Page 44 - The Indian EYE 030422

BUSINESS EYE MARCH 04, 2022 | The Indian Eye 44

shares, oil prices and payment

to russia under stress as war

casts shadow over India

India is expected to suffer the biggest blow to economic growth, dragging it down

by 0.2 percentage points, while Philippines and Thailand will see a hit of 0.1 percentage

OuR BuREAu formal talks had not yet begun
between the two sides, an In-
Mumbai
dian government official said.
n a positive development, equi- Russia’s exports to India stood at
ty indices rebounded on Friday, $6.9 billion in 2021, mainly mineral
ia day after Russia’s attack on oils, fertilizers and rough diamonds,
Ukraine led markets to their biggest while India exported $3.33 billion
fall in over a year. The 30-share BSE worth of goods to Russia in 2021,
index jumped 1,329 points or 2.44 per mainly pharmaceutical products, tea
cent to close at 55,859. While, the and coffee. Russia and Belarus usual-
broader NSE Nifty settled 410 points ly account for nearly a third of India’s
or 2.53 per cent higher at 16,658. total potash imports. It would not be
feasible to replace them amid a rally
a day after both domestic in- in fertilizer prices to a record high, a
senior industry official told Reuters.
dices witnessed their biggest In a related development, India
will likely stand to lose the most in
single-day fall in over a year, Asia as a sustained increase in oil pric-
investors brushed off risks es fans inflation, slows growth and
stemming from the geopolit- weakens their currencies, according
to Nomura Holdings Inc. Those im-
ical crisis. pacts in Asia from Russia’s Ukraine
School students offer special prayers for peace between Russia and ukraine, invasion will be felt mostly through

“Equity markets right now are of in Chennai on Friday (ANI) commodities, specifically fuel and
the view that no other country would food. Other factors outside the con-
interfere in the war as such, physi- fertilizer from Russia could be dis- Funds in such accounts act as flict will also keep prices sustained.
cally. So, the (Russia-Ukraine) cri- rupted as sanctions intensify, threat- a guarantee of payment for trade A 10% rise in oil prices could
sis may be over by the weekend and ening India’s vast farm sector. exchanged between two countries, add 0.4 percentage points to infla-
that is what the market is pricing in,” India has called for an end to vi- while the parties barter commodities tion in India as transportation and
Neeraj Dewan, director at Quantum olence in Ukraine but refrained from from each other to offset the sum, the utility costs surge. Heavy reliance on
Securities told news agency Reuters. outright condemnation of Russia, source said. oil imports also means their current
Western nations hit Russia with with which it has long-standing politi- A similar arrangement, in which account deficits could widen further
new sanctions including freezing bank cal and security ties. part of the settlement with Rus- and undermine their currencies.
assets and cutting off state-owned en- Officials said the plan was to sia is in foreign currency and rest is India is expected to suffer the big-
terprises, they stopped short of dis- get Russian banks and companies to through local rupee accounts, was gest blow to economic growth, drag-
connecting it from the SWIFT inter- open accounts with a few state-run also being explored, said the bank- ging it down by 0.2 percentage points,
national banking system or targeting banks in India for trade settlement, ing and the government source. Such while Philippines and Thailand will
its oil and gas exports, which some a banking source involved in the mechanisms are often used by coun- see a hit of 0.1 percentage points.
analysts said helped markets recover. discussions said. “This is a proactive tries to shield themselves from the Nomura expects central banks
Now, India is exploring ways to move assuming that the conflict es- blow of sanctions and India also used in developed Asia to tighten policies
set up a rupee payment mechanism calates and there could be a slew of it with Iran after it came under West- to nip the threat to their recovering
for trade with Russia to soften the sanctions in place,” the source said. ern sanctions for its nuclear weapons economies.
blow on New Delhi of Western sanc- “In this case we would not be programme, the source said. Others will likely prioritize still-
tions imposed on Russia after its in- able to settle the transaction in dol- The programme was introduced in weak growth, with Indonesia and the
vasion of Ukraine, government and lars and so an arrangement has been 2012 and worked well for several years. Philippines seen hiking rates only lat-
banking sources said. Indian officials proposed to set up a rupee account, The discussions on Russia er this year while Thailand stays on
are concerned that vital supplies of which is being considered.” were still at an early stage and hold.

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