Byapaar.com -The Indian Business Blog

The US greenbuck sank to a historic low beyond 1.53 mark against the stronger Euro ahead of the ECB meeting on Thursday. This has rattled investors worldwide and pushed gold prices at an all time high. The European Central Bank is expected to keep the interest rate at the same level as this higher interest rates over the US rates is the source of Euro’s strength.
Tomoko Fujii, the head of economics and strategy for Japan at Bank of America in Tokyo says -
“There are pretty clear expectations for a widening in interest rate differentials, keeping the dollar at a disadvantage,”
Analysts feel that, it is not only the interest rate for which investors are dumping the US Dollar for the Euro, but there are other factors as well. Recent data coming out of US points towards an economic contraction that has made people weary to put their money on the greenbuck. According to the ADP Employer Services, the US private sector has cut 23,000 jobs during February and coming employment data update also seems to hold bleak prospect.
On the other hand European stocks are coming under severe pressure due to the competitiveness factor caused by a soaring Euro. Banks are the worst hit despite stock markets saw a slight gain yesterday after loss for five straight days . The Japanese Nikkei also gained 1.9 percent on Thursday.

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According to the latest quantitative finance research, most of the loan schemes have been noticed to have a definite change in the pattern of preference. Where business loans have been booked for like anything, cheap loans are not being demanded anymore. Maybe the risks associated with bad credit loans has something to do with this. In any case, for the first time in history of economics, moneysupermarket actually has an explanation for every change.

During his post-budget interaction with industry chamber the Assocham, Indian Finance Minister Chidambaram told that he felt home loan rates up to Rs. 20 million should be reduced and it is the duty of the RBI and other banks to see to it that the housing loan rate is slashed.

To quote Mr Chidambaram -

“I shall certainly bear in mind that there is public demand that interest rates for borrowers, who borrow (housing loans) up to Rs 20 lakh, must be lowered,”

According to Chidambaram, around 80 percent housing loans fall under the category of below Rs. 2 million and they carry a low risk for banking and credit industry. Hence, all banks should encourage to tend home to people by offering incentives and sops  through interest rate cuts. This would stimulate a lot of key industrial sectors.

The Finance Minister also lauded the efforts of RBI ( Reserve Bank Of India) Governor for drawing up a policy that maintains a balance between high rate of growth with that of low inflation.

The third quarter review of Indian Monetary policy released by the Reserve Bank of India recently revealed that RBI has decided to retain the key rates in a bid to maintain financial and price stability. Keeping in view of the domestic and international financial conditions, the RBI has decided to leave unchanged all key rates, including repo (7.75 percent), reverse repo (6 percent) and Cash Reserve Ration or CRR (7.5 percent). The stance of the policy is to contain inflation close to five percent while conditioning expectations I the range of 4 to 4.5 percent. The Gross Domestic Product (GDP) projection for the year 2007-08 also remains same at 8.5 percent. The flexibility to conduct overnight or longer term repo including the right to accept or reject tenders under the liquidity adjustment facility (LAF) wholly or partially is retained. The major highlights of the monetary policy include emphasis on credit for employment intensive sectors, reasonably positive prospects for industrial sector, favorable prospects for services etc