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Rupee may touch 76 levels against dollar in next 3 months: UBS

Agencies
November 4, 2018

New Delhi, Nov 4: With global crude prices remaining elevated, the rupee is likely to be under pressure, and may touch the 76 levels against the US currency over the next three months, says a report. The domestic currency has already crossed the 74 mark owing to continued strengthening of the dollar, lack of foreign flows and higher crude oil prices. The unit lost over 15 percent since the beginning of the calendar year.

“Assuming global crude prices stay elevated (slightly above USD80/a barrel), we retain our bearish view on the rupee and see it plumbing to 76 over the next three months,” says a weekend report by the Swiss brokerage UBS. From April to the first week of August 2018, the RBI has been intervening in the forex markets to contain volatility, which lead to a massive drop in the forex reserves that plunged by USD 25 billion to USD 393 billion last week.

This has led to two successive repo rate hikes to the tune of 50 basis points in total. By keeping policy rates on hold in October, the RBI hinted that it will not use interest rate defence as a tool to manage currency weakness, the report said. Between April and October, the forex reserves has come down by USD 32.78 billion, while foreign exchange reserves stood at USD 392.078 billion as on October 26. “Unlike in 2013, even as the rupee has weakened by 15 per cent calendar year-to-date against the dollar, it remains outside that group of most vulnerable currencies and the countrys forex reserves position is still reasonable,” UBS analyst Gautam Chhaochharia said in the report.

He said while the country remains vulnerable in its external position, there is no need to press the panic button for NRI bond issuances, to stabilise the rupee, yet unless it becomes a political issue in the run-up to the 2019 general elections. “However, in case external stress continues to rise from here (Brent continue to rise towards USD 100/a barrel and/or the rupee weakens towards the 80 levels, the option of raising dollar deposits (USD 30-35 billion) could be explored to stabilise the rupee,” Chhaochharia said.

The report said the loose monetary and fiscal policy pursued by the policymakers five years ago led to exacerbated macroeconomic imbalances when the US Fed announced the start of tapering. This caused the rupee to be amongst the “fragile five” currencies. It believes that the macro fundamentals compare favourably with those in 2013 as policy buffers have been created.

“The inflationary pressures are manageable thanks to lower food prices, and the government remains committed to fiscal discipline although the deficit targets are quite stretched, and even as we expect the CAD to widen to 2.7 per cent of GDP in FY19, it is well below the 4.8 per cent peak registered in FY13,” the report said, adding the RBI’s policy tilt is no longer accommodative. The report further says the current liquidity shortage triggered bydefault by IL&FS and group companies on their debt obligation is a liquidity squeeze and not systematic risk. “We expect the RBI to neutralise the liquidity squeeze but think that an `easy money’ period is not coming back in a hurry,” it added.

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News Network
April 24,2020

New Delhi, Apr 24: The death toll due to the novel coronavirus rose to 723 with 37 fatalities reported since Thursday evening, while the number of cases saw a record jump of 1,752 to go up to 23,452 cases on Friday, according to the Union health ministry.

The previous highest single day increase was on April 20 when 1,540 cases were reported.

The number of active COVID-19 cases stood at 17,915 as 4,813 people were cured and discharged, and one patient migrated, the ministry said.

Thus, about 20.52 per cent of the cases have recovered so far, an official of the ministry said. 

The Indian Council of Medical Research (ICMR) said that 23,502 samples have been confirmed positive as on April 24 at 9 am.

The health ministry's figure of 23,452 cases include 77 foreign nationals.

A total of 37 deaths were reported since Thursday evening of which 14 fatalities were reported from Maharashtra, nine from Gujarat, three from Uttar Pradesh, two each from Andhra Pradesh, Delhi, Madhya Pradesh, Tamil Nadu and Telangana and one from Karnataka, the ministry's data stated.

Of the 723 deaths, Maharashtra tops the tally with 283 fatalities, followed by Gujarat at 112, Madhya Pradesh at 83, Delhi at 50, Andhra Pradesh at 29, Rajasthan at 27 and Telengana at 26.

The death toll reached 24 in Uttar Pradesh, 20 in Tamil Nadu while Karantaka has reported 18 deaths.

Punjab has registered 16 deaths while West Bengal has reported 15 fatalities.

The disease has claimed five lives in Jammu and Kashmir, while Kerala, Jharkhand and Haryana have recorded three COVID-19 deaths each.

Bihar has reported two deaths, while Meghalaya, Himachal Pradesh, Odisha and Assam have reported one fatality each, according to the ministry data.

However, a news agency tally of the figures reported by various states as on Friday showed 23,577 cases and 743 deaths in the country.

There has been a lag in the Union health ministry figures, compared to the number of deaths announced by different states, which officials attribute to procedural delays in assigning the cases to individual states.

According to the ministry's data updated in the evening, the highest number of confirmed cases in the country are from Maharashtra at 6,430 followed by Gujarat at 2,624, Delhi at 2,376, Rajasthan at 1,964, Madhya Pradesh at 1,852 and Tamil Nadu at 1,683.

The number of COVID-19 cases has gone up to 1,604 in Uttar Pradesh, 984  in Telangana and 955 in Andhra Pradesh. The number of cases has risen to 514 in West Bengal, 448 in Kerala, 463 in Karnataka, 427 in Jammu and Kashmir,  277 in Punjab and 272 in Haryana.

Bihar has reported 176 coronavirus cases, while Odisha has 90 cases. Fifty-five people have been infected with the virus in Jharkhand and 47 in Uttarakhand. Himachal Pradesh has 40 cases, Chhattisgarh and Assam have registered 36 infections each so far.

Chandigarh has 27 COVID-19 cases, Andaman and Nicobar Islands 22 while  18 cases have been reported from Ladakh.

Meghalaya has reported 12 cases, and Goa and Puducherry have seven COVID-19 cases each.

Manipur and Tripura have two cases each, while Mizoram and Arunachal Pradesh have reported a case each.

"Our figures are being reconciled with the ICMR," the ministry said on its website.

States wise distribution is subject to further verification and reconciliation, it said.

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Agencies
August 6,2020

Mumbai, Aug 6: Former Reserve Bank of India governor Raghuram Rajan said on Thursday that overly focusing on what sovereign rating agencies think can take one's eyes off what needs to be done for the economy.

"It is also important to convince both domestic and international investors that after the crisis associated with the pandemic is over, we will return to fiscal responsibility over the medium term, and the government should do more to convince them of that," Rajan told the Global Markets Forum.

India was placed under one of the strictest lockdowns in the world in late March for more than two months to stem the spread of the coronavirus, but cases have continued to rise steadily since the government eased restrictions in June, stymieing hopes of an economic recovery.

The government has announced several initiatives to help the poor and small- and medium-size businesses, but actual cash outgo from the government's measures has been estimated at just about 1% of GDP.

Several attribute the fiscal prudence to fear of a downgrade after Moody's cut India's rating and outlook in early June followed closely by a change in outlook from Fitch.

The central bank on its part too has reduced the key lending rate by 115 basis points on top of the 135 bps last year and is widely expected to cut rates by another 25 bps later on Thursday.

"The RBI and government have certainly been cooperating, but it seems like it is elsewhere, the ball is in the government's court to do more," Rajan said.

He said the RBI needs to focus on whether credit is reaching the stressed areas of the economy and also if the viable firms were able to access credit and not the unviable ones.

"And I think that's where it has to focus its attentions, because resources, as you well know, are limited in India today."

Recently analysts, however, have cited the growing possibility the RBI may prefer to pause and cut rates only at its October meeting.

Government officials too have suggested the possibility of any more fiscal stimulus being announced, would only come in the second half of the fiscal year, once a recovery has taken root and coronavirus cases have peaked.

"What India should focus on at this point is protecting its economic capabilities, so that when it has dealt with the virus it can go resume activity in a reasonable way. That should be the focus," Rajan said.

"And if it does that, there is no reason why the rating agencies will not see that as an appropriate policy".

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News Network
June 19,2020

New Delhi, Jun 19: Petrol price on Friday was hiked by 56 paise per litre and diesel by 63 paise a litre, taking the cumulative increase in rates to Rs 7.11 and Rs 7.67 per litre respectively in less than two weeks.

Petrol price in Delhi was hiked to Rs 78.37 per litre from Rs 77.81, while diesel rates were increased to Rs 77.06 a litre from Rs 76.43, according to a price notification of state oil marketing companies.

Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or VAT.

This is the 13th daily increase in rates in a row since oil companies on June 7 restarted revising prices in line with costs, after ending an 82-day hiatus in rate revision.

In 13 hikes, petrol price has gone up by Rs 7.11 per litre and diesel by Rs 7.67 a litre.

The freeze in rates was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.

Oil PSUs Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) instead of passing on the excise duty hikes to customers adjusted them against the fall in the retail rates that was warranted because of fall in international oil prices to two decade low.

International oil prices have since rebounded and oil firms are now adjusting retail rates in line with them.

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