Most economists saw it coming; a currency war as an endgame to the trade war. When China let the yuan slide on Monday, its central bank justified it, citing weak economic fundamentals, but promised no competitive devaluation. US designated Beijing a currency manipulator. Washington doesn't have meaningful tools to handle this; at best can pile more tariffs. But it's a hit on currency markets globally.
STREET PULSE: Where we stand  | Looks like we are headed for another bloodbath on Dalal Street. SGX Nifty traded nearly 100 points down at 7 pm (IST), signalling a major selloff ahead. Global stocks extended already substantial losses and the offshore yuan hit an all-time low. Japan's Nikkei shed 2.7%, Australian stocks fell 2.6% and South Korea's KOSPI slid 1.5%. Wall Street's major indices posted biggest percentage drop of the year on Monday. The Dow fell 2.9%, the S&P500 2.98% and the Nasdaq 3.47%. Read More |
| Oil prices edged up on Tuesday, but remained under pressure as the escalating trade war stoked concerns over global economic growth. Brent crude futures rose 10 cents to $59.91 a barrel while WTI crude futures gained 7 cents to $54.76. Read More |
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Stimulus in the works?... Finance Minister Nirmala Sitharaman on Monday said the government is seeking suggestions from industry on ways to revive the economy, hinting that a stimulus plan could be in the works. Measures to do so could be implemented "fairly quickly", she said. The FM is meeting representatives of the auto, capital markets, real estate and MSME sectors this week.
Read More Something is looking up!... India's services sector activity rose to a 12-month high in July, boosted by fast output growth and strong domestic and international demand, pushing job creation to an eight-and-a half year high. The IHS Markit India Services PMI, released on Monday, climbed to 53.8 last month from 49.6 in June.
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It's an all-out war now...
A year-long US-China trade war boiled over on Monday as Washington accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade. Beijing also halted US agricultural purchases, inflaming a trade war that has roiled financial markets, disrupted supply chains and slowed global growth. Stocks slumped globally on Monday and extended the losses this morning.
Read More Direct hit... Pakistan's dollar bonds plunge after India revoked the special status on Kashmir on Monday. A 10-year paper issued in 2017 yielded 6.83% Monday versus 6.46% last Friday, a sharp 37 basis points drop. In the last three trading sessions, it plummeted over 65 basis points, reflecting investor anxiety over the country's ability to repay overseas obligation.
Read More Meanwhile... The rupee on Monday declined the most in about six years since September, 2013, mirroring the Chinese yuan's slide to record lows. It lost 1.63% to close at 70.74 to a dollar, the weakest level since March 1, 2019.
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