Indian rupee at record low again despite RBI intervention

A jeweller poses with silver plates in the form of Indian rupee notes inside a showroom in New Delhi August 19, 2013.

Credit: Reuters/Mansi Thapliyal

By Subhadip Sircar and Swati Bhat

MUMBAI | Wed Aug 21, 2013 8:34am EDT

MUMBAI (Reuters) - The Indian rupee plunged to a record low on Wednesday on heavy dollar demand from importers and as traders fretted over mixed signals from the central bank over its efforts to prop up the currency without choking off economic growth.

The rupee fell 2 percent to a record low of 64.5450 to the dollar despite what traders said was sporadic central bank intervention in both the spot and forward markets.

Measures by the Reserve Bank of India late on Tuesday to support longer-dated debt sent prices of beaten-down bonds sharply higher but also led traders to question the central bank's resolve in defending the currency.

Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to an economy that grew at a decade-low 5 percent in the last fiscal year.

"Currency market and participants may consider it as a reversal of RBI liquidity tightening measures to prevent currency volatility; thus some pressure on currency may re-emerge," said Anjali Verma, economist at PhillipCapital.

With a record high current account deficit at 4.8 percent of GDP, India is especially vulnerable to funds moving away from emerging markets in anticipation of a winding back of the U.S. Federal Reserve's stimulus program. Traders were looking ahead for clues from Fed minutes to be released later on Wednesday.

Deutsche Bank said in a note on Wednesday that the rupee could slide to 70 in a month or so, although some revival is expected by the end of the year.

The central bank's move to ease cash conditions after tightening them last month to support the rupee highlights the growing costs to the economy of stabilizing the currency.

"The bearishness seen across markets is largely a reflection of the fact that there is no quick fix solution to arrest the rupee fall," said Shakti Satapathy, fixed income strategist at AK Capital.

The partially convertible rupee closed at 64.11/12 per dollar, down 1.3 percent on the day, as importers led by oil refiners bought dollars. The 10-year bond yield closed down 49 basis points (bps) at 8.41 percent, its biggest single-day gain since mid-March 2009.

The yield on the benchmark 10-year bond earlier tumbled as much as 69 bps to 8.21 percent as its price rose.

The benchmark Sensex .BSESN closed down 1.9 percent as the falling rupee dented investor sentiment.

HIGHER BORROWING COSTS

Bond yields are up 86 bps since the RBI first started tightening market cash conditions in mid-July by raising short-term rates to keep rupee speculators at bay, pushing up the cost of credit for corporate borrowers.

Still, the rupee is down 6.7 percent since then.

The RBI said late on Tuesday it will buy 80 billion rupees ($1.26 billion) of bonds on Friday and will pare down its cash management bill sales as its target of pushing up the overnight rate to the central bank's emergency funding rate of 10.25 percent had been achieved.

The RBI relaxed rules on mandatory bond holdings for banks, known as the statutory liquidity ratio, which will help protect lenders from large mark-to-market losses. While banks had previously been asked to cut their hold-to-maturity bond holdings gradually to 23 percent of deposits, the RBI on Tuesday allowed banks to retain them at 24.5 percent of deposits.

"At the moment markets are definitely left guessing about the RBI's intention," said Upasna Bhardwaj, economist at ING Vysya Bank.

(Editing by Tony Munroe, Kim Coghill and Anand Basu)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Indian rupee at record low again despite RBI intervention

A jeweller poses with silver plates in the form of Indian rupee notes inside a showroom in New Delhi August 19, 2013.

Credit: Reuters/Mansi Thapliyal

By Subhadip Sircar and Swati Bhat

MUMBAI | Wed Aug 21, 2013 8:34am EDT

MUMBAI (Reuters) - The Indian rupee plunged to a record low on Wednesday on heavy dollar demand from importers and as traders fretted over mixed signals from the central bank over its efforts to prop up the currency without choking off economic growth.

The rupee fell 2 percent to a record low of 64.5450 to the dollar despite what traders said was sporadic central bank intervention in both the spot and forward markets.

Measures by the Reserve Bank of India late on Tuesday to support longer-dated debt sent prices of beaten-down bonds sharply higher but also led traders to question the central bank's resolve in defending the currency.

Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to an economy that grew at a decade-low 5 percent in the last fiscal year.

"Currency market and participants may consider it as a reversal of RBI liquidity tightening measures to prevent currency volatility; thus some pressure on currency may re-emerge," said Anjali Verma, economist at PhillipCapital.

With a record high current account deficit at 4.8 percent of GDP, India is especially vulnerable to funds moving away from emerging markets in anticipation of a winding back of the U.S. Federal Reserve's stimulus program. Traders were looking ahead for clues from Fed minutes to be released later on Wednesday.

Deutsche Bank said in a note on Wednesday that the rupee could slide to 70 in a month or so, although some revival is expected by the end of the year.

The central bank's move to ease cash conditions after tightening them last month to support the rupee highlights the growing costs to the economy of stabilizing the currency.

"The bearishness seen across markets is largely a reflection of the fact that there is no quick fix solution to arrest the rupee fall," said Shakti Satapathy, fixed income strategist at AK Capital.

The partially convertible rupee closed at 64.11/12 per dollar, down 1.3 percent on the day, as importers led by oil refiners bought dollars. The 10-year bond yield closed down 49 basis points (bps) at 8.41 percent, its biggest single-day gain since mid-March 2009.

The yield on the benchmark 10-year bond earlier tumbled as much as 69 bps to 8.21 percent as its price rose.

The benchmark Sensex .BSESN closed down 1.9 percent as the falling rupee dented investor sentiment.

HIGHER BORROWING COSTS

Bond yields are up 86 bps since the RBI first started tightening market cash conditions in mid-July by raising short-term rates to keep rupee speculators at bay, pushing up the cost of credit for corporate borrowers.

Still, the rupee is down 6.7 percent since then.

The RBI said late on Tuesday it will buy 80 billion rupees ($1.26 billion) of bonds on Friday and will pare down its cash management bill sales as its target of pushing up the overnight rate to the central bank's emergency funding rate of 10.25 percent had been achieved.

The RBI relaxed rules on mandatory bond holdings for banks, known as the statutory liquidity ratio, which will help protect lenders from large mark-to-market losses. While banks had previously been asked to cut their hold-to-maturity bond holdings gradually to 23 percent of deposits, the RBI on Tuesday allowed banks to retain them at 24.5 percent of deposits.

"At the moment markets are definitely left guessing about the RBI's intention," said Upasna Bhardwaj, economist at ING Vysya Bank.

(Editing by Tony Munroe, Kim Coghill and Anand Basu)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Indian rupee at record low again despite RBI intervention

A jeweller poses with silver plates in the form of Indian rupee notes inside a showroom in New Delhi August 19, 2013.

Credit: Reuters/Mansi Thapliyal

By Subhadip Sircar and Swati Bhat

MUMBAI | Wed Aug 21, 2013 8:34am EDT

MUMBAI (Reuters) - The Indian rupee plunged to a record low on Wednesday on heavy dollar demand from importers and as traders fretted over mixed signals from the central bank over its efforts to prop up the currency without choking off economic growth.

The rupee fell 2 percent to a record low of 64.5450 to the dollar despite what traders said was sporadic central bank intervention in both the spot and forward markets.

Measures by the Reserve Bank of India late on Tuesday to support longer-dated debt sent prices of beaten-down bonds sharply higher but also led traders to question the central bank's resolve in defending the currency.

Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to an economy that grew at a decade-low 5 percent in the last fiscal year.

"Currency market and participants may consider it as a reversal of RBI liquidity tightening measures to prevent currency volatility; thus some pressure on currency may re-emerge," said Anjali Verma, economist at PhillipCapital.

With a record high current account deficit at 4.8 percent of GDP, India is especially vulnerable to funds moving away from emerging markets in anticipation of a winding back of the U.S. Federal Reserve's stimulus program. Traders were looking ahead for clues from Fed minutes to be released later on Wednesday.

Deutsche Bank said in a note on Wednesday that the rupee could slide to 70 in a month or so, although some revival is expected by the end of the year.

The central bank's move to ease cash conditions after tightening them last month to support the rupee highlights the growing costs to the economy of stabilizing the currency.

"The bearishness seen across markets is largely a reflection of the fact that there is no quick fix solution to arrest the rupee fall," said Shakti Satapathy, fixed income strategist at AK Capital.

The partially convertible rupee closed at 64.11/12 per dollar, down 1.3 percent on the day, as importers led by oil refiners bought dollars. The 10-year bond yield closed down 49 basis points (bps) at 8.41 percent, its biggest single-day gain since mid-March 2009.

The yield on the benchmark 10-year bond earlier tumbled as much as 69 bps to 8.21 percent as its price rose.

The benchmark Sensex .BSESN closed down 1.9 percent as the falling rupee dented investor sentiment.

HIGHER BORROWING COSTS

Bond yields are up 86 bps since the RBI first started tightening market cash conditions in mid-July by raising short-term rates to keep rupee speculators at bay, pushing up the cost of credit for corporate borrowers.

Still, the rupee is down 6.7 percent since then.

The RBI said late on Tuesday it will buy 80 billion rupees ($1.26 billion) of bonds on Friday and will pare down its cash management bill sales as its target of pushing up the overnight rate to the central bank's emergency funding rate of 10.25 percent had been achieved.

The RBI relaxed rules on mandatory bond holdings for banks, known as the statutory liquidity ratio, which will help protect lenders from large mark-to-market losses. While banks had previously been asked to cut their hold-to-maturity bond holdings gradually to 23 percent of deposits, the RBI on Tuesday allowed banks to retain them at 24.5 percent of deposits.

"At the moment markets are definitely left guessing about the RBI's intention," said Upasna Bhardwaj, economist at ING Vysya Bank.

(Editing by Tony Munroe, Kim Coghill and Anand Basu)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Indian rupee at record low again despite RBI intervention

A jeweller poses with silver plates in the form of Indian rupee notes inside a showroom in New Delhi August 19, 2013.

Credit: Reuters/Mansi Thapliyal

By Subhadip Sircar and Swati Bhat

MUMBAI | Wed Aug 21, 2013 8:34am EDT

MUMBAI (Reuters) - The Indian rupee plunged to a record low on Wednesday on heavy dollar demand from importers and as traders fretted over mixed signals from the central bank over its efforts to prop up the currency without choking off economic growth.

The rupee fell 2 percent to a record low of 64.5450 to the dollar despite what traders said was sporadic central bank intervention in both the spot and forward markets.

Measures by the Reserve Bank of India late on Tuesday to support longer-dated debt sent prices of beaten-down bonds sharply higher but also led traders to question the central bank's resolve in defending the currency.

Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to an economy that grew at a decade-low 5 percent in the last fiscal year.

"Currency market and participants may consider it as a reversal of RBI liquidity tightening measures to prevent currency volatility; thus some pressure on currency may re-emerge," said Anjali Verma, economist at PhillipCapital.

With a record high current account deficit at 4.8 percent of GDP, India is especially vulnerable to funds moving away from emerging markets in anticipation of a winding back of the U.S. Federal Reserve's stimulus program. Traders were looking ahead for clues from Fed minutes to be released later on Wednesday.

Deutsche Bank said in a note on Wednesday that the rupee could slide to 70 in a month or so, although some revival is expected by the end of the year.

The central bank's move to ease cash conditions after tightening them last month to support the rupee highlights the growing costs to the economy of stabilizing the currency.

"The bearishness seen across markets is largely a reflection of the fact that there is no quick fix solution to arrest the rupee fall," said Shakti Satapathy, fixed income strategist at AK Capital.

The partially convertible rupee closed at 64.11/12 per dollar, down 1.3 percent on the day, as importers led by oil refiners bought dollars. The 10-year bond yield closed down 49 basis points (bps) at 8.41 percent, its biggest single-day gain since mid-March 2009.

The yield on the benchmark 10-year bond earlier tumbled as much as 69 bps to 8.21 percent as its price rose.

The benchmark Sensex .BSESN closed down 1.9 percent as the falling rupee dented investor sentiment.

HIGHER BORROWING COSTS

Bond yields are up 86 bps since the RBI first started tightening market cash conditions in mid-July by raising short-term rates to keep rupee speculators at bay, pushing up the cost of credit for corporate borrowers.

Still, the rupee is down 6.7 percent since then.

The RBI said late on Tuesday it will buy 80 billion rupees ($1.26 billion) of bonds on Friday and will pare down its cash management bill sales as its target of pushing up the overnight rate to the central bank's emergency funding rate of 10.25 percent had been achieved.

The RBI relaxed rules on mandatory bond holdings for banks, known as the statutory liquidity ratio, which will help protect lenders from large mark-to-market losses. While banks had previously been asked to cut their hold-to-maturity bond holdings gradually to 23 percent of deposits, the RBI on Tuesday allowed banks to retain them at 24.5 percent of deposits.

"At the moment markets are definitely left guessing about the RBI's intention," said Upasna Bhardwaj, economist at ING Vysya Bank.

(Editing by Tony Munroe, Kim Coghill and Anand Basu)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Google blocks Windows Phone YouTube app (again), for “manufactured” reasons

The good YouTube app for Windows Phone is once again causing problems. Microsoft pulled the app in May after Google complained that it didn't include ads. After working with Google, Redmond re-released the app a couple of days ago with ads this time. But Google still isn't happy, and the company has revoked the API key the app uses, thereby disabling it.

In response, Microsoft has published a lengthy blog post about the disagreements between the two companies. Entitled "The limits of Google's openness," the post calls into question Google's 2009 commitment to openness. Google claimed, in 2009, that its "future depends on the Internet staying an open system, and [Google's] advocacy of open will grow the Web for everyone—including Google."

Microsoft says that in creating the YouTube app for Windows Phone, it assumed that the same commitment to openness applied to YouTube. It has complied with Google's demands to show ads and to block access to videos where the creators have restricted distribution. These are changes that, Microsoft argues, should "bring Google new users and additional revenue."

However, Google remains unhappy. Microsoft describes five complaints made by Google. First, the advertising giant is demanding specifically that Microsoft rewrite the application to use HTML5. Microsoft doesn't elaborate on why Google has made this demand but points out that Google's own apps on iOS and Android do not use HTML5. The software company claims that this is a "manufactured" reason, invented only to ensure that the YouTube experience on Windows Phone is inferior to that on iOS and Android.

Second, Google claims that sometimes the Windows Phone app does not show the right ads. Content creators can specify various conditions on the ads that get shown, and Windows Phone apparently does not honor those conditions. Microsoft says that it honors them as best it can, but the app is subject to the constraints imposed by Google's own API.

Third, Google claims that Microsoft is not abiding by the API's terms and conditions. Microsoft says that this too is a reference to the decision not to use HTML5.

Fourth, Google is objecting to the decision to brand the application "YouTube." Although the application states clearly that it is not developed by Google, and although the old, bad YouTube app was also branded "YouTube" without complaint from Google, Google is now unhappy about the use of its name on the new app.

Finally, Google complains that the app offers a degraded experience. This is rather a peculiar claim. It offers a superior experience to the mobile website, and it offers a superior experience to the old, bad YouTube app that Google apparently didn't mind.

Until and unless a court decrees otherwise, Google is essentially free to do what it likes with YouTube. That includes making arbitrary demands (such as using HTML5, even though Google's own engineers have implicitly deemed HTML5 to be not good enough by not using it themselves) and imposing various restrictions (such as not documenting the advertising API so that third parties can comply with all the rules surrounding YouTube ads). Google is also under no obligation to honor those same demands itself.

Nonetheless, Google's behavior appears to be more than a little capricious. Other unofficial YouTube clients exist, and thus far Google appears not to have killed them off with the same vigor it has demonstrated while going after Microsoft's client.

If Microsoft's description is accurate, Google's implication that it is somehow protecting users from an inferior experience with this move is also absurd. The new application provides a YouTube experience that's meaningfully superior to any solution that Google has thus far blessed (aside from "using a different operating system entirely").

Microsoft's post closes with a statement that Redmond is happy to work with Google to address any "legitimate" concerns.

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