India well prepared to deal with US rate hike: Finance Ministry

“European shares closed higher holding onto the gains, before the US Federal Reserve’s expected decision to hike interest rates which signals strength of its economy”.

He further said the Finance Ministry is monitoring the currency markets on a “consistent basis because those tend to move most rapidly and in the most volatile manner when it comes to interest rate changes”.

The announcement came at the conclusion of the crucial two-day meeting of the policy making federal open market committee’s (FOMC). Short term volatility will be seen however it will not be too much.

Sinha maintained that the Fed action is on the expected lines.

Chennai: India is better placed than many of its peers after the American central bank – the US Federal Reserve – raised its key interest rates, said credit rating agency Fitch Ratings on Thursday.

According to Economic Affairs Secretary Shaktikanta Das the hike in interest rate of US Federal Reserve is good news for Indian exports. India is benefiting from low crude prices and overall macro-economic stability is also there, he added.

“The impact of policy normalisation by Fed is unlikely to have any fundamental shift in the outlook for the Indian economy”, India Ratings said.

“This rate hike was widely anticipated, so I think markets should have priced this in and there shouldn’t be much of an impact of this per se (on markets)”, he told reporters here. As far as India is concerned, we are really well- cushioned. He added that inflation is coming down and the fiscal deficit situation is good and hence the impact of the hike should be minimal.

“A dovish rate hike by the Fed is likely to be positive for the emerging market forex space as questions persist not only over the timing of further rate hikes but also on the extent”.

“For financial markets, with looming uncertainty over the Fed policy path behind, the driver for markets hereon will be more inward-focussed than external development-reliant”, India Ratings & Research Analyst Bansi Madhavani said.

Yet, the good news is an official recognition that the USA economy is out of its slowdown with unemployment rates at a decade low and a pick-up in spending.