FE Editorial : Another blow to Europe
The Financial Express: Jan 16 2012, 03:28 IST
no longer AAA rated. Which means that either the EFSF will lose its AAA rating or the others like Germany will have to increase their contribution—given the problem got exacerbated by Merkel not wanting to give an unlimited German backstop to weaker European nations, this looks unlikely. How all of this will pan out is uncertain, though the IMF’s January 24 projections will help put a perspective on things. For India, apart from the impact that a recession in Europe will mean for exports—Europe is one of the main reasons for why Infosys lowered its next quarter earnings forecast—the larger issue remains of the funding needs of European banks and the money they have invested in India ($148 billion). It is no one’s case that all of this will go back, but certainly significant sums will be demanded back by European banks. How significant will decide the future trajectory of the rupee.