Kochhar confident economy can tide over China-driven crisis

Mumbai :Attributing the ongoing market carnage to global cues, ICICI Bank chief Chanda Kochhar today said the country has many positives like high forex reserves, and low current account and fiscal gaps, which can help it weather the ongoing volatilities.

“What we are seeing today is the volatility caused by global factors. I would say that at this point in time, we must remember that we are better placed to weather this volatility,” Kochhar, the managing director and chief executive of the country’s largest private sector lender, told reporters here.

The markets have seen in the last few days a massive rout, wiping out over Rs 8 trillion of investor wealth.

“We are living in a globalised world. Whatever happens in global markets does impact the risk appetite and does impact capital flows,” Kochhar said referring to the bloodbath in the market following worries emanating from China.

Stating that she expects the country to remain resilient and will tide over the current turmoil, Kochhar cited the strong forex reserves of over USD 380 billion and the narrowing current account gap as the bulwarks of the country.

This Monday when the market tanked close to 6 per cent, to assuage the wounds, Reserve Bank Governor Raghuram Rajan had said the economy was better placed than many others with a strong fiscal position.

A lower CAD, fiscal deficit and over USD 380 billion in forex reserves coupled with lower oil prices and falling inflation are the biggest strengths of the domestic economy, Rajan added.

Kochhar further said that “we are not relying too much today on capital flows to fund our imports”.

“The country is heading in the right direction as far as fiscal deficit and inflation are concerned. All these factors augur very well for us which give us the ability to weather this volatility which we are seeing because of global circumstances,” Kochhar said.

The Sensex tanked nearly 1,700 points on Monday despite the comments from Rajan and Finance Minister Arun Jaitley during market hours, but gained some lost ground yesterday recovering over 290 points but shed 317 points at the close of trade today.

Apart from the bourses, the currency markets also witnessed extreme volatilities with the rupee on Monday plunging to a fresh 2-year lows of 66.65. It, however, recovered to 66.10 against the dollar yesterday, but opened weak today.