A US slowdown may not help India.

"The newly identified Omicron variant of the covid-causing Sars Cov-2 virus" "might turn out to be a source of relief for the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), which meets for three days starting on 6 December," wrote Prof V Anantha Nageswaran. "The new coronavirus variant Omicron has now become dominant in South Africa and is driving a sharp increase in new infections health officials say," BBC. "Omicron has now been detected in at least 24 countries around the world, according to the World Health Organization (WHO)." Why should the MPC be relieved by another mutant of the virus that caused unknown millions of deaths in the early part of this year, "As corpses floated in the Ganges and crematoriums and graveyards were overwhelmed," ET? Because there will not be any pressure to increase interest rate which has been clamped at 4% since 22 May 2020, HT. The international price of crude oil will decline. "Crude oil futures settled lower on Wednesday, as an early rally fizzled and selling intensified on worries the Omicron variant of coronavirus could cut oil demand as global supply builds," Reuters. Indian stock markets are off their highs. "Buoyed by easy monetary policy, a gradual re-opening of the economy and a rapid vaccination drive, the benchmark BSE Sensex Index has rallied nearly 20% year-to-date," Reuters. "But the BSE Index has dropped around 8% from its all time high of 62,245.43 set on Oct. 19 as concerns mount over the Omicron coronavirus variant." There maybe a recession in the US and "should a re-appointed (Fed Chair Jerome) Powell signal adherence to the currently expected timeline for a Fed taper and end special bond purchases by mid-2022, and if US asset markets begin to correct consequently, it would solve a lot of problems and resolve trade-offs for India." May not be so simple. "Indian bond prices fell while the rupee weakened..., as investors raised bets that the US Federal Reserve would stay on course for policy tightening in the middle of 2022 after the announcement of a second term for its chairman Jerome Powell," Reuters. "The benchmark 10-year bond yield rose as much as 3 basis points on the day to 6.38%." Predicting borrowing costs much higher than 4%. Unfortunately, "Powell suggested, in a testimony to the US Congress committee on banking, that it was time to 'retire' the term 'transitory inflation' to better reflect the fact that the Fed was going all in to fight inflation, which has run at more than a 30-year high of 6 percent in October in the US," ET. In an earlier post Nageswaran was incensed that the IMF has predicted a fall of the rupee. "From 70.9 in 2020-21, the Fund sees the rupee depreciating to 89.4 against the dollar by 2026-27." Foreign Institutional Investors (FIIs) have sold nearly $7 worth of Indian shares in the last two months and nearly $15 billion worth since 1st April, BI. If Omicron causes a global slowdown investors will move to safe haven currencies, Reuters, and the rupee will drop which will increase prices of imports. Is it too late for the rupee? And the economy?