Dubai…than sinking feeling!

Dubai, till recently the magnet for international investment, is now repelling bulls world over. That sinking feeling came yet again as debt problems in Dubai took its toll on financial markets world over. Safe-haven bonds rose and the rupee fell against the dollar. The debate of whether we are out of the woods or not will only gain further momentum again.

In what appears to be the biggest sovereign default since Argentina in 2001, Dubai has sought debt standstill agreement at its Dubai World holding company or in other words, a six-month reprieve on debt payments.

Dubai Inc as it is nick-named, is deep in debt of $80 billion and needs a bailout from Abu Dhabi.

Meanwhile, RBI governor, Duvvri Subbarao, said the RBI will study the situation in Dubai and if necessary communicate about what the implications likely are.

Speaking to reporters in Hyderabad, the RBI governor said, "We should not react to instant news like this. One lesson of the crisis is that we must study the developments, and I think we must measure the extent of the problem there and how it impacts India."