Wednesday, March 27, 2013

Marc Faber: Economic Times Interview Part 3

ET Now: The Indian central bank has cut rates. Can monetary easing help kick-start the economy?

Marc Faber: Basically what the lower interest rates in India might do is to weaken the rupee, and obviously then if the rupee weakens, we might have some inflationary pressures like in other countries. In India, the rate of inflation is vastly understated. So in real terms, probably economic growth is rather slow.

ET Now: But one of the concerns for India has been the large current account deficit which is due to higher imports of both gold and crude. What is your sense on these two commodities? Can gold correct more? Should investors be using this weakness to buy?

Marc Faber: I do not know. I would not use this weakness to buy. I rather think that India has numerous problems. One is the fiscal deficit. One is the current account deficit and the combination of the two argues in the long run for a weaker currency.

|ET Now: What are you expecting from the FOMC meet? Will it be more like a no-event or they are likely to acknowledge the better data flow and hence hey will start making a base for pulling out the QE3 plug?

Marc Faber: I do not expect any plan to exit anything at the Federal Reserve. I rather think that they might plan to extend QE3 for further time because one of the goals was to essentially reduce the asset purchases when unemployment drops to 6.5%. That may be far away.