Indian Rupee Going On Submit Unfortunate Gains Near Reduce - May 12, 2009

Mumbai: Moving in tandem with the local equity markets, the Indian rupee on Monday surrendered early gains to fall from the high of 49.05, to close 22 paise down at 49.50/52 against the dollar. In active trade at the Interbank Foreign Exchange (Forex) market, the rupee resumed higher at 49.06/08 a dollar from its last weekend''s close of 49.28/29 per dollar.

It touched a high of 49.05, level in morning deals as the Sensex was up by over 150 points in early trade. However, a sudden sell-off in equities due to the uncertainty over the Lok Sabha election results, due on May 16, weighed on the rupee and it fell to a low of 49.52 before concluding the day at 49.50/52 per dollar. The Sensex closed lower by 193.44 points or 1.63 per cent while, the dollar demand from importers, mainly oil refiners, also dampened rupee sentiment.

Gold Tumbles By Rs 395 Per 10 Grams - Aug 06 , 2008

Gold prices on Aug 5 dipped by Rs 395 to close at Rs 12,355 per 10 gram on the bullion market in Mumbai on heavy selling sparked by weak global trends after crude oil declined to a three-month low, easing inflationary concerns. Silver too nosedived by Rs 890 to Rs 23,950 per kg on reduced demand. Traders said gold, considered as a hedge against inflation, settled lower due to stockists selling triggered by falling global trend and shifting of funds towards surging equity markets. In London, gold dropped by $9.75 to $885.05 an ounce after touching a low of 882.16, a lowest since June 25.

They said a weak trend in the US markets, which set price trend in Asian markets, continued to influence trading and forcing stockists to reduce their holdings. Standard gold and ornaments plummeted by Rs 395 each at Rs 12,355 and Rs 12,205 per 10 grams respectively. Sovereign also lost Rs 50 at Rs 10,550 per piece of 8 gram. Silver ready fell by Rs 890 to Rs 23,950 per kg and weekly-based delivery by Rs 870 to Rs 23,720 per kg respectively. Silver coins fell by Rs 200 each at Rs 27,900 for buying and Rs 28,000 for selling of 100 pieces.

Central Bank Is Paving The Way For A Separate Entity - Aug 02 , 2008

MUMBAI: The central bank is paving the way for a separate entity to carry out payment and settlement activities within the country which will bring down transaction costs, including credit card transactions.

The new entity — National Payments Corporation of India (NPCI) — will be set up by the Indian Banks’ Association (IBA) and will be owned jointly by banks. However, no bank or group of banks will be allowed to hold more than 10% of the ownership while 51% of the equity will be held by public sector banks, according to Reserve Bank of India deputy governor V Leeladhar.

Speaking at a conference on Friday, Mr Leeladhar said, “The setting up of this umbrella organisation would bring greater efficiency by way of uniformity and standardisation in retail payments, expand its reach and bring innovative payment products to augment customer convenience.” Further, the NPCI will be a Section 25 company — which will not distribute its profits as dividend, but will plough it back for the improvement and expanding the reach of the retail payment systems.

Also, now that the Payment and Settlement Systems Act 2007 has been ratified by Parliament, it is going to be notified by the government in a week or two, following which it will come into force, the deputy governor said. He also highlighted various other initiatives RBI plans to take in the payments and settlements space like satellite banking and mobile banking.

At the same time, IBA deputy CEO K Unnikrishnan said most of the reservations that various unions had against the setting up of the separate entity have been addressed, and that they are confident of receiving the license for the company by August 15. He added the NPCI will carry out all sorts of financial settlements apart from RTGS settlements which will continue to be under the purview of the central bank. (RTGS or realtime gross settlements are used for all electronic payments over Rs 1 lakh.)

“NPCI will also form a switch for ATMs and point of sale (PoS) terminals and pave the way for the IndiaPay concept,” said Mr Unnikrishnan.

Rupee Appreciates Further Tracking Equities

Mumbai: The rupee appreciated further against the dollar tracking the upswing in the domestic stock market. The rupee opened at 40.20 and touched an intra-day high of 40.03. It then fell to end at 40.12, against the previous close at 40.26/27. Nevertheless, the RBI intervened to buy dollars when the rupee touched the intra-day high of 40.03. Market participants expect the rupee to remain rangebound and continue tracking the movement in the stock market. There was a fall in forward premia as exporters were selling and booking profits.

Rupee Up 16 Paise Against Dollar

Mumbai: The rupee appreciated 16 paise against the dollar tracking the movement in the domestic stock market. The rupee opened the day at 40.42 and went on appreciating gradually thereafter to close at 40.26/27 on March 24, up from the previous close of 40.42/43. According to the source, there was good dollar selling by banks and exporters which also helped the rupee to appreciate. Foreign exchange dealers said that the rupee would weaken and trade in the 40.30- 40.50 range this week.

Turkey Looks To Ink FTA With India

Mumbai: Turkey is looking at a free trade agreement with India as it plans to enhance the bilateral trade to $10 billion annually by 2012, Turkish Minister for Foreign Trade Kursad Tuzmen has said. Tuzmen also wanted more flights between India and Turkey in the face of growing bilateral economic cooperation. The two-way trade of Turkey was around $800 billion as against India''s $600 billion annually. While Turkey''s trade deficit was around $80 billion, India''s was around $60 billion. Indian companies are committed to invest in Turkey as it is among the 11 countries listed by investment bankers for growth potential.

Turkish businessmen are looking at alliances with their Indian counterparts in the areas of energy, mining, biotechnology, medicine, IT and railways, the source said at an Indo-Turkish Business Association meet. The country is also keen to broaden their activities in the Indian market by investing in different potential sectors like food and food processing, textile, plastics, chemicals, machinery, construction material as well as infrastructure projects.

Rupee Ends At 40.43 Against Dollar

Mumbai: The rupee ended higher against the US dollar on March 19, as it tracked the movement of the Sensex. As the equity markets opened higher following the rate cut by the US Federal Reserve, the rupee also opened higher at 40.40 and even reached 40.36. As the Sensex shed the gains, the rupee moved lower to 40.53/54. Following this, some bunched-up dollar sales by exchange companies helped the rupee gain to end the day''s trade at 40.42/43, against the previous close of 40.50/52. In the forwards market, the 6-month premia closed at 1.69 per cent (1.76 per cent) and the 12-month premia at 1.25 per cent (1.27 per cent).

Rupee Ends At 40.52 Against Dollar

Mumbai: The rupee increased against the greenback on March 18, as traders were selling dollars and unwinding their positions ahead of the US Federal Open Market Committee (FOMC) meeting on March 18. The home currency opened stronger at 40.64/66 and strengthened through the day to finally end at 40.50/ 52, against the previous close at 40.72/73. In the forward premia market, the 6 month closed at 1.76 per cent (1.54) and the 12 month ended at 1.27 per cent (1.14).

Rupee At 40.43 Against US Dollar

Mumbai: The Indian rupee on March 14 ended almost flat at 40.4350/4450 against the greenback on alternate bouts of buying and selling in the foreign exchange market. At the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 40.50/52 a dollar from previous close of 40.43/44. It later fell to a low of 40.58.Forex dealers said the rupee sentiments were bolstered later in the day after a surge in the stock market. They added that dollar buying by oil refiners to meet their import requirements aided the local unit. Weak Asian stock markets and recovery in dollar against the Yen also partly weighed on rupee sentiments. Meanwhile, the benchmark Sensex posted a gain of 403 points after yesterday''s fall of 770 points. Dealers said heavy dollar sales at the higher levels also pushed the rupee upwards and it touched a high of 40.38 a dollar before concluding the day at Rs 40.4350/4450 a dollar.

RBI Likely To Widen Repo, Reverse Repo Margin

MUMBAI: The Reserve Bank of India (RBI) has hinted at measures to widen the spread between the rates at which it borrows from and lends to banks. This is aimed at giving the regulator more headroom to move either way, given the uncertainties in global markets.

Currently, RBI borrows from banks at 6% through the reverse repo auction and it lends to banks at the rate of 7.75%. The margin can be widened by either increasing the repo rate or reducing the reverse repo rate. Speaking to reporters on Friday, RBI governor YV Reddy pointed out, “By and large, uncertainties would continue. And as of now, it is not clear when things will get normal or a little less abnormal.

In situations where there are lesser uncertainties, it helps to have a smaller corridor between the repo and reverse repo rates and vice versa.” The governor was speaking on the sidelines of a function, where Bank of Mauritius governor Rundheersing Bheenick was delivering an address.

Mr Reddy said that it’s sometimes difficult to guess the magnitude of the uncertainties arising out of the subprime crisis in the US. The central bank governor said that policy makers, across the globe, are cooperating to ensure that the uncertainties meet an early end, but the ultimate source of comfort can come only from the US.

Mr Reddy emphasised that monetary policy management becomes difficult in India, given the fiscal deficit and a large current account deficit. He reiterated that it has been stressed in the recent policy review that rising oil and food prices would exert pressure on price levels.

Speaking on forex derivatives issues, Mr Reddy pointed out that the central bank had been flagging the risks involved in these products. He added that the regulator had been involved in an interactive supervisory role. However, the sensitivity towards these risks is growing more rapidly in recent times, he said.

Incidentally, Standard and Poor’s (S&P) on Friday, estimated that write-downs on account of the subprime crisis could reach $285 billion. According to S&P, the total market value of write-downs of subprime asset-backed securities (ABS) write-downs disclosed so far by financial institutions — banks, brokers, and insurers — well exceeds $150 billion, globally. S&P has estimated that the valuation write-downs of subprime affected ABS could reach $285 billion for the global financial sector.

The governor of Bank of Mauritius highlighted the challenges faced by Mauritius due to unprecedented foreign fund inflows. He pointed out that monetary authorities in Mauritius are currently revisiting their policy framework. Bank of Mauritius is considering the option of increasing the tenure of its special deposit facility and may increase the differential to 200 basis points (from 145 bps) below the key repo rate (9% currently).

Mr Bheenick said that the bank is in talks with other central banks to develop a liquid and deeper market for forex swaps. “We are encouraging investors to take away the focus from the local market and look for opportunities outside Mauritius to boost fund outflows. It is becoming increasingly difficult to distinguish hot money flows from those of a more permanent nature,” he said.

Rupee Ends 10 Paise Lower Against US Dollar

Mumbai: After tumbling by 24 paise in morning trade, the Indian rupee recovered smartly but still ended lower by 10 paise at 40.43/44 against a dollar amidst a collapse in domestic as well as Asian stock markets, and softening of US currency worldwide. In see-saw trade at the Interbank Foreign Exchange (Forex)market, the local unit opened weak at 40.45/47 against last close of 40.33/34.

The domestic currency dipped further in late morning session to 40.59 a dollar on distinctly weak equity markets across the globe. Forex dealers said dollar buying by banks on behalf of oil refiners to their import requirements aided the weakness in rupee. The world crude oil prices yesterday set a record of 110.20 dollar a barrel in New York.

India imports nearly 70 per cent of its oil, which might further impact negatively on the economy which has already showed a sign of cooling down as industrial growth in January has fallen to 5.3 per cent against 11.6 per cent in the same month last year. Forex dealers said heavy dollar selling by exporters amidst the softening of US currency pulled the rupee upwards in later part of the day. The local unit even touched a high of 40.38 a dollar.

Recovery in rupee was also partly attributed to weak dollar overseas. Dollar touched a record 12-year lower against Yen while all-time low against euro yesterday in New York. However, the collapse of stock markets was so strong that rupee moved downward again to close the day at 40.43/44. Meanwhile, the benchmark Sensex ended sharply lower by 771 points, its sixth lowest fall, while most of the Asian markets also showed bearish trend at end today.

Industrial Sector To Grow By 10.4% In FY 09, Says CMIE

Mumbai: Centre for Monitoring Indian Economy (CMIE) has estimated the expansion at 10.4 per cent for fiscal 2009. CMIE expectS the industrial production to grow by 10.4 per cent in FY 09. The current investment boom is expected to correct the slowdown problem. The reason for the current slowdown in industrial production was the supply problem faced by sectors like cement, aluminium, electricity and steel.

India''s industrial growth slipped to 5.3 per cent in January as compared to 11.6 per cent in the same month last year as growth in all major sectors comprising manufacturing, electricity and mining declined. It expected the country''s gross capital formation to increase by 15.5 per cent in FY 09 and continue to drive growth in its GDP.

CMIE said India''s GDP was expected to grow by 8.9 per cent in FY 08 and 9.1 per cent in FY 09. The real GDP grew by 7.5 per cent in FY 05, nine per cent in FY 06 and 9.6 per cent in FY 07. CMIE''s prediction of a 9.1 per cent growth in real GDP in FY 09 is based on the assumption of an adequate precipitation during the monsoon. Besides, the Union Budget would help fuel growth as the finance minister has proposed a sharp cut in tax rates. For a large section of urban Indian households, this translates into significant additional spending power, CMIE said, adding this is bound to lead to a substantial increase in the demand for consumer durables and other goods and services that have taken a hit in the recent past.

Total Forex Reserves Touched $300bn

Mumbai: The total foreign exchange reserves touched the $300 billion mark for the first time, with an accumulation for the third week in a row. For the week ended February 29, the reserves increased by $6.625 billion to reach $301.235 billion, according to the Reserve Bank of India. In the previous week, the foreign currency assets had increased by $1.754 billion to reach $294.610 billion. As per the RBI''s weekly statistical supplement, foreign currency assets raised by $6.261 billion to touch $291.250 billion.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies held in reserves. The total FII inflows into the equity market for the week under consideration were Rs 1,322.6 crore. Though the rupee was flat against the dollar, the euro had reached a record high of $1.5238 during the week, which also may be reflected in the value of the forex reserves. After remaining unchanged for three weeks, the gold reserves increased by $359 million to reach $9.558 billion. SDRs remained unchanged and the reserve position in the IMF increased by $5 million to touch $427 million.

Nris Change Tack, Opt For Direct Remittances

MUMBAI: India is the largest recipient of remittances by its diaspora across the world with annual inflows of over $20 billion for almost four years now. But a chunk of this money is not new money sent by migrant Indians. Almost half the money is conversion of NRI deposits into the accounts of their relatives back home. But this year there is a slight shift in the pattern with NRIs opting for direct remittances, instead of parking them in deposits.

Remittances are reflected in `private transfers’ in the balance of payments. It comprises remittances for family maintenance, local withdrawals from Non-Resident Rupee Account, gold and silver brought through passenger baggage, and personal gifts/donations to charitable/religious institutions.

According to the latest data analysed by the RBI, of the total remittances (private transfers) amounting to $19 billion during April-September’07, $8.3 billion was local withdrawals of NRI deposits. While $9.4billion was on account of inward remittance for family maintenance.

The share of this component which contributed a significant share of remittance flow to India at about 60% in 1999-2000 dipped to 47% in 2006-07. In the first half of 2007-08, however, the share of inward remittances was about 50% of total remittance flow to India.

Forex Reserves Grow By $2 Billion

Mumbai: The foreign exchange reserves went up by $2.048 billion to touch $292.856 billion for the week ended February 15 due to rise in foreign currency assets. The reserves had fallen by $1.86 billion to $290.8 billion in the previous week (February 8).

Foreign currency assets rose by $2.055 billion to $283 billion in the week ended February 15. During the week under consideration, the euro appreciated from $1.4520 to $1.4670. The pound also rose from $1.945 to $1.965.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.The gold reserves remained unchanged at $9.19 billion. The country''s reserve position in the IMF fell rose by $2 million to $419 million.

Subprime-Wary RBI Steps Up Vigil On Mncs

MUMBAI: The Reserve Bank of India has stepped up its vigil on foreign banks operating in the country following the subprime crisis, which has led to many banks writing down loans worth billions of dollars.

The RBI executive director Anand Sinha indicated this to the media on the sidelines of a seminar here on Friday. India’s top policymakers had said in the past month that the spillover effects of the subprime crisis to the country are quite low. However, RBI governor YV Reddy said the unusual developments in the West indicates the heightened uncertainties, which can pose a challenge for the proper conduct of monetary policy, especially for emerging market economies.

According to Mr Sinha, India has still not witnessed a single financial crisis, which shows the stability of the local banking system. But several top notch banks in the US and Europe ran into problems owing to their exposure to loans to borrowers with poor credit history. Till date, banks have written down loans worth close to $150 billion in the past few months. Still there is a growing scepticism that the writeoffs will continue and could touch $400 billion.

Following the subprime crisis, these banks have been cutting down their credit and exposure limits across the world. In India, too, some of these banks have pared their exposure. They are now cautious even while lending to Indian corporates for their overseas funding needs.

Mr Sinha sounded a note of caution on the possibility of predatory competition gripping the local banking segment. He indicated that the entire subprime crisis in the US could have been triggered by banks seeking funds, which arose out of volatile deposits and not core deposits.

To avoid a similar situation in India, Mr Sinha stressed that if there is greater financial inclusion, banks may be able to ensure better quality of deposits. “We cannot leave out a majority of the population. Core deposits are what bring about stability in the economy,” he added.

Re Crosses 40 On Dollar Shortage

Mumbai: The rupee crossed the psychological level of 40 and shed 28 paise against the dollar on the back of sustained purchasing of the greenback by oil companies. The home currency opened on a weaker note at 40.03, reached an intra-day low of 40.24 and ended the day at 40.21/22, down from the previous close of 39.93. The last time the rupee touched 40.20 was on September 20, 2007. The 3-month forward dollar closed at a discount of 1.19 per cent (-1.38 per cent) and the 6-month forward also ended at a discount of 0.25 per cent (-0.25).The 12-month ended at a premium of 0.45 per cent (0.56 per cent).

Forex Reserves Fall $1.86 Billion

Mumbai: The foreign exchange reserves slipped by $1.86 billion to $290.8 billion for the week-ended February 8, owing to a fall in foreign currency assets. Last week, the reserves had gone up by $4.36 billion to $292.67 billion. Foreign currency assets dropped by $1.86 billion to $281 billion in the week ended February 8.

There could have also been a slight revaluation effect as the euro and the pound depreciated against the dollar. The euro fell from $1.48 to $1.44 and the pound also depreciated from $1.97 to $1.94 during the week under consideration. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves. The gold reserves and SDRs remained unchanged at $9.19 billion and $9 million, respectively. The country''s reserve position in IMF plummeted by $6 million to $417 million.

Rupee Weakens Tracking Bourses

Mumbai: The rupee fell by eight paise against the greenback on Feb 11. Rupee opened at 39.63/65 and saw an intra-day low of 39.74, before ending the day at 39.6950/70. Foreign exchange dealers said that the rupee would continue to weaken further to the 39.80-39.85 level. In forwards, the six-month premia closed at 0.85 per cent (0.76 per cent) and the 12-month closed at 1.14 per cent (1.04 per cent).

Forex Reserves Grow By $4.36 Bn To $292 Bn

Mumbai: India''s foreign-exchange reserves went up by $4.36 billion to a record $292.7 billion in the week ended February 1, the central bank said. Foreign-currency assets went up by $3.5 billion to $283 billion, the Reserve Bank of India said in an e-mailed release in Mumbai. The nation''s special drawing rights with the International Monetary Fund were held at $9 million. Its reserves with the IMF fell by $11 million to $423 million, while gold reserves rose $871 million to $9.2 billion. The reserves comprise overseas currencies, gold and special drawing rights with the IMF.