International Economy - Current Affairs for December, 2015

Following the lifting of controls, Argentine peso lost 30% of its value after a pro business government scrapped forex restrictions introduced by leftist predecessors. Following the close of the first day in the absence of currency limits, dollars were changing hands for 14 pesos which is 42% higher than closing rate.

Fed Reserve the central banking system of the US on 16th December 2015 increased interest rate by 0.25 percent in a decision approved by the Board of Governors of the Federal Reserve System chaired by Janet L Yellen. Interest rates in US are now between 0.25-0.50 as against o.25 and o range. This marks the first increase since 2006.

6 Gulf states have indicated they will tax citizens for the first time in a massive policy shift. The gulf cooperation council comprising UAE, Oman, Qatar, Bahrain, Saudi Arabia and Kuwait will now introduce VAT following costly military campaigns and a drop in global oil prices. Taxation is an alternative source of income for the Gulf states.

This stock exchange named Yangon Stock exchange has plans for six companies to start taking in March 2016 namely:

1. First Myanmar Investment Company
2. First Private Bank Limited
3. Great Hor Kham Public
4. Myanmar Agribusiness Public Corporation
5. Myanmar Citizens Bank
6. Myanmar Thilawa SEZ Holdings Public
7. Initially open to domestic companies, it will allow foreigners to invest in Myanmar shares

This is as against FTA of 7.65 lakh during November 2014 and 7.34 lakh in November 2013. A growth of 6.5% in November 2015 was registered over 2014. FTAs during the period January November 2015 was 71.03 lakh with 4.5% growth as against FTAs of 67.94 lakh with growth of 10.5% in January-November 2014 over January-November 2013. Percentage share of FTAs in India in November 2015 among top 15 nations was USA (15.76%) followed by Bangladesh, UK, Canada and Australia. Percentage share of FTAs in India during November 2015 were among top 15 port cities at Delhi Airport, followed by Mumbai and Chennai. Foreign exchange earnings during the month of November 2015 was INR 11,610 crore as compared to INR 12,968 crore in November 2014 and INR 11,994 crore in November 2013.

An MoU was signed between India and South Korea to relieve the burden of double taxation for taxpayers in both nations during pendency of MAP or Mutual Agreement Procedure proceedings. This will improve ease of doing business in the two nations as well.

Union Cabinet chaired by PM Narendra Modi has given ex post facto approval for an MoU between India and UK of Great Britain and Northern Ireland on cooperation within the energy sector. This includes cooperation on market reforms, regulatory structures and role of competition in supply and distribution of electricity. Creation of a regional energy grid is also on the agenda.

Iran has replaced Kuwait to become the fifth largest crude oil supplier in the first half of fiscal 2015-2016, selling over 6.5 million tons of oil. Iran is also the second biggest supplier of crude oil after Saudi Arabia till the year 2010-2011. India is dependent on imports to meet needs to the tune of 80%.

Japan will provide development assistance loan worth INR 5479 crore for Chennai and Ahmedabad Metro development projects. An agreement has been signed for JPY 19.981 billion (about Rs 1,069 crore) for the Chennai Metro Rail Project (IV) and JPY 82.434 billion (about Rs 4,410 crore) for Ahmedabad Metro Project.