I just read this article from Bank of America Merrill Lynch stating that US Shutdown might lead to a default by US Treasury on its bonds. However this default will lead to debasing of Indian Currency by 12%.
I am no macro-economic expert, but it does not need a PhD to question why the hell will India be punished and USA be rewarded?
In plain simple terms, if USA is unable to fulfill its debt obligations, the world would punish it by dumping the currency. As a result rest of the currency should appreciate. However it seems that when it comes to India & Rupee, no logic works.
Update: While I was waiting for my partner to finish editing this post, I came across a second article. This has a beautiful map
The gist being: USA & Western countries are most prepared to mitigate the impact of a financial risk while Africa & India are not. The irony is that USA is under shutdown because the federal government has no money to pay for the non-essential services & employees. Western Europe has repeatedly defaulted on its debt. India is not in the best of shape, but I don’t remember a single instance in the past 60-70 years when Indian Central government could not pay its employees in time.
But then again, I am an illiterate village idiot with no fancy degree or brand to flash.
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