RBI tells exporters to sell dollars to give rupee a leg up

May 11, 2012

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Mumbai, May 11: The Reserve Bank of India ordered exporters to convert half of their foreign exchange earnings kept in bank accounts into Indian rupee to prop up the worst-performing BRICS currency, a day after it closed at a record low, prompting fears of a further slide.

But the relief lasted only a few hours before the rupee resumed its decline since the order could bring in just about $3 billion, enough to cover five days of deficit.

The RBI also cut banks' intra-day positions in currency trade to five times of the net overnight open positions, which is set by the central bank as part of curbs announced on December 15. The overnight positions are not disclosed by the central bank.

More measures, including funding crude imports from foreign exchange reserves, a new US dollar mobilisation scheme, or even a sovereign dollar bond sale to boost the currency, could be on the cards, traders speculated.

The early rally faded soon with the rupee coming off highs of 52.95 to the US dollar to close at 53.44. Its all-time closing low was 53.83, on Wednesday.

Most currencies falling against dollar

Despite a series of measures from the central bank, many believe that weak macroeconomic variables such as fiscal and current account deficits, and worsening global liquidity due to deteriorating European sovereign credit crisis may diminish the effectiveness of its response.

"The RBI announced two measures that will ease, (and) slightly reverse near-term pressure on INR, but neither fixes the underlying problems that are causing INR to depreciate," said Rajiv Mallik, senior economist, CLSA Singapore. "Further, USD squeeze also has adverse implications for onshore INR liquidity."

Half the balances in the so-called Exchange Earners' Foreign Currency (EEFC) accounts should be converted into rupee balances within a fortnight and that holds true for future earnings as well, said the central bank in a notification. Exporters will be allowed to buy foreign exchange only after exhausting US dollar deposits in their accounts.

Most currencies are sliding against the greenback as global investors retreat to the safety of US dollar amid resurgence of doubts over the future of the Euro.

The rupee has been hurt more than others since India needs US dollars from outside to pay for imports as it does not export enough to pay for imports. Most big emerging countries have a surplus since they earn more US dollars from exports than needed to pay for imports.

"The facility of EEFC scheme is intended to enable exchange earners to save on conversion, transaction costs while undertaking forex transactions in future," said the central bank. "This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on capital account."

Some recent measures of the central bank are akin to its actions during the Asian crisis of 1997-98, when it ordered companies to bring in the proceeds of share sales in the form of Global Depository Receipts.

In December last year, the central bank brought in measures to curb speculation, which helped the rupee rally in the March quarter. It has reversed since due to the government's tax policies directed at overseas investors that have increased uncertainty and also because of lack of economic reforms.

With the current account deficit, the excess of imports over exports, at 4.3% of the gross domestic product and portfolio flows tapering off, the currency could be under renewed pressure if either exports do not rise sharply, or imports do not slow.

Both are unlikely now given the state of the economy. Subsidised petroleum products keep demand high, and import of gold continues due to high inflation expectation. Slowing European economies cap export growth.

Trade deficit for April stood at $13.4 billion in April, after hitting a record of $185 billion last fiscal. Exports rose 3.2% while imports grew 3.8% to $37.9 billion.

A breather could come in the form of unconventional measures, as in the past. "There could be some unconventional measures such as the IMD (India Millennium Deposits), or the RIB (Resurgent India Bonds)," said Rohit Bammi, partner at consultants KPMG. "There's a possibility of routing crude imports through foreign exchange reserves to take out the volatility."

At the turn of the century, India raised funds through the Resurgent India Bonds, and India Millennium Deposits to improve the reserves position. These involved paying high interest rates to lure overseas Indians.

Although neither the government nor the central bank has committed to such programmes, speculation is rife due to the sliding rupee. Indeed, some believe it may be the right time to float USD sovereign bonds that could bring in some fiscal discipline and also create a benchmark for Indian corporates keen to borrow overseas.

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News Network
February 28,2020

Patna, Feb 28: Social and cultural activists from far and wide converged here on Thursday to lend their support to a massive rally that marked the conclusion of Kanhaiya Kumar's 'Jan Gan Man Yatra' across Bihar to galvanise public opinion against CAA-NPR-NRC.

Medha Patkar of the Narmada Bachao Andolan fame, Mahatma Gandhi's grandson Tushar Gandhi and former IAS officer Kannan Gopinathan, who gave up his career at a young age in protest against abrogation of Article 370, shared the stage with the former JNU students' leader.

Shabnam Hashmi -- founder of socio-cultural organisation ANHAD and sister of slain Marxist playwright and director Safdar Hashmi -- also joined them.

Congress MLA Shakil Ahmed Khan, a former president of JNU students' union himself who accompanied Kanhaiya during his tour that commenced at Champaran on January 30, Mahatma Gandhi's death anniversary, and leaders of state units of CPI and CPI(M) also addressed the rally held at Gandhi Maidan.

Kanhaiya began his speech with a one-minute silence held in the memory of those who lost their lives in Delhi violence.

Defending his frequent use of the term "azadi" (freedom) which supporters of the Sangh Parivar hold to be tantamount to supporting secession, Kanhaiya said, "We must talk about the virtues of azadi here since today happens to be the day when legendary revolutionary Chandrashekhar Azad had given up his life fighting the British."

Charging the ruling BJP with pitting Hindus against Muslims, he said, "Let us resolve to defeat their agenda by emulating the fabled friendship of Ram Prasad Bismil and Ashfaqullah Khan."

The young CPI leader, who made an unsuccessful debut from his native Begusarai Lok Sabha constituency last year, seemed unimpressed with the resolution passed by the Bihar Assembly earlier this week against NRC and inclusion of contentious clauses in NPR forms.

"Both the government and the opposition are busy congratulating themselves. I extend my congratulations as well. But to all those who are present here, I would say it is a half-victory. We must not allow our movement to fizzle out and draw inspiration from Gandhi's model of civil disobedience when the NPR exercise gets underway," he said.

"Villagers should ask their respective panchayat heads to ensure that no NPR official is allowed to come knocking in their areas of jurisdiction when NPR is scheduled to be undertaken in May," the CPI leader said.

"We have to brace for a long and tough fight. We are living under a regime which sends conscientious professionals like Dr Kafeel Ahmed behind the bars and declares anybody questioning its actions as an anti-national," said Kanhaiya, who has himself been slapped with a sedition case.

Earlier, in his address, Tushar Gandhi likened CAA, NPR and NRC to the "three bullets that killed the Mahatma" and asserted that these measures would "harm the poor, belonging to all religious communities and not just the Muslims".

"If the government does not care about the poor, we must tell those in power -- 'chale jaao' (go away) just as we had done to the British colonisers... it is going to be a long fight. Independence was achieved five years after the call for Quit India Movement," he said.

"We need to keep repeating the importance of non-violence over and over again while those with other value systems simply have to utter inciting statements," he said, in an oblique reference to the controversial poll campaign of Union minister and BJP leader Anurag Thakur during the recently-held Delhi Assembly elections, which the party lost.

Kannan Gopinathan said, "The claim that CAA is all about granting citizenship and not taking it away is bunkum. Any law which seeks to favour one section of the society on the basis of religion can be tweaked to harm another social segment... people say this government is Fascist. I am not sure of that but it is certainly stupid."

"This government brought in demonetisation and wrecked the economy but failed to achieve its promise of eradicating black money. It abrogated Article 370 and now it is clueless as to what to do with the situation in Kashmir," he said.

"Union minister Amit Shah had declared in Parliament that NRC will be implemented. Faced with public resistance, Prime Minister Narendra Modi had to say he does not know what NRC is. Keep up the stir for a little longer, he will start saying he does not know Amit Shah," said Kannan, evoking peals of laughter.

In the course of his speech, Kanhaiya also made the crowds sing after him the National Anthem but skipped a few words towards the end. Participants at the rally were viciously trolled on social media for the slip-up.

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News Network
March 6,2020

Mumbai, Mar 6: A Rolls Royce car, paintings of famous artists M F Hussain and Amrita Sher-Gil, designer handbags and other luxury items belonging to fugitive diamond jeweller Nirav Modi garnered over Rs 51 crore in the second auction conducted on Thursday.

As many as 40 items went under the hammer on Thursday, which marks the completion of auction of assets seized by the Enforcement Directorate.

The auction was conducted by Saffronart on behalf of the deputy director, Enforcement Directorate, and was expected to garner a minimum of Rs 40 crore in proceeds.

A collection of 112 prized assets of Modi were put up for live and online auctions from March 3 to 5, which included major artworks by contemporary and modern Indian artists, designer handbags, luxury watches and cars.

While the online auction on March 3-4 garnered Rs 2.04 crore against the expected proceeds of Rs 52 lakh, the live auction on Thursday garnered Rs 51.41 crore more.

These assets, seized by the ED, were put on auction in an attempt to recover a part of the dues Modi owes to various banks.

According to officials from Saffronart, the ED would get Rs 53.45 crore from the proceeds of these two auctions.

The lots that went under the hammer included legendary painter MF Hussain's painting of 'Battle of Ganga and Jamuna- Mahabharata 12' which went for a record 12 crore, the highest price received so far for the painter's work.

Amrita Sher-Gil's rare 1935 painting 'Boys with Lemons', which was auctioned for the first time, sold for Rs 15.7 crore ($2.24 million).

V S Gaitonde's tranquil 1972 painting was sold for Rs 9.52 crore while Manjit Bawa's Untitled 1992 sold for Rs 6.16 crore. Modi's Rolls Royce Ghost witnessed a high demand, selling for twice its estimate at Rs 1.68 crore ($240,000).

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News Network
March 16,2020

New Delhi, Mar 16: Reliance Group Chairman Anil Ambani has been summoned by the ED in connection with its money laundering probe against Yes Bank promoter Rana Kapoor and others, officials said on Monday.

They said Ambani was asked to depose at the Enforcement Directorate office in Mumbai on Monday as his group companies are among the big entities whose loans went bad after borrowing from the crisis-hit bank.

The officials said Ambani, 60, has sought exemption from appearance on some personal grounds and he may be issued a new date.

Ambani's group companies are stated to have taken loans of about Rs 12,800 crore from the bank that turned NPAs.

Finance Minister Nirmala Sitharaman had said in a March 6 press conference that the Anil Ambani Group, Essel, ILFS, DHFL and Vodafone were among the stressed corporates Yes Bank had exposure to.

Officials said promoters of all the big companies who had taken large loans from the beleaguered bank which later turned bad are being summoned for questioning in the case to take investigation forward.

Ambani's statement will be recorded under the Prevention of Money Laundering Act (PMLA) upon deposition, they said.

Kapoor, 62, is at present in ED custody after he was arrested by the central probe agency early this month.

The ED has accused Kapoor, his family members and others of laundering "proceeds of crime" worth Rs 4,300 crore by receiving alleged kickbacks in lieu of extending big loans through their bank that later turned NPA.

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