January 21, 2011 / 17:12 IST
Though many experts feel India is no more attractive among global investors, Sameer Goel, Director, Head of Asia Rates Research, Deutsche Bank has a different opinion.
In an interview to CNBC-TV18, he said that capital flows will continue to emerging markets including India. He, however, agrees that foreign institutional investor (FII) flow has been disappointing in January. According to him, India is facing supply-side inflation risk. Goyal is expecting the Reserve Bank of India (RBI) to raise rates by 25 bps in its credit policy review on January 25. On currency, he remarked that dollar has not yet bottomed out but
rupee is likely to do better compared to dollar in 2011.Below is a verbatim transcript of Sameer Goel's interview with CNBC-TV18's Soniya Shenoy and Latha Venkatesh. Also watch the accompanying videos.Q: What are your thoughts on inflation? How much of an inflation or interest rate hike are you expecting? Where will we end the fiscal in terms of an interest rate hike?A: It is not surprising that large chunk of inflation is being driven by food in commodity prices. In India and also in Asia, the output gaps have cruised in over the last several quarters. There is an increased risk that the supply side inflation spills over much more into core price pressures. It is the risk going forward for India and other emerging markets. In terms of interest rate hikes, I think RBI will stick to 25 bps hike. We still have further normalization to go, probably, take it upto 7% by middle of the year. I don
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