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Crisil report forecasts negative short term impact of sanctions
Short term interest rates, foreign exchange markets, inflation and trade are all expected to react negatively, following the imposition of international sanctions, an analysis by Crisil said. The report said the money market was expected to react through speculation rather than on fundamentals. Government borrowings are expected to rise to cover infrastructure development and increased defence spending. Although the rupee rate is expected to be negative, no sharp falls are predicted. The dollar inflow is expected to slow down. As the US is a major trading partner, exports are liable to suffer too. The report said the trade deficit in rupees was likely to increase with a drop in exports.