Ways4Forex

Rupee at over 2-mth low, IT stocks rally

2012-11-26T21:42:00.000-08:00

Mumbai: Demand for dollars by oil companies, muted foreign fund activity as the year-end nears and the continuing political logjam in New Delhi combined to weaken the rupee to a two-and-a-half-month low in Monday's market. The rupee, after touching an intra-day low at 55.89 to a dollar, recovered slightly to close at 55.73, but was still weaker by 21 paise to its Friday close of 55.52. The rupee's weakness, however, had a positive impact on software and other exporters since this would mean a boost to their revenues in rupee terms.

Monday's market witnessed the sixth consecutive session of weakness for the rupee. This has left the Indian currency weaker by 3.8% in less than a month.
Gold hits new peak
Mumbai/Delhi: Gold prices scaled new peak on continued off-take from stockists and traders on prospects of higher wedding demand. While standard gold (99.5 purity) spurted by Rs 160 per 10gm to Rs 32,500 from Saturday's closing level of Rs 32,340 in Mumbai, pure gold (99.9 purity) surged by Rs 155 to Rs 32,640 from Rs 32,485. AGENCIES

RBI seeks alternative to $

2012-11-20T19:36:00.000-08:00

Wants Emerging Market Currencies As Reserve Option

Mumbai: Even as China tries to promote the Yuan as an international currency, Reserve Bank of India (RBI) has joined the effort of chipping away at the dollar's preeminent position as the world's currency. The central bank on Monday called for inclusion of emerging market currencies as alternative reserve currencies to the dollar.
    Delivering the 46th A D Shroff Memorial Lecture in Mumbai on Tuesday, RBI governor D Subbarao said that the dollar's monopoly as a reserve currency had resulted in many countries facing a liquidity problem as foreign creditors and foreign investors turned risk averse. "Paradoxically, even as the US economy was in a downturn, and its central bank resorted to extraordinary quantitative easing, the dollar strengthened as a result of flight to safety," Subbarao said.
    The governor pointed out that one alternative was to have a menu of reserve currencies. "But this cannot happen by fiat. To be a serious contender as an alternative, a currency has to fulfill some exacting criteria. It has to be fully convertible and its exchange rate should be determined by market fundamentals; It should acquire a significant share in world trade; The currency issuing country should have liquid, open and large financial markets and also the policy credibility to inspire the confidence of potential investors. In short,the 'exorbitant privilege' of a reserve currency comes with an 'exorbitant responsibility'," he said.
    According to the governor, another option of developing special drawing rights (SDRs) — an overdraft facility that countries have with the International Monetary Fund to get credit denominated in dollars, pounds, euro or the yen — is not a feasible option as SDRs would have to be automatically acceptable as a medium of payment in cross-border transactions, it should be freely tradeable and its price has to be determined by forces of demand and supply.

EXCHANGE OFFER

Rupee may hit 50/$ in a few months: Govt

2012-09-28T22:12:00.001-07:00

NewDelhi:The government on Friday said it expects the rupee to appreciate to around 50 against the dollar over the next three-four months on higher foreign inflows, a development that will help rein in subsidies and also check inflation.

    "The rupee has gone below 53 and that reduces the subsidy requirement. If rupee further strengthens, which we hope it will, with the steps the government is taking, we expect it could even touch 50 in the next 2-3months or four months," economic affairs secretary Arvind Mayaram told reporters. He said the recent policy initiatives are expected to result in higher foreign exchange inflows — through the FII and the FDI channels — and ease the pressure on the rupee.
    On Friday, the rupee rose to 52.50, a level last seen on May 1 before ending the day at 52.86, 16 paise stronger than the previous close. For a currency that was among the worst performers till recently, this was the fourth straight week of gain and the best quarter since June 2009. Since September 13, when the government initiated the so-called reform measures by raising diesel prices and capping subsidized cooking gas sales, the Indian currency has gained around 5% against the greenback.
    A gaining currency makes imports cheaper, especially the oil import bill, and cools down inflation. Mayaram said that a one rupee gain translated into 8 basis points reduction in inflation (100 basis points make a percentage point). Going by this argument, nearly a quarter percentage point has been shaved off from inflation in the last two weeks, while the oil subsidy, based on underrecoveries of oil companies that was projected at Rs 1.67 lakh crore, has also come down by around Rs 20,000 crore. A one rupee change against the dollar results in change in under-recoveries by Rs 8,000 crore. The market, however, is not as bullish. In a research note, Bank of America Merrill Lynch economist Indranil Sengupta estimated the rupee to be around Rs 51 to a dollar this fiscal. Most agencies expect the rupee to hover around 51-52 to the dollar given the global uncertainty.
    But even at these levels, there is a gain for the government. "It is not simply in terms of cutting subsidies that you can contain fiscal deficit, (but) by better management of economy also fiscal deficit can be contained," Mayaram said. He said the government may step up the disinvestment drive and will try to keep the fiscal deficit as close the target as possible. Sensex closes near 15-month high
Mumbai: The government's moves to increase revenues and an assertion that its borrowing from the market for the second half of the current fiscal will not exceed the budgeted figure led to a strong rally on Dalal Street, lifting the sensex by 183 points to 18,763 — near its 15-month closing high mark.
    The day's rally, that added Rs 73,000 crore to investors' wealth, was also aided by news from Europe that Spain, one of the struggling economies in the continent, has agreed to an austere budget that would contain its fiscal deficit to some extent.
    The day's session began on a strong note with sensex up more than 100 points, and soon climbed to its intra-day high at 18,870.
    Profit-taking late in the session, however, pulled the index down from its high and it closed with a 1% gain.
    The rally was helped by foreign fund buying with data at the end of the session data showing a net inflow of Rs 1,230 crore.
    The day's figure took the aggregate monthly FII flows to over Rs 20,000 crore, or about $3.9 billion.
    Domestic funds, however, remained net sellers with a net selling figure of Rs 679 crore, taking the monthly figure to close to Rs 9,200 crore.
    Among the top sensex gainers were Hindalco, up 3.4% at Rs 121, Tata Motors gained 3% to Rs 267 and Cipla with its stock up 2.5% at Rs 381.
    Of the 30 sensex stocks, 26 ended with gains.
    The strong FII flows also aided in strengthening the rupee, which closed at 52.86 to the dollar, compared to its Thursday close of 53.03, a five-month high.

RBI Sold $7b in Forward Market to Stem Re’s Fall

2012-07-19T20:45:00.001-07:00

Selling in forward market helps central bank avoid depletion of foreign exchange reserves

The Reserve Bank of India is selling dollars in the forward market to meet dollar demand without any drain in its foreign exchange reserves kitty. The central bank has sold $6.85 billion in the forward market in May, the latest Reserve Bank of India data indicates. This is reckoned to be one of the highest forward dollar sales by the central bank in any single month. The central bank net sold only $485 million in the spot market during the month.
"The central bank's forward sales in May was one of a kind because the central bank had used all possible tools, including spot intervention, as the rupee fell sharply against the dollar during the month," said K Anant Rao, senior analyst, Karvy Research. The rupee had slipped 6.6% against the dollar during the month. Besides, the RBI had asked PSU banks to sell dollars and exporters to bring back dollar proceeds.
One of the advantages of intervening in the forward market is that there is a commitment of dollar supplies if required, that too without depleting the foreign exchange reserves. One can also roll over such contracts. Such a strategy also helps contain the premium on forward cover because importers had also rushed for cover during the month to hedge against high volatility in the rupee.
The rupee has secularly dipped against the US dollar since early August 2011, after ratings firm Standard and Poor's downgraded the US sovereign debt outlook. The deepening of the debt crisis in several Eurozone economies like Greece, Spain and Portugal added to the currency's woes.
RBI has announced several policymeasures to encourage capital flows, including relaxing the returns on NRI deposits, enhancing the limits for foreign portfolio investors for investment in debt instruments and easing the overseas borrowing norms. These measures have somewhat helped in containing the pace at which the rupee weakened in recent months. Though there is no firm indication as to the nature of intervention by the central bank in the currency market, currency dealers say that the level of intervention in both spot and futures market has never beenas aggressive as in May 2012.
gayathri .nayak @timesgroup .com

GROWING CLOUT Re, yuan gain currency at ADB

2012-07-17T18:47:00.001-07:00

New Delhi: Reflecting the growing might of China and India in the global economy, the Asian Development Bank (ADB) on Tuesday said it would start supporting deals denominated in rupee and renminbi under its Trade Finance Programme (TFP) in view of the expected rise in inter-regional transactions using the two currencies.

    "ADB's Board of Directors today approved the inclusion of renminbi and Indian rupee in the TFP, which fills private sector market gaps for trade finance by providing guarantees and loans to banks to support trade. Over 50% of TFP's portfolio has supported intra-regional trade and this move will bolster TFP's ability to further enhance its support for trade within developing Asia," the Manila-based multilateral body said in a statement.
    Since 2009, the US dollar, the euro and the yen were the currencies in use under the programme that has provided support of over $10.6 billion. "The move will help companies get credibility and increase their ability to generate liquidity and the price at which they get liquidity. Overall, it will have a positive impact on trade in India and China," said Ajay Marwah, head of trading at HDFC Bank's treasury.
    Government officials, however, said the move is also expected to benefit bilateral trade between the two Asian giants by cutting down on exchange rate fluctuations and transactions costs as traders will not have to use a third currency.
    Already, BRICS (Brazil, Russia, India, China and South Africa) have signed an agreement to provide credit in local currency. There is also discussion on a common Asian currency, although it is at a very early stage and is unlikely to come anytime soon given the concerns over the artificial value of renminbi. By not permitting a free float, China is accused of undervaluing its currency to boost exports.
    The developments, however, come at a time where there is growing debate on whether dollar will be the dominant currency in the years ahead given the scar that the financial crisis has left on the US economy.

Re Falls as ECB Cuts Rates, may Slip Further

2012-07-06T20:28:00.000-07:00

The rupee fell for the third straight day after the European Central Bank presented a bleak economic picture as it cut interest rates to a record low, pushing investors to seek safety in US Treasuries and German bonds. But money market pressures are easing. The currency that gained for four straight sessions in the run-up to an auction of permits for foreign institutional investors to buy government bonds is slipping, drawing the RBI to sell dollars, traders said.
With lukewarm response from investor to bid for those bonds, importers are worried that the US dollar inflows may slow and that pressure on the currency could return. The rupee closed at 55.42 to the US dollar, down 0.9% from the previous close of 54.95. It swung in a range of 54.25 to 54.68 with high volumes that made the RBI step in to reduce the volatility.
Since investor sentiment has been dented further with the lower-than-expected job additions in the US, the rupee may resume its slide, probably to a new low if the government does not come up with concrete measures to fix its finances. "The dollar-rupee should trade in a narrow range next week, with intervention at higher levels and good amount of buying at lower levels," Ashtosh Raina, head of forex trading at HDFC Bank, was quoted as saying by Reuters.
But the pressure on the Indian money markets is easing with banks' borrowing from the central bank falling to multi-year lows as they access more funds through higher export credit refinance that was raised to 50% from 15%. Banks borrowed just . 11,530 crore from the RBI, down from about . 98,000 crore on Tuesday.
Though the easing pressure may set the stage for lower interest rates, analysts warn that it may be too early to conclude. "Liquidity deficit may not disappear, with average liquidity deficit hovering around . 50,000 crore to . 1 lakh crore till September and may spike temporarily above that in September owing to advance tax outflows,'' says Madhavi Arora at Karvy Research.

Re fall to boost IT margins by up to 4%

2012-07-03T21:07:00.001-07:00

CURRENCY BETS PAY

Cos' Profit Depends On Extent Of Hedging

Bangalore: Indian IT firms may make windfall gains from the rupee depreciation in the June quarter, with profit margins likely to rise between 2 and 4 percentage points, depending on the extent of their hedging.
    Sid Pai, partner in research and consulting firm Information Services Group, said, "At this point, it could be difficult to estimate the quantum of rupee gains for each of the companies as its closely linked to the size of hedges. We get a sense that for Q1 of 2012-13, the rupee factor may cause a margin uplift of 300 to 400 basis points.''
    Jagannadham Thunuguntla, head of research at SMC Global Securities, also said it would be tough to compute the net effect of the rupee on margins without having a proper view of the hedge scene. "But the companies with high-hedges (in the Rs 40 levels) may report a lower margin impact at 1.5 percentage points," he said.
    Given the unexpectedly sharp drop in the rupee value in the quarter, companies that had less money under hedges will likely reap better returns. Infosys had only $800 million under hedges, against TCS's $3 billion and Cognizant's $3.7 billion. Some analysts expect Infosys to gain the most out of the rupee fall, with a 3 to 3.5 percentage points improvement in its June quarter margins.
    The rupee depreciated by about 20% in the June quarter. The currency stood at 45 to the dollar between April and June last year, and between 52 and 56 during April-June this year. In the quarter ended March, TCS had the highest net profit margin, at 26.15%, followed by Infosys at 25.66% and Wipro at 14.39%. One brokerage house has speculated that Infosys may be tempted to offer a salary increment on account of the rupee windfall. Some others say it could offer a bonus to its employees. Infosys will be the first of the big Indian IT companies to announce the June quarter results, on July 12.

Worst Trade Deficit in Ages to Weigh on Re Depleting forex kitty, strong crude demand and overseas loan repayments to hurt currency’s pullback

2012-07-01T19:45:00.001-07:00

Hopes of a recovery for the battered rupee may dim if the government fails to come up with a plan to raise US dollar funds soon as the worst external trade position in decades worries investors. Notwithstanding the rupee's biggest gains in three years on Friday, depleting foreign exchange reserves, strong crude oil demand, overseas loan repayments and a fall in services exports growth rate are chinks in the armour in reviving the currency.

Revival in global investor appetite for equities and commodities after Europe agreed to fix its banking crisis may play spoilsport for India, which was hoping to benefit from lower commodity prices. Crude, which constitutes a third of imports, rose $6 a barrel to about $98. Higher coal imports to offset domestic deficit will, along with crude, worsen India's external trade as the Centre's subsidies cushion the impact of high market prices on consumers. The selling of diesel and cooking gas at below market prices is feeding a consumption boom that's straining both the currency as well as government's finances. "It's a surprise and a concern," said Brinda Jagirdar, chief of economic research at State Bank of India, after the March quarter current account deficit — the excess of imports over exports — came in at a record 4.5% of the gross domestic product. "This calls for immediate attention to the external sector, or the problems could escalate. Softening oil and commodity prices could get offset by a rise in coal imports along with depreciation in rupee." The RBI's external trade data released on Friday for the March quarter painted a grim picture. Merchandise exports' growth fell to 3.4% in the quarter from 47% a year earlier, but imports rose 23%, although it was down from 28% in the same period a year ago. This led to a widening of trade deficit to $51.6 billion, up from $30 billion a year ago. Exports of net services fell to 21% from 72% a year earlier. The rupee that had lost a quarter of its value in the past year had its biggest gain in three years on Friday before the trade data was released. It ended at 55.64.
Even the record portfolio inflows in the March quarter were not sufficient to meet the dollar demand and the country had to dip in to $5.7 billion of foreign exchange reserves. This led to a fall in the foreign exchange cover for external debt to 85%, from nearly 100% a year earlier. Recent RBI measures, such as easing overseas borrowing norms for companies, may not bring in enough US dollars to support the rupee.
Economists are not yet changing their rupee-US dollar target rate as the sharp depreciation of the currency and lower commodity prices than in the last year could lead to a better balance in the next few months. "We expect the current account deficit to narrow on account of falling crude oil prices, lower demand for gold and the lagged impact of INR depreciation," said Sonal Varma of Nomura Securities. "Rupee depreciation initially worsens the trade balance as the value of imports rises, but gradually should improve the trade balance as import volumes contract and exports gain."
Although the current account deficit for last fiscal at 4.2% was worse than the 3% in 1991 when India pledged gold to avert a default, it might have peaked. Historically, India's trade balance had adjusted for the better whenever the currency lost value.

Cheaper Re not Reason Enough for India Entry

2012-07-01T19:43:00.001-07:00

Brokers will say that the market is a buy, but we aren't there yet, says Aberdeen's Lim

Indian stocks have become cheaper due to the falling rupee but the plunging return on equity has cancelled out the benefits, says Adrian Lim, senior investment manager of Aberdeen Asset Management, who manages the mammoth $3.8-billion Aberdeen Global Indian Equity Fund. Following are the edited excerpts from an exclusive interview with ET's Nihar Gokhale before last week's Eurozone summit.

What is your outlook for Indian stocks?
In the near term the outlook is under-whelming. One hurdle, clearly, is still high interest rates, which will weigh on consumer demand. These may also deter companies from investing — any project will have to yield at least a double-digit return to be profitable. This combined with falling rates of growth (Q1 GDP at a near 10-year low) spells flat or even negative earnings growth for many companies this fiscal. The consolation is that investors have marked down stocks. If the Sensex continues to fall, then the market may look like having good value. But we are not there yet. Still, India is a market we instinctively like because of the quality of the companies. They are used to adversity. We just forget that because national expectations have been raised unreasonably these past few years.
What is a bigger risk for India at this juncture: Eurozone or the domestic economic slowdown?
That's an open guess. Weakness in the Eurozone is bad for the euro and benefits the dollar. The effect is to put additional pressure on an already weak rupee, making imports more expensive. A fatter fuel bill will, in turn, worsen the fiscal situation. On the other hand, if the Eurozone becomes the world's problem, fuel prices may ease faster than expected and that could offset the depreciating rupee. The domestic slowdown is easier to read: industrial production, manufacturing and services are all flat-lining. These trends are likely to deter capital inflows, which are needed to help finance the deficit. Again, that would be bad for the rupee. So, whichever way you look at it, the currency is centre stage. But if the government showed more resolve over opening up the economy to competition, then these concerns would quickly dissipate and confidence would return.
There are concerns that India could be staring at the prospect of stagflation with inflation at elevated levels but growth slowing. What do you think about this?
No. Although there are structural reasons why India's inflation has been high historically, including the cost of food and goods distribution, red tape and monopoly controls, it would really take something out of the ordinary to see prices stay elevated for a sustained period. We would discount even a bad monsoon, a resurgent oil price, further loss of confidence in government policy... or an unholy combination of two or more such factors. The RBI is not so foolish as to stake its reputation on such outcomes. As things stand, India has high growth; it's just not as high as it was recently.
What are your views on the Indian rupee? Has the recent depreciation in the currency made buying Indian stocks attractive?
Your question suggests that the rupee may have reached a floor. This is open to question. The government does not seem bothered by the exchange rate and risk-aversion may continue to the rupee's detriment. On a real exchange-rate basis, i.e. taking into account recent inflation, the rupee has anyway been cheaper. These considerations do not, however, have much bearing on our view of individual stocks, where we take a broader view of fundamentals. From a price-perspective, the stock market has become cheaper. Against this, returns on equity have been falling, so any benefits have been cancelled out. Brokers will be inventive in finding ways to say the market is a buy but we think volatility argues that we sit tight for now.
What are your top stocks in India? Which sectors are you bullish on?
We hold HDFC and ICICI Bank among financials; Godrej Consumer and Hindustan Lever in the consumer sector; Tata Consulting and Infosys in IT; and HeroMoto in transport, to name just a few. These are all wellrun companies and we know the management of each extremely well. Unlike many portfolio managers we don't chop and change our stocks. We tend to stick to a nucleus of 30 companies only -- this way we really know what we hold and so we can be confident adding to or reducing, positions, as the case may be, when we see any untoward price movements. To the uninitiated it looks like we do very little but our style is very active versus benchmarks. We gravitate to less capitalintensive businesses where cash flow is most visible. Stocks come first, sectors are secondary.
Which sectors would you stay away from?
We tend to avoid those sectors that may be subject to government control, be that through tariffs, subsidies or some kind of preferential treatment (that could be revoked). It follows that the energy and power sectors are unattractive. We're less keen on very cyclical businesses generally. So we prefer to hold, say, Grasim, the cement company, than a construction company, for exposure to infrastructure. We aren't dogmatic, though. Occasionally, we find good stocks where don't necessarily expect them — it all comes down to quality as well as price.
Has RBI's decision to retain interest rates at current levels disappointed you?
It surprised us given that the RBI had earlier telegraphed there was room for a cut. That it has chosen to keep rates as they are is more pleasing than disappointing, however. Events change and sensible central bankers change their minds accordingly. Core inflation has become vulnerable to a rise in prices brought on by more expensive imports, with the rupee testing new lows. Data for May shows consumer prices accelerating.

CURRENCY CALL Yuan full-float pilot run in Shenzhen

2012-06-28T20:36:00.001-07:00

Beijing: China has launched a pilot programme to implement full convertibility of the yuan. It has selected Shenzhen, the place from where former president Deng Xiaoping launched economic reforms 30 years ago, to run the pilot programme.

    The move involves twoway yuan flows between Hong Kong and a $45-billion special economic zone (SEZ) in Shenzhen across its borders. Chinese planners said the move will be a learning graph for authorities to eventually open up the country's tightly-controlled capital account. The decision comes even as the former British Colony celebrated the 15th anniversary of its takeover by China with a visit by President Hu Jintao.
    The government has been trying to introduce wider use of yuan in international settlements and encouraged the growth of an offshore yuan market in Hong Kong.
    Major foreign banks in Hong Kong now offer settlements and loan facilities in yuan, although the Hong Kong dollar is the city's primary currency.
    The government has selected an almost undeveloped Qianhai Economic Zone, which is due for full development in 2020, as the area in
Shenzhen where the experiment towards full capital account convertibility will be carried out.
    "(The government) will proactively conduct an experiment in exploring convertibility under the capital account in Shenzhen's Qianhai zone," Wang Zhongwei, deputy director of the Information Office of the State Council, the country's cabinet, said.
    The government will also encourage development of Hong Kong's offshore yuan market as part of a new package of policies, he said.
    Hong Kong Exchanges Clearing announced this week it was forming a joint venture with the Shanghai and Shenzhen stock exchanges to develop financial products and services.

RBI seeks restrictions on currency futures

2012-06-28T20:35:00.000-07:00

CHECKING SPECULATION

New Delhi: The Reserve Bank of India (RBI) has sought checks on currency trading, arguing it was resulting in speculation. The demand, which has not found favour with market regulator Sebi, was made during a meeting of the Financial Stability Development Council (FSDC) recently and came at a time when the rupee is touching new lows against the dollar and putting pressure on the overall economy.

    Sources told TOI that Sebi has managed to get a reprieve for the currency futures market, where trading began in 2008 after a reluctant RBI agreed to the plan after years of debate. Futures are aimed at helping traders hedge their currency bets. One of the major reasons for RBI's opposition was joint regulation with Sebi. FSDC is a regulatory coordination body comprising regulators and is headed by the finance minister. RBI is learnt to have raised the issue during a meeting of the subcommittee, which is chaired by the central bank governor.
    In recent weeks, RBI has sought to clamp down on activities that could impact currency fluctuations and the proposal is also in that direction. Therupee has depreciated over 20% over the past 12 months and closed at 56.80 against the dollar on Thursday, compared to Wednesday's close of 57.16.
    Sebi has taken the plea that in the absence of a regulated segment such as currency futures, traders would be forced to hedge their risks in unregulated markets such as the non-deliverable forwards market in Singapore, where volumes are of the order of $20 billion, compared to $4 billion for currency futures. The over-the-counter market is regulated by RBI where business worth around $15 billion is transacted.
    Market players said that instead of banning currency futures the regulators could look to club position limits and use other tools to check speculative behaviour. Subbarao dampens stimulus hopes RBI Governor Flags Concerns About High Fiscal Deficit, Rising Bad Loans TIMES NEWS NETWORK
Mumbai: Reserve Bank of India governor D Subbarao has said that the government does not have the headroom for a fiscal stimulus. The central bank has also indicated its unhappiness with the fiscal deficit position, which it sees as an impediment to rate cuts.
    The change of regime in the finance ministry has raised hopes of an economic stimulus package. Despite RBI's hawkish stance on inflation, the industry has been hopeful that the central bank would cut rates in its policy review in end-July. However, RBI's latest pronouncements in its Fiscal Stability Report seem to indicate that chances of a rate cut have not improved in the last few days.
    "On the domestic front, slowing growth, elevated inflation and large fiscal and current account deficits are serious concerns. The already high fiscal deficit leaves little room for the government to stimulate the economy. The current account deficit is being increasingly financed by debt flows, threatening long-term sustainability," said D Subbarao in his foreword to the report released on Thursday.
    Later in the report, RBI said "Recent trends in terms of an elevated ratio of revenue deficit to gross fiscal deficit and the increasing proportion of revenue expenditure relative to capital outlays are also disquieting. Gross financing needs of the government remain high with consequent impact on private investment and growth."
    While the continued strength of the financial system and the softening oil prices are seen as a silver lining, RBI concerns over bad loans have increased. The report has pointed out that bad loans and restructured loans in aviation are disproportionately high and could make things difficult for the ten public sector lenders with whom the loans are concentrated.
    Commenting on the rapid pace of rise in bad loans, RBI said, "Asset quality concerns persist as the growth in nonperforming assets (NPAs) accelerated and continued to outpace credit growth. NPAs grew at 43.9% as at end March 2012, far outpacing credit growth of 16.3%," the report said. Besides bad loans, RBI has flagged increased gold coin import by banks, growth in gold loan companies, and growing interconnectedness between institutions in the financial sector as a cause for concern.
    The trend of rising bad loans is a continuing one according to bankers. Speaking at a CII bank technology summit in Mumbai on Thursday, SBI chairman Pratip Chaudhuri said that low economic growth may raise restructuring requirements. "Restructuring of loans will continue going forward and the consolidation of NPAs will also continue," he said.

RBI governor D Subbarao

India shouldn’t worry about Re fall: Mr Yen

2012-06-26T19:45:00.001-07:00

ONE-ON-ONE

Mumbai: Eisuke Sakakibara, a former Japanese minister of finance and economist, known as 'Mr Yen' because of his ability to move currency markets during the '90s, advises the Indian government to take advantage of the falling rupee by boosting exports and not to fret about it. The currency depreciation is a worldwide phenomenon caused by "simultaneous recession" in global economy, he tells TOI on a visit after becoming a board member at investment bank Avendus Capital.

You are here in the midst of what some people call an Indian currency crisis. What are your views on rupee's
steepest fall ever in recent months?
What is happening right now is repatriation. Funds are now returning from emerging economies to US because of simultaneous recession worldwide. There's a flow from equities to bonds. It's a worldwide phenomenon triggered by the euro crisis. India is running a current account deficit and capital inflows supported the currency so far. So as long as capital continues to flow out, this depreciation will continue. How long...is uncertain. If I were the Indian government, I would tell the Indian people, 'Don't worry because it is to do with repatriation and not because of any weakness in the Indian economy' and try to take advantage of the situation by increasing exports.
Do you think the euro will
survive as a single currency? How do you see the future of the Eurozone?
Germany and France forged European integration in the post-War era. But it's beginning to disintegrate because of the Greek crisis and the US crisis. I think the problem is structure. The Greek crisis has been temporarily suspended but it's spreading to Spain and perhaps Italy. So the integration is at risk and this is a structural problem and I don't see any immediate way out of the European crisis. The crisis will continue and eventually hit European banks. Because bonds of south European countries are plummeting, the balance sheet of banks are deteriorating. I think it is a possibility that some French, German or Italian banks may have a problem and the fiscal crisis may eventually become a financial crisis. I would not be surprised if a major financial institution in Europe goes bankrupt.
A lot has been said about Japan's debt that's running at about 200% of its GDP…
It's true that debt is high but Japan is not in a financial crisis. While the debt is 180% of the GDP, the accumulated assets of the Japanese households is almost 240% of the GDP, which more than covers up the debt. And most of that debt is owned by Japanese institutions unlike in the case of US, where more than 70% of its debts are in the hands of foreigners.
There's rising interest of
Japanese corporates in
India. How do you see the
Indo-Japanese deal corridor shaping up?
Yen has been strong and I see it that way for a while, giving the Japanese companies enough comfort to pursue international acquisitions. They have gone into China in a big way, but are now talking about China Plus One strategy. That's bringing lot of focus on the Indian market where they see better longer-term growth. India's younger population will sustain longer growth, possibly even 20 or 30 years after China peaks off. Japanese conglomerates, aided by low cost of capital, normally look at the long horizon.

Eisuke Sakakibara ECONOMIST & EX-JAPANESE FM

Govt steps fail to cheer forex mkt

2012-06-25T22:24:00.000-07:00

RBI Hikes Foreign Investment Cap In G-Sec To $20Bn Re Slips Below 57

Mumbai: The Reserve Bank of India (RBI) in consultation with the government announced a host of measures to encourage flow of foreign debt, but failed to cheer forex markets where the rupee slipped to end the day below 57 levels, close to its historic lows.
    The measures include allowing companies with forex earnings to raise foreign borrowings of up to $10 billion, increasing the limit for FII investment in government debt from $15 billion to $20 billion, allowing qualified institutional investors to park funds in government securities and relaxing norms for foreign debt investment in infrastructure. In addition, the indicative external commercial borrowing ceiling for the current financial year has also been increased from $30 billion to $40 billion.
    "We are re-tarring the road for better and faster traction," Thomas Mathew, joint secretary in the finance ministry, told a press conference. Market players, however, said that the moves—like Pranab Mukherjee's term in the finance ministry—were high on promise but low on substance. Mukherjee is due to step down as finance minister on Tuesday to contest presidential elections.
    Bankers said that RBI measures will help bring in more foreign exchange — but only after there is a change in sentiment. The measures were not seen strong enough to reverse the tide of foreign funds which are making their way to safe havens like US treasuries.
    But even in the current market there would be a few investors such as sovereign wealth funds who could bring in money while good quality companies like Larsen & Toubro with forex earnings could raise foreign debt.
    "We have been receiving lots of enquiries from real money investors like sovereign wealth funds, central banks and from long-term players like big pension funds….the announcement today should be greeted with enthusiasm by such potential investors," said Hitendra Dave, MD and head, globalmarkets, HSBC India.
    The rupee which had firmed up to 56.82 in intra-day trade slipped below 57 to close at 57.02 against the dollar—14 paise stronger than its alltime low close of 57.16 on Friday. The main reason for the disappointment was that Mukherjee had earlier built up expectations by announcing that a package of measures would be announced on Monday.
    Most had expected that there would be some kind of a scheme to attract NRI funds and policy measures to make India more attractive to strategic investors.
    "No decisive government action was seen on the policy front, against expectations of FDI liberalization, NRI focused bond issues, or policy reforms," said Rohit Bammi, partner, KPMG India.
    He added that as India's outlook has deteriorated in the eyes of external investors and lenders, the pricing for incremental ECBs is unlikely to be significantly better than rupee borrowings if hedging costs are taken into account. As a result the rupee was unlikely to get support from these measures.
    "The measures announced by RBI are on the whole positive. But they will not improve sentiment or fundamentals in a significant manner. For this to happen, the market requires measures that would bring in around $20-30 billion in the near run. None of these measures will create this kind of an environment. Under these circumstances, the rupee will continue to be under pressure," said Madan Sabnavis, chief economist at Care Ratings.
REINING IN A RISING DOLLAR
MEASURE
tManufacturing & infra cos can raise ECB up to $10bn to refinance loans, or for fresh capital expenditure
tFII limit for investing in G-secs hiked to $20bn, Sovereign wealth funds, multi-lateral agencies, insurance & pension funds allowed to invest in G-secs tFII investment in infrastructure debt and NRI investment in infrastructure rationalized tNine largest PSU lenders have formed a consortium for jointly financing infrastructure projects
IMPACT
tBlue chip companies with foreign currency earnings can raise foreign loans
tG-sec markets to get deeper and bond yields could come down in the long run. However, no immediate impact as existing limits not fully utilized
tNew avenue for core sector companies' financiers to raise funds
tVery large projects of over Rs 1,000 crore will find it easier to achieve fi nancial closure

Re plunges to all-time low of 56.57

2012-06-21T20:38:00.001-07:00

Limited Fed Action Disappoints Mkts | Oil Prices Dip To 18-Mth Low Of $91

Mumbai: The rupee fell to a new lifetime low of 56.57 on Thursday as world markets were disappointed with the Federal Reserve's decision not to come out with a fresh round of monetary easing. The currency, however, recovered to close at 55.31—a reduction of 16 paise from its previous close following dollar sales by the Reserve Bank of India and a recovery in the stock market.
    Curiously the rupee weakened even as international crude market saw oil prices fall to an 18-month low of around $91 per barrel. For the government which had budgeted for oil at $110 a barrel, the sharp fall in crude prices has more than offset the impact of a weaker rupee on its import bill. Besides the fall in oil prices, imports have decelerated sharply because of the spike in the value of the dollar. But the rupee continued to remain under pressure as the local currency is largely driven by capital account flows—dollars that come into the country as a result of investment by foreign institutional investors and foreign borrowings by Indian companies. Since April this year international markets have been witnessing a risk-off ' situation—one where investors chose to park their funds in low risk securities even if that means sacrificing returns.
    "The rupee weakness is basically on the back of issues such as fiscal slippage, governance and actions by rating agencies and not so much to do with trade. We are not seeing much of capital inflows whether it is remittances, FII, FDI or debt," said Ashutosh Raina, head of forex dealing at HDFC Bank. According to Raina, with the rupee having touched a new low, the next resistance level should be around 56.80. "Once that is breached we will have to see where it goes from there. On Thursday, the main cause for rupee weakness was global disappointment with the US Federal Reserve not coming out with a fresh round of quantitative easing in the meeting on Wednesday. The Fed worsened sentiment by cutting forecasts for growth.
    Bankers say that although RBI sold dollars on Thursday, it is not intervening significantly because it sees the rupee weakening as a natural process and not a result of any speculative attack. RBI has already banned banks from holding trading positions in the forex market. This means that demand for dollars is largely from importers. It is possible for merchants to build up positions by delaying or advancing their payments, but given the uncertainty, no one is making big bets.
    Reserve Bank of India governor D Subbarao said on Monday that an economy will see its currency appreciate if it grows faster than its trading partners. India's main trading partners are the Middle East (largely a re-export centre), China and the United States. The rupee has weakened by over 20% against the US currency since August 6 when the US was downgraded by international rating agency Standard & Poor's.

India:Re falls below 56 as Fitch lowers banks’ outlook

2012-06-20T20:35:00.000-07:00

Mumbai: The rupee slipped beyond 56 level as the domestic currency slipped for the third consecutive day as rating agency Fitch lowered the outlook of Indian banks and financial institutions.
    The local currency ended the day to close at 56.15 against the dollar, 18 paise lower than Tuesday's close of 55.97. Sentiment was also hit by hard-hitting comments from RBI governor D Subbarao on Monday that growth would have to be sacrificed to bring inflation under check.
    The lenders affected by Fitch's rating revision include the State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, IDBI Bank, ICICI Bank, Axis Bank, Export-Import Bank of India, Housing and Urban Development Corporation, Infrastructure Development Finance Company. Following the revision in the ratings, the BSE Bankex, which reflects the movement of bank stocks, fell almost half a percentage point on a day when the sensex closed flat.
    The rupee had touched an all-time low of 56.52 against the dollar on May 31. Although there was a marginal improvement in sentiment after an election in Greece brought into power a pro-euro government, domestic issues have been keeping the currency under pressure.
    On Tuesday, RBI governor D Subbarao said that it was not RBI's intention to defend the rupee through intervention and that RBI sold dollars only to smooth out volatility. The dollar gained against the rupee even as it weakened against the euro. Markets worldwide saw a minor rally on hopes that the US Federal will come with a fresh stimulus package in its meeting on Wednesday. Dealers said that if Fed disappointed markets there was a possibility that the rupee could open weaker on Thursday.
Sensex ends flat in volatile trade
Mumbai: In choppy trade, the BSE sensex on Wednesday ended 37 points higher at 16,897, led by metal, capital goods and healthcare stocks, with investors tracking firm global trends amid renewed hopes that Federal Reserve would come out with fresh steps to boost the US economy. The sensex had jumped 103 points in the intra-day trade. AGENCIES

Yen hits record high on US warning

2011-03-17T20:37:00.000-07:00

Hong Kong: With Japan's nuclear crisis showing no sign of ending, the yen surged to arecord high against the dollar on Thursday, compounding the economy's worries and raising expectations that the central bank will soon have to intervene.
    Stocks in Asia were generally down but in Europe, equities gained after two sessions of sharp declines.
    The yen has been creeping upward since the devastating earthquake and tsunami that battered northeastern Japan last Friday. It spiked sharply to a record high of around 76.30 per dollar in early Asian trading on Thursday after a US nuclear official warned that the situation at the quake-stricken Fukushima Daiichi Nuclear Power Station was more serious than Tokyo has acknowledged.
    The yen eased off those levels during London trading to hover around 79 yen per dollar. But even at that level, the currency was about 5% stronger than where it was shortly before the quake.
    Finance ministers and central bankers from the Group of 7 countries were set to hold a telephone conference at 7 am on Friday Japan time, according to the Japanese finance minister, Yoshihiko Noda.
    Kaoru Yosano, the economy minister, stressed that although Japan would welcome moral support from the Group of 7, the Japanese markets have not become destabilized enough to warrant joint currency intervention or government purchases of shares, Reuters reported.
    Still, the yen's sharp climb and the G-7 teleconference reinforced expectations that the Japanese central bank, which has been injecting massive amounts of liquidity into the system all week, will soon take the step of intervening outright in the foreign exchange markets in a bid to weaken the yen.
    Given the economic turmoil generated by the quake and nuclear crisis that has followed it, said Thomas Harr, a currency strategist at Standard Chartered in Singapore, "it's very likely that Japan will get international backing" for any such move, which could come over the next 24 hours.
    The Bank of Japan last intervened in September, when it sold 2 trillion yen to slow the currency's appreciation. That was the first such move since 2004. However, Harr added, it will be very hard to stem the yen's rapid rise. "The yen rose about 20% after the Kobe earthquake in 1995," he said. NYT NEWS SERVICE

Current account deficit triples as imports soar

2010-09-30T20:00:00.001-07:00

Widening Deficit To Make Central Bank's Job Of Ensuring Stability In Forex Market More Difficult

INDIA'S current account deficit tripled in the June quarter as imports soared, raising the spectre of volatile currency when the tide of overseas fund flows turns.
    Interest rate differentials between the domestic market and the developed nations raised the external debt too as companies found it beneficial to borrow in dollars. Widening deficit may make the central bank's job of ensuring stability in the foreign exchange market, inflation and interest rates tough, economists say.
    Current account deficit in the June quarter widened to $13.7 billion, from $4.5 billion in the year earlier, a data released by RBI showed. Current account in the balance of payments measures the net position of a country's exports and imports of goods and services.
    "RBI has a tough task striking a balance between inflows, exchange rate and controlling inflation," Bloomberg News quoted Rahul Bajoria, a Singapore-based economist at Barclays as saying. "The deficit will increase the headwinds and lead to a weakening of the rupee in the short term."
    Cheap money sloshing around the globe is finding its way to developing nations including India, pushing up local currency values. This leads to higher imports while exports stagnate due to consumer reluctance in the West to spend because of rising unemployment. Although foreign fund flows into India, expected to be an all-time high of $25 billion this year, are pushing up stock prices, they are hurting exports and may shake the economy when overseas investors pull their money out.
    The trade deficit was higher at $34.2 billion during the quarter compared with $25.6 billion during the year earlier. While rising imports are an indication of strong demand that could help the country achieve 8.5% growth, a sustained deficit could undo the achievements so far, say economists. "Risks of a near-term shock over the BoP remain," Chetan Ahya, Asia-Pacific economist at Morgan Stanley wrote in this paper recently. "Policymakers have, in effect, taken on more risk in pushing growth and the remaining exposed to the risk of a rise in oil prices above $90/bbl and global risk aversion affecting capital inflows into emerging markets. Under either of these conditions, the currency could depreciate and short-term interest rates spike up, hurting investment and growth — precisely the areas policymakers are aiming to accelerate.''
    The government recently raised the limits of corporate and government bonds holding by foreigners.
    Services surplus fell to $20.5 billion, from $21.2 billion a year earlier due to slowdown in non-software services and investment income, largely comprising returns from deploying foreign exchange reserves.
    Companies borrowed more from overseas markets exploiting interest rate discrepancies.
    Net short-term trade credit was $5.6 billion, up from $1.5 billion, in line with increasing imports, the data showed. Overseas borrowing turned positive at $2.7 billion during the quarter. It declined $0.4 billion a year earlier.
    The overall balance of payments that includes both the current as well as capital account transactions for the quarter, ended in a higher surplus of $3.7 billion ($115 million) on account of a capital account surplus of $18.3 billion ($4 billion). Capital inflows improved on back of sharp surge in short-term trade credits, external commercial borrowings (ECBs), external assistance and banking capital.

To counter swing, hedge your bets

2010-06-08T19:16:00.001-07:00

Volatility in the currency markets is here to stay, requiring importers and exporters to hedge their foreign currency exposure, says

  TILL April, almost everyone was predicting that the rupee would only strengthen against the dollar. After all, the Indian economy was among the ouperformers in the world. But within weeks after the Greek crisis threatened the euro's continuance as a common currency in the Eurozone , the dollar bounced back. In the past six months alone, the rupee strengthened about 15% till April and slipped about 5.5% thereafter on the back of funds pulling out and the dollar gaining from a weaker euro.
   The rupee volatility level is currently around 15% compared to 5% in the pre-crisis level, according to Hemant Mishr, MD, global markets, Standard Chartered Bank. The trend in the currency markets has changed the market dynamics significantly, traders say. Some bankers see two-way hedging in the currency markets. "Importers are hedging for fear of the dollar strengthening and exporters are hedging as the status quo remains," said a trader with a large private bank. That apart, suffering losses after taking wrong calls during the subprime crisis, many corporates have turned more cautious. "In the past couple of years, companies have learnt to hedge in order to protect their risks, instead of taking a market view," says Rugved Dhumale, senior vice-president, Mecklai Capital.
   As for the central bank, the volatility in the currency markets is some sort of a blessing in disguise. With the sudden reversal in the trend from an appreciating rupee, it no longer need worry about mopping up excess dollar inflows and rein in the level of rupee funds in the market. Surprisingly, RBI had not been intervening in the currency market for more than three months. But there is no clear indication as to how the central bank has reacted to the downward trend in the rupee of the last one and a half months or so. Given the runaway inflation that the economy is witnessing, it might not be comfortable with a weak rupee either given the impact on the country's import bill.
   The current movement in the currency markets is due to the crisis in the Euro area. The rupee's downward trail coincides with the surfacing of the problems in the Greek government finances. As for the markets, the weak fiscal position of the many European governments has impacted sentiment on the euro. As a result, the dollar has once again bounced back as the major global currency, despite the fragile economic recovery in the United States. Central banks across the globe which were seen withdrawing from US government bonds until February are pumping money back into US bonds. "Markets also look at interest rate differential, where again the dollar will stand in good stead. Also with the incremental sovereign risks entering the banking system, no investment will happen in euro dominated risk assets," says Mr Mishr.
   However, there is no consensus over how long will the dollar's strength continue. "The market will have to brace itself for these minor crises, volatility across asset markets, including currencies, is going to remain high for at least the next three months definitely, may be even longer," says Mr Mishr. So what message does this outlook send to exporters and importers? At times of such high volatility in the currency markets, Puneet Chaddha, MD and head, commercial banking, India at HSBC, advises corporates not to keep open positions and suggests that they should take steps to minimise foreign currency risk. He believes range forwards are a good option in these conditions as they allow customers to reduce their risk within a price band.
   According to Rahul Bajoria, regional economist at Barclay's Capital: "Importers will need to source dollars as growth remains strong. Oil importers are likely to remain in the market, as crude oil prices have declined in sync with the current bout of risk aversion." Moreover, a strong domestic demand and large requirement of crude oil , coupled with drop in crude oil prices will make importers comfortable enough to source dollars at current levels, he adds.
   According to Mr Dhumale: "Export seems to have recovered. Orders are already in place. Companies are looking at healthy order books. Since there is an expectation that the rupee will appreciate in the medium to long term, importers are not particularly worried. People who are structurally worried are the exporters, because the rising rupee could affect their competitiveness in the market. The China talk of revaluation might give imports a breather, as Chinese goods might become expensive."
   So, though importers have the cushion of domestic demand, it is clear that the strong dollar will keep the importers on tenterhooks and it will take sometime for the rupee to touch the attractive figures of April.

Now, traders bet big on euro-rupee pair

THE descent of the euro may have raised fears of a double dip, but local traders who make or lose money with every tick of a stock or a commodity aren't complaining. The more or less secular movement of the euro since April-end has given them one more asset to play in — the euro-rupee pair on local bourses that has witnessed increased trading volumes since April-end when the stock markets began to fall in response to the deepening crisis in Europe. Since the dollar has been strengthening against the euro, traders normally sell the euro-rupee on MCX-SX and NSE and buy the dollar-rupee to gain from the dollar-euro movement, said Moses Harding, head-global markets group, IndusInd Bank. RBI data show that the reference rate for the euro-rupee (at which the contracts are settled on expiry) has declined steadily from 59.43 on April 27 — the day when Sensex began to fall — to 56.38 on Monday, a dip of 5.13%. Over the same period the rupee has shed 6.4% against the dollar at 47.28. But the dollar movement has been more erratic compared with the euro-rupee.
   Since futures are a zero sum game, one man's gain is another man's loss. At a time when equity markets have flip-flopped, mostly with a downward bias, traders who took the view that the euro would weaken against the rupee gained by selling the euro and buying the rupee and then reversing the trade. Said, Hitesh Daga, a trading member with NSE, BSE and MCX-SX, "In fact, traders prefer to sell the euro in the current scenario. That's because since the introduction of other currency pairs on the bourses, the dollarrupee has delinked itself from the euro, pound and yen. Now, when the euro falls versus the dollar, the rupee strengthens against the euro and that may cap the gains on the dollar-rupee, so we prefer to keep the other leg open." (In effect, not buying the dollar after selling the euro and buying the rupee). Ram N Sahgal

Rupee retreats from near 2-week low tracking euro

2010-06-08T19:04:00.000-07:00

The rupee retreated from its lowest level in nearly two weeks on Monday tracking a recovery in the euro, while dollar sales by exporters looking to cash in on the unit's sharp fall also helped.
   The currency closed at 47.10/11 per dollar, off a low of 47.47 — its weakest since May 26 — but still 0.55% below since its Friday's close of 46.84/85. "There were some large dollar inflows with a foreign bank, which helped in the rupee's recovery," a senior dealer with a foreign bank said, adding that the euro's recovery versus the dollar also aided sentiment.
   The euro recovered on Monday from an earlier slide to a four-year low versus the dollar, but fiscal troubles in Hungary reminded investors of the scale of Europe's debt problems and weighed on the single currency.
   Dealers said exporters were also seen selling dollars around 47.25 levels, which helped the rupee trim its fall, but there was downward pressure from weak local shares.
   Foreign fund flows into and out of the stock market are a key driver for the rupee. So far in May and June, foreigners have sold about a net $2 billion worth of shares, but are still buyers of a net $4.6 billion in 2010. Last year, record inflows of $17.5 billion had helped the rupee gain 4.7% on the year. One-month offshore non-deliverable forward contracts were quoted at 47.35, weaker than the onshore spot rate.
   In the currency futures market, the most traded near-month dollarrupee contracts on NSE and MCX-SX closed at 47.2325 and 47.24 respectively, with the total traded volume on the two exchanges at about $7.4 billion.

Bonds up on delayed rate increase speculation

Ten-year bonds rose for a second day on speculation Europe's widening debt crisis will hamper a global recovery, delaying interest-rate increases in India.
   Yields fell to their lowest level in two weeks as the MSCI Asia-Pacific Index of regional shares slid after the US Labor Department unveiled a weaker-than-estimated jobs report for May. The Reserve Bank of India's pace of increasing interest rates to contain inflation is appropriate and has factored in risks to global economic growth, RBI deputy governor Subir Gokarn said on Monday.
   "Investors are betting that the central bank may re-think its exit strategy in light of the global developments even though our growth is pretty strong," said Srinivasa Raghavan, head of fixed-income trading in Mumbai at IDBI Gilts. "There is also probably some demand for safehaven assets."
   The yield on the 7.80% note due May 2020 dropped four basis points to 7.48% at the close of trade on Monday. The rate touched 7.44%, the lowest level since May 25. The price rose 0.27 per Rs 100 face amount to 102.20.
   The central bank has raised interest rates twice since mid-March by a quarter percentage point each time to curb wholesale-price inflation running close to 10%.
   RBI's benchmark reverse-repurchase rate is now at 3.75%. The next policy meeting is scheduled for July 27.
   The cost of five-year interest-rate swaps, or derivative contracts used to guard against fluctuations in borrowing costs, decreased. The rate, a fixed payment made to receive floating rates, declined 10 basis points to 6.53%.

Re weakens against $ for 4th straight session

2010-05-06T19:51:00.001-07:00

RUPEE REPORT

Mumbai: The Indian rupee weakened against the US dollar for the fourth consecutive session as the greenback strengthened against other major currencies and in the local market foreign funds continued their selling. The rupee weakened 37 paise to the dollar to close at 45.31, a sixweek closing low, after plunging to 45.46 in intra-day trade.

    In line with the weakness in local equities, the domestic unit had opened sharply lower at 45.07/08 a dollar from its last close of 44.93/94.
    Market players said the recovery in the rupee from the day's low was because of a suspected support from the central bank for the Indian currency. In the last four sessions, against the dollar, the Indian currency has lost nearly a rupee. On Friday, it had closed at 44.37.
    During the day, as fears of a Greece contagion to other Eurozone areas rose, the dollar rose against the euro to a 14-month high. Fears that there could be more troubles for the Eurozone is also prompting FIIs to take money off the table, institutional dealers said.
    In the last two sessions, foreign fund managers have taken out about Rs 2,500 crore (over half-a-billion dollar) from the Indian stock market, after pouring in about $6.7 billion since the start of the year.

Strong rupee brings cheer to FMCG sector

2010-04-11T23:48:00.000-07:00

HIGH ON CURRENCY

Mumbai: The strengthening of Indian rupee against the dollar could bring some cheer to fast-moving consumer goods (FMCG) companies which are challenged by fading benefits of lower raw material costs.

    Prices of raw materials like palm oil, copra, LAB (linear alkyl benzene) and HDPE (high-density polyethylene), which are key ingredients of daily use items like soap, detergent and hair oil, are already showing signs of firming.
    Palm oil prices, for instance, went up by 34% in the fourth quarter of fiscal year 2010 compared to the corresponding quarter of the previous fiscal. The prices of HDPE, which goes into packaging and thus is much in demand in the FMCG sector, rose by around 40% during the period.
    A rising rupee would negate the impact of cost increases on imported raw materials like palm oil, which is used in making toilet soaps.
    "Rupee has appreciated by about 5% in recent past. The benefits would accrue to us on our vegetable oil imports and would mitigate, to some extent, the impact of increased inflation on packaging materials and freight. Since rupee has seen movement in both directions in the last six months, the benefit of appreciating rupee can't be counted as sustainable savings,'' said Dalip Sehgal, managing director, Godrej Consumer Products.
    Milind Sarwate, chief, finance, HR & strategy, Marico, said the company does not depend significantly on imports and, hence, the rising rupee does not necessarily lead to lower costs. "Most Indian FMCG companies are now MNCs. Therefore, fluctuations in rupee can affect them in several ways, which were not earlier salient. For example, if rupee strengthens, the financial results of overseas subsidiaries of Indian MNCs lose their lustre when consolidated with the Indian parent company's results,'' said Sarwate.
    The rupee rose to its 19-month high on Friday (April 9) at 44.29/dollar as against 44.46 on April 8. The rise is mainly on account of FII inflows and a weak dollar overseas.
    According to industry analysts, price increases, irrespective of rising input costs, in the highly competitive space of soaps and detergents are a difficult proposition for companies focusing on increasing their volumes instead. "We believe maintaining profitability and decent profit growth will be the key challenge for most FMCG companies,'' a Sharekhan Research report said.
    According to the report, fading raw material cost benefits, lower sales realisation (due to the price cuts implemented to improve sales volumes) and heavy spends towards advertisement would limit the margin expansion for companies like HUL, GCPL, Marico.

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- With Exclusively Redefined Money Management Principles that Control Risk.

Do you want proof?

The FRWC is willing to allow you unrestricted access to their EA Lab and will provide you with the investor password for verification of the live account (not just Fusion but ALL other FRWC robots too).

http://sunnykesh.com/recommends/FRWC/

You are truly witnessing a turning point in the history of Forex Trading.

EAs are hands down, the single best solution to make your money work FOR you, on 100% complete Autopilot... with no intervention necessary... and with absolutely staggering gains possible.

And yes, FUSION-V 1.1a is one of the best EAs ever created.

You are being given the chance to own the top 1% of EAs in the world... and it's going to cost you LESS than 1% of what it took the FRWC to get them to YOU.

They are available right now. There's only one question...

Are you ready?

Today at 9AM EST the FRWC will release the most powerful robots ever seen:

http://sunnykesh.com/recommends/FRWC/

All the best,

Sunny Kesh

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Nothing in this email should be considered as advice on trading or on making investments. We are not regulated to give advice to anyone in any country regarding any type of investing or trading. The contents of this email and any website(s) visited as a result of this email should be considered as educational only.
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Fusion-V 1.1a Bot is unveiled! 355.46% in 19 days

2010-02-15T09:08:00.000-08:00

Hi,

When I saw this, my jaw hit the ground! I was speechless,

I could hardly believe what I was looking at, it's just so incredible - In one game-changing move they've altered the destiny of Forex trading. The FRWC has already done more than we could have ever have hoped for the EA industry, but what they've done here will change things forever.

Fusion-V 1.1a is going to change the world and your life! The only question is...

Are you ready for what comes next?

http://www.sunnykesh.com/recommends/FRWC

- The Forex Robot World Cup has created the world's first SUPER ROBOT (an FRWC EA Lab product)!

- 355.46% in 19 days of Real-Money, Live Trading!

- The combined DNA of the top 5 robots in one single Super Bot!

http://www.sunnykesh.com/recommends/FRWC

- Exclusive money management rules that aportion risk more evenly!

- 100% total access to the EA Lab!

- Investor passwords for verification!

http://www.sunnykesh.com/recommends/FRWC

Fusion-V 1.1a is like nothing the world of Forex has ever seen before. 5 Robots that were great on their own is one thing - but putting them all together - merging the best qualities of each with the weaknesses of none... it's just revolutionary. It's absolutely mind-boggling.

http://www.sunnykesh.com/recommends/FRWC

All the best,

Sunny Kesh

P.S. This has just put every single EA marketer on the planet out of business - the only way they can survive now is by picking the crumbs of whoever doesn't manage to get in on the 16th.

http://www.sunnykesh.com/recommends/FRWC

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Nothing in this email should be considered as advice on trading or on making investments. We are not regulated to give advice to anyone in any country regarding any type of investing or trading. The contents of this email and any website(s) visited as a result of this email should be considered as educational only.

Forex Robot World Cup Winner Talks

2010-02-11T21:17:00.001-08:00

Hi,

--------------------------------------------------
=> NEVER Done Before In The Automated FX Industry
--------------------------------------------------

Like always...

I knew the FRWC was going to put out something new this week and they have! The Forex Robot World Cup is about to introduce you to the 1st place winner, Drazen Ziskovic (145.60%).

It's time to take a road trip!

This video is so cool - it really makes you feel like you're inside a global village. That's the secret weapon of the FRWC - tapping into the best minds on the planet!

YOUR PLIMUS AFFILIATE LINK

- Meet the creator of the LMD Multicurrency Robot

- FRWC keep up their end of the deal!

- 329 entries and the one man that beat them all!

http://www.sunnykesh.com/recommends/FRWC

- One man - a singular vision to build the better bot

- 145.60% in 2 months... REAL money, LIVE account!

- His thoughts on LMD (The future performance of LMD)

- What he thinks about testing (His testing was even more hardcore than FRCW's)

- What he's going to do with his prize money. (He lives and breathes Forex!)

http://www.sunnykesh.com/recommends/FRWC

You know, when you see this, you might not think too much about this guy. He comes across as quiet and unassuming. He's not a "life of the party" type of dude.

This is a guy who trades and was just trying to build the BEST ROBOT IN THE WORLD. He wasn't trying to sell it, he used it himself! He's a shy programmer from Croatia - just an ordinary guy with a genius streak.

http://www.sunnykesh.com/recommends/FRWC

All the best,

Sunny Kesh

P.S. If you take one thing away from this, let it be that you don't have to be a huge, multi-national corporation to change the world. One man with enough dedication to the pursuit of excellence did it - here's the proof:

http://www.sunnykesh.com/recommends/FRWC

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Nothing in this email should be considered as advice on trading or on making investments. We are not regulated to give advice to anyone in any country regarding any type of investing or trading. The contents of this email and any website(s) visited as a result of this email should be considered as educational only.
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