The European Central Bank (ECB) today announced an expanded asset purchase programme. Aimed at fulfilling the ECB's price stability mandate, this programme will see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes in order to address the risks of a too prolonged period of low inflation.
Commenting on the same, Ajay Bodke, head investment strategy & advisory, Prabhudas Lilladher, said, ''Euro to weaken against all major currencies especially USD & Swiss Franc. Bond yields in Euro Zone countries to fall. Risk-on trade to get a fillip with EM equities & currencies seeing inflows. Commodities to see some inflows too but their fortunes wouldn't see dramatic change as underlying demand conditions in major economies (which are weak) are the prime determinant of their fate. Commodity importing economies to gain the most & rapidly growing ones among them like India to see torrent of inflows.
All exporters from India to Euro Zone should be negatively impacted. But all those who have borrowed in Euros to be positively impacted. All those importing from Euro Zone to be positively impacted. Finally all those who want to visit the Eiffel Tower and the Leaning Tower of Pisa to benefit!! Modi seems to have brought all the luck & good fortune with his ascendence to the throne in Delhi.
First the halving of oil & other commodity prices & expectation of oil remaining benign due to geo-political & economic reasons, the BOJ expanding its own QE program, Chinese economic engine that had galloped at 10% per year for an unbelievable 3 decades faltering and now Mario injecting a stiff dose of much-needed liquidity into sick & comatose Euro Zone. Looks like heavens have never smiled upon the Sovereign Democratic Socialist Secular Republic of India as they have now!!''