Follow ringmaster U.S. Fed to save local currency: Uday Kotak
The Hindu
"Central bankers globally move in a herd led by ring master the US Fed. Whether easy or tight money. Go out of line your currency is crushed. Look at Japan, a 30 plus percent depreciation. That’s the power of the US $ the most sought after asset in the world today. How long?" he had tweeted.
Veteran banker Uday Kotak has said central bankers who do not follow the "ring master U.S. Fed" face the risk of getting their currencies crushed as has happened in the case of the Japanese Yen.
Mr. Kotak, who is also the managing director of Kotak Mahindra Bank, said that globally the central banks take a cue from the U.S. Fed and decide their monetary policy accordingly.
"Central bankers globally move in a herd led by ring master the US Fed. Whether easy or tight money. Go out of line your currency is crushed. Look at Japan, a 30 plus percent depreciation. That’s the power of the US $ the most sought after asset in the world today. How long?" he has said in a tweet.
The U.S. Fed has been tightening its monetary policy to rein in inflation, which has touched a record 41-year high.
The Fed began its tapering process in December 2021, with monthly asset purchases reduced from $120 billion to $105 billion.
So far this year, the Fed hiked its benchmark rate by 150 basis points or 1.5%.
Last month, the Federal Open Market Committee (FOMC) hiked the interest rate by 75 basis points following an already aggressive 50 basis point increase in May 2022.