Economy
2:59 am
Thu September 19, 2013

Fed Decision Gives Indian Market Temporary Reprieve

Originally published on Thu September 19, 2013 8:44 am

Transcript

STEVE INSKEEP, HOST:

A market rally in India is at the top of NPR's business news.

(SOUNDBITE OF MUSIC)

INSKEEP: We are all connected, of course. And like Wall Street, Indian markets soared, after the Federal Reserve's surprising decision to continue its stimulus program in the United States.

From New Delhi, NPR's Julie McCarthy reports.

JULIE MCCARTHY, BYLINE: The U.S. Fed's decision to keep unchanged its massive bond-buying program to spur the U.S. economy cheered Asian markets.

It was a booster shot for the embattled Indian rupee, which clawed back nearly two percent of its value. The benchmark index of the Bombay Stock Exchange, the Sensex, also surged nearly 600 points.

U.S. Federal Reserve Chairman Ben Bernanke had been expected to announce that the U.S. would wind down it stimulus that had foreign investors pouring into emerging economies on a wave of cheap money.

But investor sentiment changed dramatically this summer on the prospect that the Fed would tighten the money supply.

India, the world's second most populous country and Asia's third biggest economy, has been among the most vulnerable to the shift in sentiment. In recent months, capital fled triggering market volatility.

While the Fed's decision to continue stimulus moved Indian markets up, analysts warn it is a temporary reprieve. Corruption and poor infrastructure continue to be drag on the Indian economy, as do rising inflation and a growing current account deficit.

Julie McCarthy, NPR News, New Delhi. Transcript provided by NPR, Copyright NPR.