Why India’s Surprise Rate Hike May Lead To The Next Emerging Market Crisis

In his take on the RBI’s surprise decision, Bloomberg macro commentator Srinivasan Sivabalan writes that after today’s rate hike, “the turmoil that has moved from one emerging-market currency to another this year (Argentina, Turkey, Indonesia and now Brazil) is threatening to claim India as the next victim.” Specifically, the economist envisions the “familiar coming together of economic doubts and political risks” and lists the following three risk factors which may see the EM contagion spread to the world’s second most populous nation.