Rupee, stocks rally as new RBI chief Rajan fuels confidence

September 5, 2013

RBI_chief_copyMumbai, Sep 5: The rupee rallied and shares surged on Thursday after the Reserve Bank of India (RBI) chief unveiled a slew of measures to support the ailing currency and open markets, providing a shot of confidence for investors unnerved by the country's worst economic crisis in two decades.

The rupee rose as much as 2.3 per cent to 65.53 per dollar, well off the record low 68.85 hit on August 28.

The Nifty rose as much as 3.3 per cent, propelled by lenders such as HDFC Bank, which surged after the new measures included increasing overseas borrowing limits for banks.

However, amid the euphoria over RBI governor Raghuram Rajan's strong Wednesday debut, economists warned he cannot by himself solve the challenges in an economy facing a sharp growth slowdown and a record high current account deficit, which have fueled a 16 per cent slide in the rupee so far this year.

The government has failed to push through politically tough reforms needed to fix the economy, and elections due by next May instead raise the prospect of expensive populist spending that could threaten the country's sovereign credit rating, which is one notch above junk status.

"To a certain extent, the recent rupee tumble and instability in the financial markets, has been a crisis of confidence. To that end, the path of action provided by the new governor and the stress on keeping communications predictable and consistent will be a welcome move," Radhika Rao, an economist at DBS in Singapore, said in an email to clients.

"Still, the external drivers of the rupee weakness will continue to dictate the momentum, along with the urgent need to address domestic structural pitfalls - fiscal and current account deficits, along with reviving investment activity."

At least for Thursday, Indian markets reflected the optimism placed on Rajan, a former chief economist at the International Monetary Fund who unexpectedly unveiled a flurry of proposals in his first day at the helm of the central bank.

In terms of action to prop up the rupee, the measures included providing exporters and importers more flexibility in hedging their forward currency contracts, as trading firms had long complained about regulations that left them unable to quickly cope with rapid currency movements.

"The statement is impressive and a must-read, in our view," Deutsche Bank said in a note.

"India's myriad cyclical and structural impediments will continue to hold back the economy for the time being, and risks of a deeper crisis are non-trivial, but (Wednesday's) statement shows a fresh and cohesive vision of monetary and financial sector policy from a newly appointed central bank governor can shine a much-needed light on India's promise and potential."

India's defence of the rupee has so far relied on controversial steps taken by the RBI, which have included draining cash from the market, raising short-term interest rates and imposing capital controls on resident Indians.

Investors have expressed little faith that the government can push through substantial reforms, such as a hike in subsidised fuel prices, that could help revive confidence in the economy.

Asia's third-largest economy is suffering from a dearth of investment and sharp slowdowns in the manufacturing and services sectors.

/* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}

Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4

Rupee, stocks rally as new RBI chief Rajan fuels confidence

Mumbai, Sep 5: The rupee rallied and shares surged on Thursday after the Reserve Bank of India (RBI) chief unveiled a slew of measures to support the ailing currency and open markets, providing a shot of confidence for investors unnerved by the country's worst economic crisis in two decades.

The rupee rose as much as 2.3 per cent to 65.53 per dollar, well off the record low 68.85 hit on August 28.

The Nifty rose as much as 3.3 per cent, propelled by lenders such as HDFC Bank, which surged after the new measures included increasing overseas borrowing limits for banks.
However, amid the euphoria over RBI governor Raghuram Rajan's strong Wednesday debut, economists warned he cannot by himself solve the challenges in an economy facing a sharp growth slowdown and a record high current account deficit, which have fueled a 16 per cent slide in the rupee so far this year.

The government has failed to push through politically tough reforms needed to fix the economy, and elections due by next May instead raise the prospect of expensive populist spending that could threaten the country's sovereign credit rating, which is one notch above junk status.

"To a certain extent, the recent rupee tumble and instability in the financial markets, has been a crisis of confidence. To that end, the path of action provided by the new governor and the stress on keeping communications predictable and consistent will be a welcome move," Radhika Rao, an economist at DBS in Singapore, said in an email to clients.

"Still, the external drivers of the rupee weakness will continue to dictate the momentum, along with the urgent need to address domestic structural pitfalls - fiscal and current account deficits, along with reviving investment activity."

At least for Thursday, Indian markets reflected the optimism placed on Rajan, a former chief economist at the International Monetary Fund who unexpectedly unveiled a flurry of proposals in his first day at the helm of the central bank.

In terms of action to prop up the rupee, the measures included providing exporters and importers more flexibility in hedging their forward currency contracts, as trading firms had long complained about regulations that left them unable to quickly cope with rapid currency movements.

"The statement is impressive and a must-read, in our view," Deutsche Bank said in a note.

"India's myriad cyclical and structural impediments will continue to hold back the economy for the time being, and risks of a deeper crisis are non-trivial, but (Wednesday's) statement shows a fresh and cohesive vision of monetary and financial sector policy from a newly appointed central bank governor can shine a much-needed light on India's promise and potential."

India's defence of the rupee has so far relied on controversial steps taken by the RBI, which have included draining cash from the market, raising short-term interest rates and imposing capital controls on resident Indians.
Investors have expressed little faith that the government can push through substantial reforms, such as a hike in subsidised fuel prices, that could help revive confidence in the economy.

Asia's third-largest economy is suffering from a dearth of investment and sharp slowdowns in the manufacturing and services sectors.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
April 16,2020

New Delhi, Apr 16: South Delhi District Magistrate Brij Mohan Mishra on Thursday said that the administration is investigating how the pizza delivery boy contracted the coronavirus.

"In the last 15 days, we discovered houses he had delivered food. We contacted people living in 72 houses and they have been asked to stay in-home quarantine. No symptoms have been seen in people related to him. 

Testing of his roommate has been done and his reports are awaited. The rest of the people don't have any symptoms, they have been placed under institutional quarantine. Those in-home quarantines are also asymptomatic," Mishra said.

"Unless a positive case comes, we feel that transmission has not taken place. The boy told us that he was continuously wearing a mask while delivering the food. We are also finding out how he got infected. We are getting the information about the places he visited for delivery. He was tested on the basis of the doctor's advice. Later, he tested positive," he said.

72 families have to stay in home quarantine in the Malviya Nagar area after the delivery boy tested positive for COVID-19 on Wednesday.
Delhi Health Minister Satyendra Jain said that 17 other delivery boys linked with the infected person have also been placed under institutional quarantine.

"A pizza delivery boy has been detected with COVID-19 here. 17 other delivery boys linked with him have been placed under institutional quarantine and 72 people have been placed under home quarantine," Jain said.

Food delivery app Zomato said that the staff of the infected person's restaurant has delivered some orders which were placed on its platform.

"We've been made aware today that a restaurant's employee, who has been recently tested positive for COVID-19, had delivered food in the past to a few customers in the Malviya Nagar area in Delhi. All these customers have already been contacted by the govt authorities... We are not sure whether the rider was infected at the time of delivery," the company said in a statement.

Zomato also claimed that colleagues of the delivery boy have tested negative for COVID-19.
"This restaurant had instructed their riders to wear masks and follow strict hygiene to keep customers safe from any unintended mishap.

All co-workers of the said rider have been tested negative. And as a precaution, the restaurant where this rider worked has suspended operations," read the statement.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
January 27,2020

Jaipur, Jan 27: Senior Congress leader Shashi Tharoor said that if the Citizenship Amendment Act leads to the implementation of the NPR and the NRC, it would be a complete victory for Pakistan's founding father, Muhammad Ali Jinnah.

He said that Jinnah's idea of a country was already winning in India with the contentious Citizenship Amendment Act (CAA) coming into effect, but asserted that there was still a choice available.

"I would not say Jinnah has completely won, but I would say Jinnah is winning. There is still a choice available to the nation between Jinnah's idea of a country and Gandhiji's idea of a country," he said on the sidelines of the Jaipur Literature Festival on Sunday.

The CAA came into force in India in December amid protests across the country and around the world.

The MP from Thiruvananthapuram said that the amended Citizenship Act took Jinnah's logic by declaring that religion shall be the basis of nationhood, reaffirming that Gandhi's idea is that all religions are equal .

"The CAA is, if you are talking Tennis, you would say one set up or big first set lead for Jinnah. But the next step would be if the CAA would lead to the National Population Register (NPR) and the National Register of Citizens (NRC). If that happens, then you would consider that Jinnah's victory is complete," he said.

The CAA seeks to grant citizenship to migrants belonging to Hindu, Sikh, Buddhist, Christian, Jain and Parsi communities who came to India from Pakistan, Bangladesh and Afghanistan on or before December 31, 2014.

On the BJP's defence that the NPR was carried out during the UPA regime, Tharoor said that the Congress government had utilised a decision of the NDA government led by former prime minister Atal Bihari Vajpayee.

"It never asked where were your parents born. It never authorised the enumerators to note on the margin 'dubious citizenship', a term used in the NPR rules crafted by this government. That is purely BJP's invention," he said.

If we go around this country authorising people to interview all the citizens, or identify some who have 'dubious citizenship', you can be pretty sure which Indians are going to be found on the 'dubious citizenship', he said.

"That will principally be one community that is not mentioned in the CAA. And if that happens, then it is indeed Jinnah's victory.

"From wherever he is, he can point to this place and say, 'see I was right in the 1940. We are separate nations and Muslims deserved their own country because Hindus cannot be just'," Tharoor said.

Speaking about the Delhi election, the three-time MP said that the maximum development in the national capital happened under the Congress government.

"What Sheila Dikshit did in her 15 years as Chief Minister of Delhi, no other leader could do it before or after her," he said.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
Agencies
May 26,2020

The Shopping Centres Association of India (SCAI) on Monday said the sector has lost over Rs 90,000 crore in the last two months, owing to the lockdown, and market players need much more than the repo rate cut and the loan moratorium extended by the RBI.

In a statement, the industry body said that the Reserve Bank of India's (RBI) relief measures are not adequate to support the liquidity needs of the industry.

According to the SCAI, there is a common misconception that the shopping centres' industry is centred around metros and large cities with investments only from large developers, private equity players and foreign investors.

"However, the fact is that most malls are part of the SMEs or standalone developers. i.e. more than 550 are single owned by standalone developers out of the 650-odd organised shopping centres across the country and there are 1,000+ small centres in smaller cities," it said.

Amitabh Taneja, Chairman of SCAI said: "The organised retail industry is in distress and has not earned anything since the lockdown and their survival is at stake. While the extension of the loan moratorium talks about some relief on repayment but won't help the industry in liquidity."

He said that a long term beneficial plan from the government is much required to revive the sector.

"Being the most safe, accountable, and controlled environment, unfortunately, malls have not been permitted to open which will lead to job losses and might even shut shops for a lot of mall developers," Taneja said.

In its representations to the Centre and the Reserve Bank of India, the association has also pointed out that, in absence of financial package and stimulus from the RBI, over 500 shopping centres may go bankrupt, that may lead to the banking industry staring at NPAs of Rs 25,000 crore.

The industry body has put forward its recommendations and requests to the government. It had sought moratorium till March 2021 at the least in terms of repayment of bank loans, interest, EMI and so on, without levy of any penalties or penal interest.

It has also sought a one-time loan restructuring with lower rates of interest, permitted for shopping centres and a facilitative and forward-looking support provision of short-term financing options for a period of six to 12 months, at lower interest rates, to meet the increased working capital requirements.

Among other relaxations, it had also appealed for GST rebates to offset the losses on account of and for the period of closure of business.

It also said that interest rates should be brought down to "manageable levels" of 5-6% in view of the precarious financial situation.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.