FED RATE CUT BY 25 BASIS POINT

ITS IMPLICATION ON INDIA AND CHINA

Foreign Investors
Foreign investors are flocking into China and India to also gain from their surging economic growth. China's $2.7 trillion economy, which contributes a tenth of global growth, has expanded more than 11 percent for the past three quarters. India's government expects its $906 billion economy to grow an annual 9 percent for the third straight year.
People's Bank of China Governor Zhou Xiaochuan has raised the reserve limit for its lenders to 13 percent from 9 percent at the start of the year. The Reserve Bank of India yesterday lifted its cash reserve ratio for the fourth time this year to 7.50 percent, a 225 basis point increase from January.

India and China may be forced to further restrict bank lending as declining U.S. interest rates prompt investors to pump record cash into the world's two fastest-growing economies.
``If the U.S. cuts rates, it will have Asia's blood on its hands,'' said Marc Faber, managing director of Hong Kong-based Marc Faber Ltd. and publisher of the Gloom, Boom & Doom Report. ``The Fed is pursuing an easy monetary policy that is creating massive bubbles outside the U.S.''