Wednesday, November 23, 2011

The rupee declined halted.

The Indian rupee eased in today’s early session despite some negative news flow from the globe. All
the Asian stocks are trading down today and almost all Asian currencies are down v/s the US dollar.
While the Indian rupee managed to gain and is up over a percent at the time of writing.
The RBI on Tuesday eased rules for overseas investors in infrastructure debt funds, allowing foreign
buyers to purchase bonds issued by such funds. Foreign investors can now buy either local or foreign
currency bonds issued by infrastructure debt funds, provided they hold them for three years, the
Reserve Bank of India said in a statement yesterday.
In negative news, the US Commerce Department cut its estimate of GDP to 2% in the July-to-
September period from an initial reading of 2.5%. Although the economy accelerated in late summer,
it is still not growing fast enough to create jobs for most Americans trying to get back to work. The
unemployment rate stood at 9% in October.
In data releases today morning from China, the HSBC flash manufacturing purchasing managers'
index (PMI), the earliest indicator of China's industrial activity, slumped in November to 48, a low not
seen since March 2009.
The MSCI's broadest index of Asia Pacific shares outside Japan fell 0.3% today with the materials and
technology sectors leading losses. The euro edged up about 0.1 per cent to around $1.3520, despite
growing fears about rising bond yields after Spain's borrowing costs hit a record high. The single
currency was boosted by the IMF move to make liquidity available to country's caught up in
contagion from debt woes elsewhere, and also talk of repatriation flows from European banks.

Monday, November 21, 2011

Rupee is heading towards the critical resistance of 52

The rupee slipped towards fresh 32-month lows today weighed by foreign fund outflow concerns
from domestic shares and dollar demand from state-run oil refiners. The local currency ended lower
by 0.8% v/s the US dollar on Friday at 51.3350, after sliding to 51.41 during trade.
Asian stock are heading lower today as a change of government in debt-laden Spain and Singapore's
warning of a sharp growth slowdown underlined the challenges facing the world economy. The fifth
casualty on the unstoppable spreading of the debt crisis tsunami in Europe has taken its toll in the
form of a new government formed in Spain, following the previous leadership debacle in Greece,
Italy, Portugal and Ireland. Spain dumped its ruling Socialist government Sunday for the conservative
leadership of Mariano Rajoy, who inherits an economy wracked by debt and an unemployment
nightmare which at more than 21% is the highest among the 17 nations that use the euro.
Adding to pessimism, Singapore today has warned that its economy will likely suffer a sharp
slowdown next year as export demand from developed countries wanes. Because of its high reliance
on trade, Singapore is often a bellwether for the rest of Asia.
Today, Japan's Nikkei index fell 0.2% to 8,354.65. Hong Kong's Hang Seng was 2.3% lower at
18,068.51. South Korea's Kospi index dropped 1.3 % to 1,815.48.
The EURUSD has been stable from Friday overnight session and currently above 1.35 mark. The
USDINR is now heading towards 52 mark on deteriorating current account and weak capital account.
The Indian rupee is expected to trade weak in the short term on weak external sector, slowing
industrial growth along with European debt problem. India’s trade deficit widened the most in
October in at least 17 years.

Merchandise exports rose 10.8% to $19.9 billion last month from a year earlier, Commerce Secretary told reporters. Imports gained 21.7% to $39.5 billion, causing a trade deficit of $19.6 billion.
That’s the biggest shortfall since April 1994. In a plan to boost the capital account which has been financing the huge current account deficit, India on Thursday decided to increase the limit of foreign
institutional investors (FIIs) investment in government securities bonds by $5 billion to $15 billion and in corporate bonds by a similar amount to $20 billion. The enhanced total limit for FII
investment in government bonds would be $15 billion from the existing limit of $10 billion and the enhanced total limit for FII investment in corporate bonds would be $20 billion from $15 billion.