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In the event of default of $3 trillion (total $14.3 trillion) US debt, it will be a shockwave through the global financial market. Sources say that US owes china & Japan $1.2 trillion & $900 billion respectively.
Assurance given by secretary of state is just a consolation to Asian giants that US would avoid any event of default. Since south Asian banks do not hold a considerable amount of debts given to US & Europe, analysts view is the direct impact to the region is quite limited. Panic & losing confidence drive the market trend across the world though there is a slim chance of defaulting. Further experts say prolonged solution would create an indirect impact on well positioned banking & resilient market system in the region.
Weakening dollar & uncertainties exposed out of US debt crisis are appreciating regional currencies that divert the investors towards gold as a safer heaven. This may be one of the reasons for a huge outflow from Colombo bourse. Due to currency appreciation, foreign remittance from Gulf expats may put on hold in the short term. Any expert in this forum may highlight the direct or indirect impact of such remittance on Colombo bourse.
Huge debt leads to borrow more to cover up the servicing cost of debt. This is a vicious cycle. Efficient economic management addresses the reduction of debts over the time relating to country's GDP & revenue for survival. This is a good lesson & pre warning to economic policy makers of Sri Lanka.
Your views are welcome.
Assurance given by secretary of state is just a consolation to Asian giants that US would avoid any event of default. Since south Asian banks do not hold a considerable amount of debts given to US & Europe, analysts view is the direct impact to the region is quite limited. Panic & losing confidence drive the market trend across the world though there is a slim chance of defaulting. Further experts say prolonged solution would create an indirect impact on well positioned banking & resilient market system in the region.
Weakening dollar & uncertainties exposed out of US debt crisis are appreciating regional currencies that divert the investors towards gold as a safer heaven. This may be one of the reasons for a huge outflow from Colombo bourse. Due to currency appreciation, foreign remittance from Gulf expats may put on hold in the short term. Any expert in this forum may highlight the direct or indirect impact of such remittance on Colombo bourse.
Huge debt leads to borrow more to cover up the servicing cost of debt. This is a vicious cycle. Efficient economic management addresses the reduction of debts over the time relating to country's GDP & revenue for survival. This is a good lesson & pre warning to economic policy makers of Sri Lanka.
Your views are welcome.
