By IANS,
Kolkata : There could be capital outflows from emerging markets like India in the short run because of the Greek debt crisis, Reserve Bank of India Deputy Governor Subir Gokarn said here Monday.
“There will be impact on the emerging markets. There could be some capital outflow. Though India is in a stronger position among the emerging markets, we cannot rule out net capital outflow,” Gokarn told reporters on the sidelines of a banking summit organised by the Indian Chamber of Commerce.
And if there is a net capital outflow, it would impact the rupee-dollar equation in the short term. “There could be a strengthening of dollar against all other currencies,” he added.
Gokarn said there could be “some nervousness” in the short term. “As a result, there will be some widening of portfolio towards the safe havens.”
Investors worldwide are concerned that Greece’s sovereign debt crisis could spread through the Euro zone. To prevent that happening, European Union finance ministers have pledged an emergency loan package that with IMF support touching $1 trillion.
Gokarn also said oil prices, which have come down to $75 a barrel from $80-85 a barrel, could go up again.
“Oil prices will start recovering and it is again going to creep up. This will add fuel to the fire,” he said.
He, however, did not specify upto what extent the fuel prices could go up.