Ways4Forex

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.

FRWC - Your Questions Answered!

2010-02-18T19:06:00.001-08:00

Hi,

My inbox has been flooded with questions about FRWC's Royal
Trader Package which went live yesterday.

In case you missed my email yesterday here is the link again.

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

Judging from the emails I have received some of you are already
setup and seeing great results from the product!

For the rest of you that are still in two minds about it hopefully this

Q&A should clear up any questions or doubts you may have had.

Will these EA's work on any MT4 broker?
Yes, you are not restricted to a single broker, you can use it on
any MT4 enabled broker.

Do you know how long this product will be on sale?
I really don't know... I wouldn't be surprised if they decide to
close the doors at some point to limit the number of people using
these robots. If you need a couple of days to get the money together

hopefully you should be fine but I wouldn't hang around too long!

If I need to contact the FRWC before I purchase how can I do that?
Just go to the link below and submit your question, their support team

will get back to you ASAP.
http://www.forex-robot-world-cup.com/contact.php

Why are they charging so much for this product?
I believe the main reason for this is to stop too many people using
these powerful robots. If you followed 'FapTurbo' in the beginning the

product worked very well but in the end with almost 50,000 people

using the robot it lost its edge. The Fusion-V is a very powerful robot

and as you can imagine the FRWC team do not want to make the

same mistake.

I have a small account can I still use these EA's?
Yes, just make sure your account has micro lots to allow the EA to
risk the correct percentage on each trade. As your account grows so
will the amount you risk on each trade.

Can I test it on a demo account before I go live?
Yes you can, you can open a demo account with any MT4 broker.

If I want to use just one of the robots from the competition can I do that?
Yes you have access to all the robots and are free to use any individual

one or Fusion-V which combines all the top winning robots.

Does it have a risk free trail period?
Yes you can try The Royal Trader package for 60 Days, if you are
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This might be priced higher that other forex robots you have seen
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... IT WORKS

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Because of their iron-clad guarantee. If you don't get results you
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Hope to see you in the FRWC Labs soon!

Kind regards
Sunny

Automated FX trading revolution (LIVE FINALLY!)

2010-02-16T08:06:00.000-08:00

Hi,

------------------------------------------------------------
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In life, we make decisions everyday, but life is strange that way. Ten years ago,

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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.
---------------------------

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...

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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.

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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.

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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!

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- 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!)

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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.

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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

---------------------------
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.
---------------------------

Verified Real Money FX Trading Bots (72.5%/Month)

2010-02-06T21:37:00.001-08:00

Hi,,

-------------------------------------------------------------------
The Forex Robot World Cup Shocks The FX Industry

- What Did The Winning Robots Do To Achieve Astounding Performance (live trading for 2 months)?

- How Much Effort Was Put Into It?

- WHAT Are You Truly Getting Here BESIDES 72.5% Per Month VERIFIED automatic in.co.me?

- How Transparent Was Their Competition?

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I'm sure you've heard people say this before...

"We're only human!"

...We make mistakes, we have feelings, we're impulsive, over-cautious... in short - the same thing that makes us so unique is also our greatest enemy.

We can think many times faster than the best computers in the world yet, at any given time, we're thinking about so much that each thought affects the other...

Again, we're only human after all!

It's always been a problem for traders - we're NOT androids! We agonize over every decision we make... we feel greed and fear.

We lack discipline... and that's how some of our best trades slip through the cracks. Bottom line... we need to be cold, calculating and mechanical in order to make it in the markets.

This is exactly the reason why automated FX trading is making such huge waves in our industry. It takes us - our thoughts, our decisions, our judgments... out of the equation completely.

And THAT is the real way to profit from FX trading... AS LONG as you have the right automated solution.

Now... here's where things get really interesting...

They recently held the Forex Robot World Cup. Just like the soccer world cup decides which is the greatest team in the world... this contest decides which is the greatest FX ROBOT in the world.

It's the first contest of its kind and a true milestone in this industry... and, soon, the winning robots will be available for purchase in small quantities.

Now... what they have prepared for you here is amazing and you've *got* to see it:

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They've made a simply awesome video that takes us backstage to see how everything came together. It's still hard to believe that Forex has come this far - this is something you absolutely HAVE to watch.

Here's a quick summary:

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2010-01-28T08:10:00.001-08:00

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The Indian rupee bottomed out in March ’09

2010-01-17T19:18:00.001-08:00

With a Pinch Of Salt

The Indian rupee bottomed out in March '09 but remained range bound for months after that. Now its appreciation is aided by a faster than expected economic recovery in India and strong capital inflows

PALL AVI M U L AY &DEVANGI JOSHI ET INTELLIGENCE GROU P

SIGNS of recovery in the western economies have raised hopes for an improved financial performance by major export oriented industries like textile, pharmaceuticals, IT and ITeS, among others. An early confirmation of this trend was the 18.24% y-o-y growth in India's merchandise exports in November '09, a first time in 13 months. The optimism on India's external sectors, however,
is running against the run of rupee. At its current level of around Rs 45.67 to a US dollar, rupee is up 10.3% compared to its level in the end March '09. This upward trajectory of rupee will have a huge bearing on the future earnings growth of the exportoriented industries.
    Heavy capital inflows in the country are likely to support the northward movement in the rupee. There have been net foreign institutional investments (FII) worth Rs 91,000 crore during April-Dec '09 as against the net outflow worth Rs 42,000 crore in the corresponding period last year. Not only FIIs, but other forms of foreign capital including foreign direct investment and ECBs, have posted a strong upsurge.
    Estimates for GDP growth for the quarterended September '09 has surpassed the market expectations and touched a level of 7.9% largely due to a strong rebound in manufacturing industry, increased government expenditure and sustained growth in agriculture sector despite deficient rains. This has in turn made India, a favourite destination among overseas investors.
    The inward capital inflows have also been supported by the higher interest rates in India. And this differential is likely to get accentuated even further in the coming months as the central bank is likely to tighten monetary policy in its fight against runaway inflation. The food inflation is already at a decade high level and now even wholesale prices of industrial goods are witnessing a rise in prices. In contrast consumer inflation in the US and the UK are merely 1.8% and 1.9%, respectively.
    Last week China raised the interest on interbank three-month bills and reserve requirement ratio for the first time in 19 weeks signaling its intention to put a brake on monetary expansion. RBI is likely to join the rate-tightening club soon. There is an anticipation of hike in benchmark interest rates in the forthcoming monetary policy. A cumulative 100-150 bps increase in interest rates is expected during 2010, which may flood the country with foreign capital inflows in coming months and may further put upward pressure on the rupee.
    However, the upside could be restricted by the crude oil prices that have started moving up. This will bloat India's oil import bill and thus put downward pressure on the rupee.
    Now that the crude oil prices have nearly doubled from a bottom of $35 in February '09, it is expected to remain above $70 due to a recovery in the world economy. Moreover, a higher than expected rise in demand while the supply from OPEC (Organization of Petroleum Exporting Countries) under check could drive the prices further towards $100. Due to the rally in crude oil prices in 2009, the oil import bill in November '09 was higher by 33% compared the figures in April 09. With the recent uptick in domestic manufacturing activity will further raise the demand for crude oil increasing India's oil import bill. If the pace in increase in import bill turns out to be faster than export earnings growth, it will adversely affect trade deficit dampening rupee's upward movement. The other factor, which could keep a check on the rupee's appreciation in 2010, is any recovery in the US dollar. The dollar index –a benchmark to gauge US dollar's strength against a basket of major currencies –declined by 3% in 2009. With this decline, the index has lost more than 30% of its value since 2002.
    During this gradual decline intermediate pullbacks have appeared a number of times. However, this time around the interest rate in the US stands at its lowest in history, while the inflationary pressures are building-up due to increase in liquidity. Moreover, the major currencies like Euro, Sterling and Yen have showed a subdued performance in last one-anda-half years due to rising debts as well as monetary expansion. Hence on a relative basis the dollar's further depreciation may be quite gradual.
    Due to this setting, the Dollar index (and hence) the Dollar is likely to find a strong support at its recent lows. In conclusion, the rupee is set to appreciate towards 44.50-44 per dollar as it has managed to move past a barrier of 45.80, recently. However, rising crude oil prices and a potential rebound in the Dollar would be the factors to watch out for.
    Pallavi .mulay @timesgroup .com

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Strong rupee may help tame inflation

2009-12-29T18:56:00.001-08:00

SOARING global commodity prices are giving sleepless nights to policymakers at a time when they thought they had inflation by the horn with the easing food prices. Crude oil prices rose above $79 a barrel on Monday, doubling over a year. Prices of sugar and vegetable oils, the other two important items in the country's import basket, are also moving up, threatening to trigger off inflationary pressures.

    While most analysts and policymakers are of the opinion that inflation should be tackled by the RBI, through an immediate hike in policy rates, many others say that the current bout of inflation is not a monetary phenomenon to be tacked by rate management. The government's efforts to rein in prices may get a boost from an unexpected quarter. The rupee that has appreciated more than 4.3% in this fiscal year, cushioning the impact of high global commodity prices. The currency is expected to continue its strengthening streak well into the next year.
    "We expect a 10% appreciation in the nominal exchange rate of rupee over the next year," said Manoj Vohra of Economist Intelligence Unit (EIU). However, the strengthening streak of the local currency may be checked by a resurgent dollar in the short term, he added.
    The RBI has denied any intention to use forex management as a tool to control inflationary pressures. But, economists do not see RBI interfering in the forex market to check the rising rupee, as the central bank is moving slowly towards a full convertibility regime. "A strong rupee can give RBI more headroom to use monetary tools such as policy rates and reserve ratios without impacting the competitiveness of the country's exports in short term," said Indranil Pan, chief economist at Kotak Mahindra Bank. A 10% appreciation in rupee can cut down the wholesale price inflation by 1-3%, he said.
    The country's monthly import bill has been hovering at around $20 billion in recent months. Crude oil accounts for almost a third of India's total imports. India, the second fastest growing economy after China, imports more than 80% of its crude oil demand. The country imported crude oil worth $75 billion in the last financial year. The government was forced to hike the retail fuel prices last year when the global crude prices touched record highs.
    Annual inflation measured by the wholesale price index has moved up to 4.8% in November from 1.3% in the previous month. Soaring food prices have been the largest contributor to the high inflation during the period. "We expect food price inflation to moderate slightly over the next four months but still remain at 15% yearon-year by end Mar-2010," says Chetan Ahya of Morgan Stanley in a research note.
    With inflation gathering momentum on the back of a resurgent economy, analysts economists like Indranil Sen Gupta expect the inflation to overshoot the RBI's comfort zone of 6.5% by the end of the fiscal year. A strong rupee will provide the much-needed relief to the country's policymakers in their fight against galloping prices.

Dollar surges against Yen, Euro on surprise jobs data

2009-12-06T00:37:00.001-08:00

Currency gains as figures put farm job losses at 11,000 vs forecast of 130,000

Reuters NEW YORK

THE dollar jumped against major currencies on Friday after data showed the United States lost far fewer jobs than expected last month, bolstering hopes the economy is on a stable path to recovery.
    Employers cut 11,000 non-farm jobs last month while markets had expected job losses of 130,000. The surprisingly strong report stoked speculation the Federal Reserve may consider raising interest rates from record lows sooner than initially thought. That would increase returns on dollar-denominated assets and make them more attractive again to investors.
    "The market is pricing in more scope for changes in Fed policy, meaning, higher interest rates. That's why we're seeing a rally in the dollar," said Paresh Upadhyaya, senior portfolio manager at Putnam Investments in Boston. Upadhyaya helps oversee assets of about $20 billion. "But I wouldn't put too much into this dollar rally. First of all, it's a Friday and its December, so there's usually very poor liquidity. If anything, this is a technical washout," Upadhyaya said.
    The dollar broke above 90 yen for the first time in three weeks and was on track for its best day against the Japanese currency since August. It was last up 2.5 percent at 90.46 yen. The euro, meanwhile, fell below $1.49 and headed for its biggest one-day decline since June. By early afternoon trading, the euro was down 1.5 percent at $1.4840, well off a $1.5091 peak.
    The ICE Futures' dollar index, a measure of its value versus six currencies,gained 1.6 percent to 75.85, its biggest one-day jump since October of last year. The dollar index has lost 7 percent so far this year as markets have bet that the United States would lag recovery in the rest of the world, and the Fed would keep interest rates low indefinitely. "A jobs recovery is the last piece of the puzzle before we can say we're in full recovery, so it raises the question that maybe rates will go up sooner rather than later. That's pushed the dollar higher," said Fabian Eliasson, vice president of FX sales at Mizuho Corporate Bank in New York.
    The dollar rose 1.7 percent to 1.0175 Swiss francs after earlier falling below parity, while sterling fell 0.5 percent to $1.6470. Recent Fed statements about keeping US rates low for an extended period have encouraged investors to use the dollar as a funding vehicle to purchase higher-yield assets. But analysts said the data today forced many traders to cover short-dollar positions and may signal the end of trades that blindly sell the dollar on strong economic news. "If (signs of a job recovery) continue, you may start to see the dollar rally on strong data rather than the opposite," Mizuho's Eliasson said.

Rupee at 3-week low, loses 46 paise

2009-10-28T20:54:00.001-07:00

GOVERNMENT bond yields rallied on Wednesday after the demand for debt improved, following the central bank's move on Tuesday to hike statutory liquidity ratio (SLR).

    The 10-year benchmark bond yield closed at 7.27%, after falling as low as 7.20% after the policy review. It had closed at 7.34% on Tuesday.
    The rupee fell to a threeweek low on Wednesday, sentiment soured by shares falling for the third straight day and month-end dollar demand from refiners. The rupee ended at 47.34, against the dollar, its weakest since October 5 and almost 1% weaker than its previous close of 46.88/90.
    Goldman Sachs believes the rupee will continue to strengthen against the dollar, with its 3, 6 and 12-month USD/INR targets at 44, 43.4, and 43, respectively. It recommends short dollar/rupee positions.

Rising rupee weighs down sinking exporters

2009-10-07T18:54:00.001-07:00

6% Gain In 2 Mths Threatens To Wipe Out Wafer-Thin Margins

THE rise of the rupee in the last two months is adding to the woes of exporters already hit by low demand in key western markets.
    Many exporters negotiated deals with clients on wafer thin margins, which could be wiped out by the rupee's 6% gain over dollar, say industry players.
    "This is a double blow for exporters. We were anyway struggling to maintain a foot-hold in the global market which has been contracting over the past year," said Tilak Raj Manaktala, a Delhi-based textile exporter and vice president of Delhi Exporters Association.
    The rupee, which rose to Rs 46.65 against the dollar on Wednesday, has upset price calculations made by exporters on the deals struck for supplies over the next few months.
    "There is always a time-lag of around four months between the placement of orders and receipt of payments," pointed out P Aggarwal, another Delhi-based exporter. When exporters did their pricing a few months back, the value of rupee was factored in around Rs 48 against the dollar. "Now when we will receive our payments, we will get only Rs 46 for a dollar. Since we have been working on thin profit margins, it could lead to losses in many cases," he added.
    Even exporters who have hedged their risks will be impacted negatively, claims A Sakthivel, president, Fieo.
    "Even those companies who have covered their risks usually cover 50% of their export turnover. The balance 50% will be hit badly," he said. If the global slowdown continues and rupee keeps appreciating it will be a big blow for exporters as the competition is already stiff in the export market, he added.
    However, the appreciation in the value of the rupee, is not all bad news for the government as it would lead to a lowering of its oil import bill.
    With a contraction in global demand, especially in the US and the EU, exports from India have been in the negative territory for the past eleven months. With the Christmas buying season on in the Western markets, the government is expecting things to improve in the next few months.

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FOREX PLAY

2009-09-24T20:22:00.001-07:00

Punters make a killing in forex market with prior QIP funds info

MANY traders at banks and company insiders have recently made a killing in the forex market by exploiting their knowledge about fund flows during qualified institutional placement (QIPs) and initial public offerings (IPOs).

    Market watchers say individuals who have access to particular dates on when actually funds move into banks have been increasingly taking bets on dollar-rupee through a variety of platforms. Currency futures market, local inter-bank forex market and currency derivatives traded in Singapore and Dubai appear to be some of the popular ones.
    In fact, a large part of the speculative activity on the currency exchanges is coming from such players, market watchers say.
    In the past two months alone, India Inc has raised close to Rs 20,000 crore from six IPOs and thirteen QIPs, according to Prime Database, roughly twothirds of which is estimated to be from foreign investors bullish on India's growth story. Average daily volumes on the three currency platforms put together stood at Rs 6,000 crore in June before primary issuances picked up. In July and August, this was around Rs 8,000 crore and Rs 9,000 crore, respectively.
    "Punters keep tabs on dates when certain funds are to hit the system and ensure that they choose a time where no other major global data are being released," said an official at a firm that advises companies on forex transactions. He said the day when funds from Tata-Docomo deal entered the banking system, the rupee surged by at least 30 paisa, despite negative cues.
    How does it work?
When funds of a certain QIP or IPO are slated to hit the Indian shores, traders and company insiders having advanced knowledge of the day, try to make the most of it by timing the market.
    For instance, an inflow of $500 million in the banking system could strengthen the local currency by around 20 paise in the spot market. A trader will sell dollar-rupee contracts anticipating such a move. He may also choose to simultaneously protect himself by taking a forward cover (hedge his exposure in the forward market) before taking such a bet. This should also help protect him against allegations of front-running.
    The opportunity to make money out of access to information about huge fund flows is taking new dimensions. But the advent of exchange-traded currency futures market, however, has brought such a transactions in the reach of many other traders.
    "Most of the information that moves forex markets is in the public domain and there's hardly any specific bit that a specific bank or group of people can be privy too," said RN Vadivelu, chief executive, Foreign Exchange Dealers Association of India. "So as such there's very little front-running possible in the forex market," he said.
    Dealers at banks are expected to subscribe to a code of conduct as prescribed by the Reserve Bank of India and Fedai, he explained, but ET was unable to find the same on the Fedai website.
    apurv .gupta @timesgroup .com

Re up 0.2% to 48.15/16 vs dollar

2009-09-17T19:59:00.001-07:00

THE rupee trimmed a morning rise to five-week highs past 48 per dollar on Thursday, as shares met resistance at 16-month highs, but still ended up on the day because of dollar weakness.

    The partially convertible rupee closed at 48.15/16 per dollar, 0.2% stronger than Wednesday's close of 48.24/25. In early trade, it hit 47.92, its highest since August 11. The rupee is up 0.7% so far this week, taking its rise to 1.4% in September.
    "The stocks pared most of their early gains, which led to short-covering in dollarrupee in the latter half of the session," a senior trader at a private bank said, adding heavy dollar buying by importers also capped the rupee's gains. Shares rose 0.2%, with strengthening hopes of a global recovery, countered by resistance after a run-up to 16-month highs. Inflows of $9.3 billion into shares so far in 2009 have helped the rupee climb back from its record low of 52.2 hit in early March.
    The dollar's losses versus majors helped the rupee finish stronger. The greenback fell broadly on Thursday, hitting a oneyear low against the euro, as equities and commodities advanced on expectations of economic recovery.
    Surging food costs have driven India into inflation faster than expected, with the wholesale price index (WPI) rising 0.12% in the year to September 5. Priyanka Chakravarty, forex strategist at Standard Chartered Bank, said a rise in inflation could push up the rupee's real effective exchange rate (REER) and raise concerns over the intervention by the central bank. The anticipated appreciation by year-end of the some of the currencies used to calculate the rupee's REER should help contain the upward pressure on REER, and authorities would be more tolerant of currency appreciation if the global economy was improving, she said. "We remain of the view that the central bank will focus on managing exchange rate volatility, rather than preventingappreciation, unless the INR sharply outperforms key trading partner currencies," she said.
    The dollar premium in onshore forwards widened to 143.50 points from 135.5 on Wednesday, as importers bought dollars following the larger-than-expected rally in the spot rupee in morning trade.

World needs new currency: UN

2009-09-08T18:10:00.001-07:00

    The dollar's role in international trade should be reduced by establishing a new currency to protect emerging markets from the c o n f i d e n c e game of financial speculation, the United Nations has said. UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said on Tuesday in a report.
    China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the US mortgage market led to the worst global recession since World War II. China, the world's largest holder of dollar reserves, said a supranational currency such as IMF's special drawing rights, or SDRs, may add stability.
    "There's a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,'' Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. An initiative equivalent to Bretton Woods or the European Monetary System is needed.
    The 1944 Bretton Woods agreement created the modern global economic system and institutions, including the IMF and World Bank. "While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies, it wouldn't be enough to aid emerging markets most in need of liquidity,'' said Flassbeck, a former German deputy finance minister who worked in 1997-1998 with then US Deputy Treasury Secretary Lawrence Summers to contain the Asian financial crisis. Emerging-market countries are under-represented at the IMF, hindering the effectiveness of enhanced SDR allocations, the UN said. BLOOMBERG

India Inc rushes to cap dollar-loan cost

2009-08-24T18:11:00.001-07:00

COS SHIFT AROUND 60% OF THEIR FLOATING-RATE LOANS TO FIXED-RATE LOANS IN ONE MONTH

Sugata Ghosh MUMBAI

    CORPORATE India is rushing to cap the cost of its dollar loans before it's too late. Fearing that interest rates may surge across markets, hundreds of companies are migrating to fixed rate loans in the global inter-bank swap market. More companies are likely to follow suit in the coming days.
    In the past one month, close to 60% of the floating rate dollar loans, pegged to common money market benchmarks like the three to six month London Inter-Bank Offered Rate (Libor), have been switched to fixed rate liabilities, senior bankers told ET.
    These are foreign currency loans given to local firms by foreign banks and overseas branches of Indian banks. In the past few years, several companies have financed their ambitious, and often long gestation, capital expenditure plans through debt, such as dollar loans. A soft interest rate regime, coupled with the dollar's slide against rupee, had turned such loans into irresistible financing option. "But, not any more. The current low rates provide a good opportunity for corporates to lock in to fixed rates for longer tenors, and many companies are preferring this," said Phani Shankar, who heads the financial markets division at ING Vysya Bank.
    Although a loan switch will immediately push up interest rates by 200 basis points (bps) or even higher, companies with two years or more left to repay the loan are still getting into the transaction, fearing that swapping the loan may become more expensive later.
    For instance, a corporate paying a floating rate of Libor plus 300 bps — which works to 3.8% — will end up paying a fixed rate of over 6%, if it moves to a fixed rate — a rate it can freeze for the remaining tenor of the five-year loan.
    Since as much as $28.7 billion came in as foreign loans (or, external commercial borrowings in official parlance) in 2007-08, these borrowers may prefer to switch to fixed rates for such loans, a large number of which have tenors of five to six years.
    Confirming that a large number of companies are going in for inter rate swaps, Hemant Mishr, MD and head of global markets, Standard Chartered Bank, said that there is a general feeling that interest rates would go up soon. In the swap market, rates have hardened in the past few months amid talk of exit strategies by central banks that have pumped in huge liquidity and may begin to withdraw some of it. Thus, many companies think that swap rates will climb in future when a conversion will get more costly.
    The swap transaction involves a simple off-balance sheet deal, where the company with a floating rate dollar loan strikes a deal with the same or another bank; under the new deal the corporate pays a fixed rate — a number that depends on what the swap market is offering that day — to the second bank, and receives a floating rate — the rate the firm is paying on the existing loan — from the second bank. Since it pays (to the first bank) as well as receives (from the second bank) the floating rate interest, the two flows neutralise each other, leaving the company with only a fixed interest rate outgo.
    Till now, a fall in interest rates has given some respite to corporates that went for floating rate dollar loans. At a time when earning projections on many of these capital intensive ventures have gone haywire due to the economic downturn, interest outgo on these projects have been lower than budgeted. Even today, low short-end rates could tempt corporates to carry on with the view that interest rates would stay low for a long time to come. "But that," felt Phani, "should not prevent corporates from locking into the gains that they have already got."
MOOD SWING
The current low rates provide a good opportunity for corporates to lock in to fixed rates for longer tenors
In the swap market, rates have hardened in the past few months amid talk of exit strategies by central banks
The swap transaction involves a simple off-balance sheet deal, where the company with a floating rate loan strikes a deal with the same or another bank

ACM - Central Bank Weekly Preview (04/08/2009)

2009-08-05T05:08:00.001-07:00

Central Bank Preview: ECB and BOE

Weekly Preview


				04 August 2009

Date / GMT		ACM	Consensus	Current Rate
6th/11:00	European Central Bank Rate Decision	1.00%	1.00%	1.00%

	A wide majority of the market expects the ECB to remain at the current level of 1.00%, but a growing consensus is beginning to suspect the central bank may forced to cut rates 25bps. Commentary released by IMF highlight critical economic challenges for the Eurozone region. In the executive summary of IMF publication released last week, they make a cautionary statement: "while the Eurozone facing strong disinflationary pressures, monetary policy will need to remain supportive…the benefits of further cuts in the policy rate need to be weighed against their possible adverse impact on the functioning of money markets but any potential margin for further reductions out to be utilized as soon as possible." ECB President Trichet has been reluctant to establish a hard floor of 1.00% as of recent, which is probably due to the appreciation in the Euro hindering export driven growth. The sharp decline of GDP to -2.5 reflects the severity of economic conditions in the Eurozone. In addition to the growth compenent, the interest rate market remains far too delicate to absorb any rate hikes in the near-term as yields begin to pose some degree of relative value for investors looking to migrate out of risk-averse positions.

6th/11:00	Bank of England Rate Decision	0.50%	0.50%	0.50%

	The BoE is expected to hold rates steady at 0.50% which is line with market forecasts. It is most likely the central bank will adopt a "wait and see" approach following the aggressive measures taken in the form of asset purchases over the last several months. A key indicator suggesting that any additional quantitative easing would occur on a much more conservative scale is the 150bln Sterling quota for gilt purchases which has not been met. Fulfilling the quota for gilt purchases will probably happen before any additional monetary policy action will be announced and this is supportive of the Gbp. The UK economy remains under pressure with rising unemployment at 7.6% vs. 7.4% estimated. Other leading indicators such as a negative GDP of -0.8% and industrial production at -11.9% pose significant challenges for UK policymakers and the deployment of further quantitative easing may prove detrimental to the long-term outlook in region.


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ACM - Central Bank Weekly Preview (04/08/2009)

2009-08-05T03:35:00.001-07:00

Central Bank Preview: ECB and BOE

Weekly Preview


				04 August 2009

Date / GMT		ACM	Consensus	Current Rate
6th/11:00	European Central Bank Rate Decision	1.00%	1.00%	1.00%

	A wide majority of the market expects the ECB to remain at the current level of 1.00%, but a growing consensus is beginning to suspect the central bank may forced to cut rates 25bps. Commentary released by IMF highlight critical economic challenges for the Eurozone region. In the executive summary of IMF publication released last week, they make a cautionary statement: "while the Eurozone facing strong disinflationary pressures, monetary policy will need to remain supportive…the benefits of further cuts in the policy rate need to be weighed against their possible adverse impact on the functioning of money markets but any potential margin for further reductions out to be utilized as soon as possible." ECB President Trichet has been reluctant to establish a hard floor of 1.00% as of recent, which is probably due to the appreciation in the Euro hindering export driven growth. The sharp decline of GDP to -2.5 reflects the severity of economic conditions in the Eurozone. In addition to the growth compenent, the interest rate market remains far too delicate to absorb any rate hikes in the near-term as yields begin to pose some degree of relative value for investors looking to migrate out of risk-averse positions.

6th/11:00	Bank of England Rate Decision	0.50%	0.50%	0.50%

	The BoE is expected to hold rates steady at 0.50% which is line with market forecasts. It is most likely the central bank will adopt a "wait and see" approach following the aggressive measures taken in the form of asset purchases over the last several months. A key indicator suggesting that any additional quantitative easing would occur on a much more conservative scale is the 150bln Sterling quota for gilt purchases which has not been met. Fulfilling the quota for gilt purchases will probably happen before any additional monetary policy action will be announced and this is supportive of the Gbp. The UK economy remains under pressure with rising unemployment at 7.6% vs. 7.4% estimated. Other leading indicators such as a negative GDP of -0.8% and industrial production at -11.9% pose significant challenges for UK policymakers and the deployment of further quantitative easing may prove detrimental to the long-term outlook in region.


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Forex Trading "With ALL the Odds" (in your favour)

2009-07-09T10:15:00.001-07:00

Forex Trading "With ALL the Odds" (in your favour)

(See how a trader who is new to the system generated winning trades in a row after only 1 week of learning and trading this system below)
http://www.forextradersupportservices.com./Clients/FXGCM.html

Many people enter FOREX trading with the hope and wish to become financially secure by trading the Forex market for a few hours a day online from home. There are a few good examples of successful traders, but sadly for every successful trader there are sometimes hundreds of traders that fail. One of the reasons for this is that traders cannot deal well with losing trades and have not found a reliable trading system.

That is why it is so important to find a trading system with a very high success rate. The sad reality however is that systems that achieve a high success rate unfortunately trade with HUGE stops or even no stops. Many traders use these systems successfully but sooner or later the market does what the market does and wipes out all or most of their accounts. That is a sad reality of trading.

Other systems that provide high success rates give so few trading opportunities that traders become bored waiting for a setup to arise.

In my early Forex trading days I use a successful short term Forex trading technique which I developed and kept very much to myself. Forex opportunities have improved considerably since then for this technique. It is a technique that allowed me quick, highly successful, deals with good risk control (stops of 14 pips). It is a technique that takes a lot of concentration (2 to 4 hours a day) and requires one to watch the screen all of that time. To give you an idea most deals go positive in less than a minute and closeout positively within 5 to 10 minutes. The advantage is that there are a good number of trading opportunities allowing one to enter 10 to 20 deals during that 2 to 4 hour period (a day).

For more details Visit

http://www.forextradersupportservices.com./Clients/FXGCM.html