India's Central Bank Chief Warns Of Market Crash

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From the International Business Times:

India’s central bank chief warns of another market crash

India’s central bank governor, renowned for forecasting the 2008 financial meltdown, has warned that the world economy faces risk of another market crash as asset prices surge.

Increasing global financial instability stems from investors chasing ever higher yields, Raghuram Rajan, a former International Monetary Fund chief economist, told the Central Banking Journal.

Another financial-sector crisis “may not happen if we can find a way to unwind everything steadily,” Rajan, who is famed for predicting the 2008 market crash years in advance, said in the interview, posted late Wednesday on the journal’s website.

“But it is a big hope and prayer,” said the Reserve Bank of India (RBI) governor, adding there is a risk of sudden price reversals and sharp spikes in financial volatility.

Rajan, author of the acclaimed 2011 book “Fault Lines” on how hidden financial fractures threaten the world economy, added he feared central banks globally “may be exhausting room” in their monetary-easing arsenal to cope with any economic crisis.

Rajan compared today’s state of affairs as similar to the 1930s which was the era of the Great Depression.

Rajan left his post as professor at the prestigious University of Chicago’s Booth School of Business and returned to India in 2012 to serve as government financial adviser and last September took over the Reserve Bank.

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From Bloomberg.com:

Sanctions against Russia hasten risk to dollar’s dominance

U.S. and European Union sanctions against Russia threaten to hasten a move away from the dollar that’s been stirring since the global financial crisis.

One place the shift has become evident is Hong Kong, where dollar selling has led the central bank to buy more than $9.5 billion since July 1 to prevent its currency from rallying as the sanctions stoked speculation of an influx of Russian cash. OAO MegaFon, Russia’s second-largest wireless operator, shifted some cash holdings into the city’s dollar.

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