Kalpana Morparia, CEO-South & SE Asia, JPMorgan believes that the India story is “certainly not overstated”, and that there is a lot of excitement among investors about it. “The India story is certainly not overstated. I think consistently we are seeing a lot of excitement. The entire credit-bourne story in India is about to start. There continues to be a lot of excitement among equity investors,” Morparia told CNBC-TV 18 in an interview. “Till a year back there was a lot of skepticism, whether the GST and Bankruptcy Bill will be passed. The thing about us Indians is that once we get something done, we are skeptical of how it will implemented. But, we heard the Finance Minister, he has the most succinct plan for the rollout of GST,” she said.
Asked about the buzz that the Commerce Ministry wants the RBI to stem the appreciation of the Indian rupee, Morparia said, “Name any incident in the last few years in which the RBI or the Finance Ministry has done anything idiotic. We are very proud of them. At the time of taper tantrums, there was a lot of buzz around fragile five. Look how well they have steered that. So, this whole buzz to my mind doesn’t make any sense.”
Jahangir Aziz, Chief Economist, Emerging markets at JPMorgan agrees that artificially undervaluing the currency is not a good strategy. “Many countries in the last few years have tried using exchange rate to keep currency undervalued. China is always told that it keeps the currency undervalued. But, that always has unintended consequences, and these usually end up in tears,” he told the channel. “No country under the sun has managed to keep its exchange rate undervalued and come out unscathed. It is a dangerous strategy to adopt,” he said.
Watch: What Kalpana Morparia and Jahangir Aziz have to say about currency devaluation
The news that the Commerce Ministry wanting the RBI to keep a check on the exchange rate and currency appreciation to help boost exports has been doing the rounds. Finance Ministry officials have, however, said there were no plans to devalue the domestic unit and its value will continue to be determined by the market. Commenting on this Aziz said, “If you look at any emerging market country, there has been a massive decline in exports. This is not a matter of the last 3-4 months, it has been going on for 5 to 6 years now. Global trade has languished and there are various reasons to it and that has very little to do with the currencies of each of these countries. I wouldn’t say that currency has a role to play in whether exports are going down or up.” “I think it is much more to do with a global phenomenon. We are seeing a global structural change and we have to get used to it. We have to get our policies and our reforms in line with a world in which the globalisation-led massive increase in trade that took place in the early 2000 till about 2008-2009, that may not come back,” he added.