally good news for the Indian economy, but it is not all good
The recovery in global commodity prices since January has been halted in its tracks. Crude oil is now trading at its lowest level in five months. Industrial metals, too, have been hammered. Some analysts have begun talking of a new commodities rout.
Weak commodity prices are generally good news for the Indian economy. The monetary policy committee of the Reserve Bank of India (RBI) has been mentioning hardening global commodity prices as one of the underlying risks to inflation. It is too early to say whether what we have seen in recent days is a temporary blip or a more sustained decline, but the trend in the coming weeks will definitely affect the central bank decision on interest rates. The rupee has, meanwhile, continued to rally because of the positive effect of lower commodity prices of the Indian balance of payments.
But it is not all good. The hopes that highly indebted Indian steel companies will be in a better position to service their bank loans could go for a toss if the losses in commodity prices sustain.
Editor's Picks »
- Cube Wealth raises ₹14 crore in Series A funding
- Morgan Stanley arm in talks to invest $55 million in KSH Group’s warehouse assets
- Goldman Sachs changing Asia investment banking leadership
- Investors sitting on $40 billion capital reserves for India
- Opinion | Beware the dark side of Artificial Intelligence
- UltraTech’s dismal Q2 results darken outlook on cement sector
- NBFC liquidity crisis set to worsen real estate sector woes
- RBI pause on interest rate hike may last only till December
- Policy rethink and higher volumes to aid container shippers
- DCB Bank delivers a strong Q2 but pressure on margins foreseen