India Forex - Forex Trading in India

India Thursday 15 July 2010 : The Indian Rupee will now join the group of major currencies of the world in having a distinct symbol for it.

The decision to give an identifiable and distinct symbol to the Indian currency has been taken in view of the fact that the country’s economy has been expanding at a sustained rate of growth, and steadily integrating with global economy.

The symbol represents the letter ‘ra’ of Devnagiri, or ‘R’ of the Roman without the vertical line on the left, with the upper part cut by two parallel lines.

The symbol, will be used by all individuals/entities within and outside India after its incorporation in ‘Unicode Standard’, ISO/IEC 10646 and ‘IS 13194′, Minister for Information and Broadcasting Ambika Soni told reporters after a meeting of the Union Cabinet which approved the symbol selected out of 3,000 entries.

The jury headed by the Deputy Governor of the RBI selected five entries out of which the Government finally chose the one designed by D Udai Kumar.

The Minister said the symbol would standardise the expression for Indian Rupee in different languages, both within and outside the country, and distinguish the currency from those of other countries such as Pakistan, Nepal, Sri Lanka and Indonesia whose currencies are also designated as Rupee or Rupiah.

After encoding of the symbol in the Unicode and National Standards, NASSCOM will approach software development companies for incorporating the Rupee symbol in their operative software to enable computer users worldwide to use the symbol even if it was not embedded on the keyboards, just as the Euro symbol is used in India though not embedded in the keyboards.

India Thursday 10 June 2010 - The india growth story has attracted big bucks from abroad. And now the government wants to use this reserve of dollars to build the country’s infrastructure – an idea which has been shot down in the past.

The Deepak Parekh committee in its report on the proposed 50,000 crore infrastructure fund, is appealing to the Reserve Bank of India to divert a small chunk of forex reserves towards the fund.

As a start the Parekh Committee suggests that $2-3 billion be used from India’s ample forex reserves of over $270 billion.

“It has been suggested that using some of the dormant forex resources for this kind of lending should be explored. If the RBI is comfortable then it could lend $2-3 billion to this fund in order to enable it to lend it infrastructure projects. Finance Ministry and each of the other departments has to take a call on these issues,” said Gajendra Haldea, advisor to planning commission deputy chairman Montek Singh Ahluwalia.

As the final contours of the infrastructure debt fund start to emerge, financial sector players that are already active in the infrastructure financing space are also eager to play a role.

SBI, ICICI and IDFC are among the players being tapped as sponsors for the fund which would include an investment of Rs 5000 crore over a period of time.

These banks are also in the running to manage the fund but sources suggest that SBI may be the front-runner to take on the task of managing the infrastructure debt fund.

The finance ministry is likely to take a final view on the recommendations and suggest a roadmap to implement it. But the real challenge may be in tweaking debt market regulations to ensure that long term insurance and pension funds can start investing in the india infrastructure story.

India Tuesday 25 May 2010 - Alpari Forex (India), a currency broking house, will launch its first exchange traded currency futures product on June 10, its CEO, Mr Pramit Brahmbatt, said. This would mark the beginning of its rollout of online forex trading services in the Indian market. The company sees immense potential for currency derivatives trading in markets such as Delhi and Jaipur.

India Monday 17 May 2010 - With the Maharashtra government deciding to levy entertainment tax on One-Day Internationals and Indian Premier League (IPL) matches from next year, the Board of Control for Cricket in India (BCCI) will have its hands full in trying to keep ticket prices down for spectators in any case.

But a bigger headache for the board is on its way, since the Enforcement Directorate (ED) seems to be tightening its screws on the BCCI. ED officials told Mail Today that the BCCI has violated Foreign Exchange Management Act (FEMA) guidelines while giving ‘guarantees’for foreign players who participated in the IPL. The ‘guarantees’ are the base prices fixed by BCCI for each player during the auction.

ED officials said the BCCI should have taken permission from the RBI for guaranteeing the amount to the foreign players.

“The guarantees are in total violation of section (6)(3)(i) of FEMA 1999, read with Notification no. FEMA-8/RB-2000 dated 3.5.2000, which basically says that no Indian should give a guarantee or surety to any person who is not a resident of India without the ‘general or special permission’of the RBI,”said an ED official.

The BCCI gave the guarantees without even seeking a letter, according to officials. This could prove very costly because according to FEMA guidelines, the ED could levy a huge penalty on the board. For instance, West Indian Kieron Pollard, who the Mumbai Indians bought for $ 2.5 million, had a base price, or ‘guarantee’ of $200,000.

Under FEMA guidelines, the ED can apply a minimum penalty of three times this amount, while the maximum penalty is ten times that amount. So the minimum penalty in Pollard’s case would be $600,000 while it could be a whopping $2,000,000 (over Rs nine crore) if the maximum penalty is levied.

Since under FEMA guidelines the government can recover a penalty on every such transaction, the BCCI would have to pay penalties for the 33 other foreign players as well. The ED officials have currently sent a file pertaining to all these violations to the finance ministry. Interestingly, both Income Tax and ED officials feel that since the violations by BCCI were ‘huge’and ‘extensive’, the maximum penalty should be levied. However, it remains to be seen what the finance ministry decides in this case.

Meanwhile, suspended IPL chairman Lalit Modi on Sunday said his voluminous reply to the first BCCI showcause notice was not to defend himself but to salvage the image of the Twenty20 event. “My reply is not about defending Lalit Modi. It’s about defending brand IPL,” Modi tweeted.

India Thursday 13 May 2010: The Reserve Bank today said high capital inflows are a matter of concern, but no specific action is being mulled as of now, as they have not started exerting much pressure on the rupee compared to 2007.

“It is a matter of concern, but that is not to say that there is any specific action being considered…They still have not, at least in the past two months, started to exert significant pressure in terms of quantum to 2007 estimates,” RBI deputy governor Subir Gokarn told the media on the sidelines of a function here today.

Gokarn said the apex bank in its annual policy in April had mentioned that volatility and threats to macroeconomic stability are the two factors which would induce it intervene in the exchange market.

“But we have to decide when we see the situation whether this threat of disruption is significant or not. It is not something we can pre-decide. It is really going to depend on the circumstances,” Gokarn said, adding the country is yet to witness the kind of pressure that was witnessed in 2007.

In 2007, it can be recalled that the rupee sharply appreciated and reached a high of around 39 to a dollar due to heavy inflow of foreign money.

Earlier in the day, the RBI said in its bulletin that it did not intervene in the forex markets during the four months to March 2010, despite heavy inflows of forex.

Today, the dollar stood at Rs 45.33.

India Wednesday 12 May 2010 - Ranbaxy Laboratories reported its fourth straight quarter of profit on favourable foreign exchange and surging US sales. India’s second largest pharmaceutical company recorded a consolidated net profit of $210 million (Rs 963.1 crore) in the January-March quarter of 2010 against a loss of $153 million (Rs 761 crore) in the corresponding period of the previous financial year.

In its standalone financial results for the quarter ended March 2010,Ranbaxy’s all-time high total income of Rs 2,417 crore has come on the back of an unusually high other income figure of Rs 488 crore. This is the second largest other income figure in the last 12 quarters after Rs 835 crore in the quarter ended June 2009.

The reason behind the sharp rise in other income of Ranbaxy in the March 2010 quarter is not clear. The other income in the quarter ended December 2009 was just Rs 146 crore. In the latest quarter, without the other income Ranbaxy’s net profit would have been Rs 384 crore, lower than December quarter’s of Rs 488 crore. With it, Ranbaxy’s net profit has registered an impressive quarter-on-quarter rise of 78 per cent from Rs 488 crore to Rs 872 crore.

This is perhaps why the Ranbaxy scrip moved only marginally up on Tuesday to close at Rs 457.9 from Monday’s Rs 454.4. The stock has been struggling to stay above Rs 450 in the last one month. The one-year high for Ranbaxy was Rs 530 on December 18, 2009.

Analysts Financial Chronicle spoke to said regulatory woes in the US would remain a drag on the company.

HFDC Securities senior vice president of institutional research Ranjit Kapadia said, “This is a one-time opportunity and would be difficult to sustain. There is no immediate solution in sight to the regulatory issues in the US.” But he cited the synergy plan with Daiichi Sankyo, entry into vaccines and the rapid progress on anti-malaria molecule as big pluses for the company.

Agreed Sharekhan Securities, pharma practice head, Sapna Jhawar. “This is an encouraging performance. But it is difficult to sustain in the second quarter even as gains this time are evenly spread out,” she said.

PwC India pharmaceutical practice head Sujay Shetty said the lead in the US market on account of the generic would give Ranbaxy good results ahead as well. Though he did admit that the FDA issue would be a negative till it was resolved.

“We have sent a reminder following our formal request last year to US FDA to inspect our Dewas facility but would not be able to commit any timeline to resolve the regulatory issue,” Ranbaxy chief executive Atul Sobti told reporters on Tuesday

The company would launch anti-diabetic drug Actos in the US by 2012. The Japan story is going to be big but will take some time to unfold in the next couple of years under the synergy plan underway with Daiichi, Sobti said. Japan is the second biggest pharmaceutical market after the US,

The company is undertaking corrective action at its other facility under the FDA radar, the Ponta Saheb plant.

The popularity of a generic version of the anti-viral Valtrex in the US helped drive up sales 266 per cent and garner around 64 per cent of prescription market share there. Ranbaxy launched the generic in US in the fourth quarter of 2009 and enjoys 180 days of exclusive marketing rights.

The company’s consolidated net sales grew by 65 per cent to $542 million (Rs 2,490 crore).

Analysts have had mixed interpretations of Ranbaxy’s stock price compared with its financials. In a research analysis in March on the impact of US healthcare reforms on Indian pharmaceutical companies, Macquarie Group had suggested that the impact would be positive. But Ranbaxy and Cipla were the only two pharma stocks that Macquarie’s research report suggested had a downside potential, of 19 per cent and 20 per cent respectively, from their March 23 prices.

The dollar index (DXY 81.00, -0.05, -0.06%) , which measures the U.S. currency against a basket of six others, rose to 81.039, from 80.930 in North American trading late Monday.

The euro (CUR_EURUSD 1.3430, -0.0012, -0.0893%) fell to $1.3441, turning down from $1.3482 Monday. The dollar had been weaker earlier, with losses against the euro as Europe’s currency edged above the $1.35 level, boosted after a much stronger-than-expected rise in the closely-watched ZEW gauge of German investor sentiment.

The dollar bought 93.13 Japanese yen (CUR_USDYEN 93.3800, +0.1800, +0.1931%) , compared with 92.41 Japanese yen late Monday.

Investors recovered some of their appetite for risk, which for the past year or so pushed money back into equities and higher-returning currencies and out of the lowest-yielding currencies, including the yen. In the last several months, that relationship has been weakening, allowing the dollar to benefit from upbeat data and news on the expectations that a growing economy is good for the currency.

Still, weighing on the dollar index, the Bank of Canada removed a commitment made at recent policy meetings to keep interest rates at current levels through the middle of this year. The central bank also said it would keep its overnight deposit rate at 0.25%, as many currency analysts anticipated.
“With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus,” policy makers said in a statement.

The U.S. dollar dropped 1.6% against the Canadian loonie after the decision, extending losses of about 0.3% before the central bank’s statement was released. The greenback bought C$0.9991, pushing the Canadian currency back above parity, where one U.S. dollar buys one Canadian dollar. Before this month, parity hadn’t been seen since mid-2008.

Changing the wording of the Bank of Canada’s statement suggests “the risk of a rate hike is greater and sooner than previously anticipated,” said strategists at Brown Brothers Harriman. “There is some thought that the BoC can move on rates as early as the next meeting on June 1.”

With a lack of U.S. economic data, traders turned to U.S. stocks. The Standard & Poor’s 500 Index (SPX 1,207, +9.65, +0.81%) rose 0.7%.

Goldman Sachs Group Inc. (GS 159.98, -3.34, -2.05%) reported stronger-than-expected earnings, overshadowing news that Britain’s Financial Services Authority has opened its own probe of the firm, following the U.S. Securities and Exchange Commission one. Read about Goldman Sachs’ earnings.

Today, it’s a welcome back risk/recovery trade day around the globe supported by positive earnings surprises from global brand names in diverse sectors,” John Stoltzfus, a senior market strategist at Ticonderoga Securities, wrote in a note. “We expect that when looking in the rearview mirror sometime not that far down the road, Goldman’s difficulties with the SEC will be seen as another brick in the wall of worry for the market to traverse.”

‘Potential bailout’ for Greece
Uncertainty over Greece, however, will remain a negative for the euro, strategists said.

The Greek government on Tuesday sold 1.95 billion euros ($2.6 billion) worth of 13-week T-bills, but at a yield of 3.65%. See column on Greece’s debt.

And news reports said German Bundesbank President Axel Weber told German lawmakers Tuesday that Greece could require more than the 30 billion euros in aid promised by its euro-zone partners as the Greek government attempts to push through austerity measures.

“The main concern is still the ongoing debt crisis in Greece and this has fueled strength in the U.S. dollar,” said Dan Cook, a senior market analyst at IG Markets. While the euro-zone and International Monetary Fund are widely expected to offer loans soon to help Greece stave off a default, “the focus now has to move from the immediate bailout for debt due in May to include potential bailout plans for 2011 and 2012.”

A senior U.S. Treasury official said he doesn’t expect and aid plan for Greece to come out of this weekend’s G20 meeting, though China’s currency peg to the dollar will be discussed.

Australia, India, U.K.
Meanwhile, minutes of the Reserve Bank of Australia’s April monetary policy meeting were more inflation-averse than had been anticipated, helping to lift the Australian dollar 1% against the greenback while boosting overall risk appetite, wrote strategists at BNP Paribas.

The Australian dollar (CUR_AUDUSD 0.9328, +0.0010, +0.1073%) bought 93.08 U.S. cents, up from 92.13 U.S. cents late Monday.

Adding to signs of economic improvement around the globe, the Reserve Bank of India further withdrew its monetary policy stimulus by raising its policy interest rates as well as commercial banks’ cash reserve requirements by a quarter-percentage point.

The British pound traded at $1.5364, up about 0.1%.

March consumer price inflation accelerated at an annual rate of 3.4%, outstripping forecasts for a 3.1% rise after a 3% reading in February. Read about British CPI.

The Paribas strategists said a pound rally on the back of the data is likely to prove short-lived. Indeed, early in the session, it rose as high as $1.5432.

“Any increase in market rate expectations on the back of this data is likely to prove misplaced in our view,” they wrote. “The current fuel-driven spike of inflation is not expected to prompt a policy response” from the Bank of England.

India Tuesday 06 April 2010: Large capital inflows into the country have seen the rupee appreciating by 10.79% against the dollar in FY2009-10. The Indian currency had depreciated 27% aginst the greenback in FY 2008-09, thanks to capital outflows in the wake of the global financial crisis. The faster pace of economic recovery in India has prompted global investors to look at India as a preferred investment destination in the aftermath of global financial crisis.

“We have seen increased inflows of capital into India. With the pace of global economic recovery perhaps delayed, investors should put money into India,” said Ananth Narayan, managing director & head of forex & rates, Standard Chartered Bank, who expects the rupee to strengthen to as much as 42 against the dollar by December, 2010. Other experts predict that the rupee could hit the 44-mark against the dollar in as short a time as three months.

On March 31 2009, the rupee ended the year at Rs 44.92/$1, touching a new 18-month high against Rs 50.35/$1 recorded on April 2, 2009, the first trading day of the FY 2009-10.

The rupee had ended FY 2008-09 (on March 31, 2009) at Rs 50.73/$1 as compared to Rs 39.94/$1 recorded on April 1, 2008. In March 2010 alone, the rupee appreciated 2.53% against the dollar, which was second highest monthly appreciation in FY2009-10 after 5.99% gain recorded in May, 2009.

For the fiscal year 2009-10, foreign institutional investors’ net buying of equities was estimated at Rs 1,10,744.40 crore while in 2008-09 they were net sellers and had sold Rs 4,82,48.50 worth of equities. The 30-share Sensex closed at 17527.77 on March 31, registering a gain of 105.98% over the 8509.56 level recorded on October 27, 2008 on the BSE.

Additionally, overseas remittances also added some push to the rupee’s rise. Provisional balance of payments data released by the Reserve Bank of India on last Wednesday shows that overseas Indians remitted $55.06 billion as compared to $51.6 billion in 2008 and $37.2 billion in 2007.

“In 2008-09, we saw the worst financial crisis world over after 1930 where in there was a contraction of investment interest. Now, India is on the path of faster recovery and emerged as a key investor destination in emerging markets,” said K N Dey, director — Basix Forex & Financials, who sees rupee level at Rs 43.50/$1 by December, 2010.

India registered an impressive GDP growth of 7.5% as per latest data. The Prime Minister sees a 9%-plus growth by the end of 11th 5-year plan (2007-12).

India Friday 26 March 2010 - Even as the global economic meltdown is beginning to fade, the world might be in for another crisis — a currency crisis, a noted expert warned.

“It is a possibility that the next crisis awaiting the world is a currency crisis,” renowned currency expert and non-executive director of Elara Capital, Avinash Persaud, told reporters in Mumbai.

Persaud is the chairman of Intelligence Capital, a firm that advises governments of many G-20 countries on managing their finances and an expert member of the UK government’s Treasury group.

“The measures that were taken to bail-out countries from the financial crisis led to a fiscal crisis and a currency crisis can possibly erupt after this fiscal crisis,” he said.

The fiscal crisis brought about an increased burden on monetary policy and different countries met it in different ways, he said.

“The US and the UK have no other option other than having weak currencies. In fact, the US has a dollar de-valuation policy,” he said.

What India’s banking regulator Reserve Bank has done in its exchange (rate) policy is sensible, by using a basket of currencies, he said.

“India actually manages its currency (rupee) against the dollar. Now the country is using a basket of currencies. In fact, we would want to limit the dollar problems. We don’t want to import dollar problems — the RBI is trying to avoid that. It’s sensible,” he said.

India Saturday 20 March 2010 –Investors shunned risk-sensitive currencies and bid the dollar higher Friday after Greece's sovereign debt crisis intensified and a rate hike in India roiled markets.

The euro dipped as low as $1.3503, the lowest since March 2, when India's central bank unexpectedly raised rates, eroding demand for gold and other raw materials. The volatile U.K. pound was hit harder by the flight to safety, sliding below the $1.50 level before staging a partial recovery.

Commodity-linked currencies, particularly the New Zealand and Australian dollars, slumped as gold, oil and silver prices retreated. The Canadian dollar also declined, its push to parity against the greenback temporarily halted by the move out of growth-sensitive assets.

“What derailed the market…was the move from the Reserve Bank of India to hike interest rates unexpectedly,” said Jack Spitz, regional manager of foreign exchange at National Bank Financial in Toronto.

That move raised the possibility that central banks in other emerging markets could also raise rates, quelling the demand for commodities, he said.

That should eventually make their currencies more attractive versus the dollar, given that rates in the U.S. are expected to remain low at least until the fall. Friday, however, worries about growth outweighed the rate advantage: Emerging markets have been the drivers of global growth, and the concern is that rate hikes there will damp growth and undermine the global recovery.

Friday afternoon, the euro was at $1.3535 from $1.3611 late Thursday, according to EBS via CQG. The dollar was at Y90.50 from Y90.33, while the euro was at Y122.47 from Y122.94. The U.K. pound was at $1.5016 from $1.5248. The dollar was at CHF1.0610 from CHF1.0581.

The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of currencies, was at 80.740 from 80.272.

Underpinning the scramble to the safety of the dollar is increasing investor anxiety ahead of the European Union summit next week. It still isn't clear whether E.U. partners will provide financial aid to Greece, which faces more than EUR20 billion in bond refinancing in the next two months.

“The situation in Greece will introduce more headwind for a euro-land economic recovery, which will lag the U.S.” said Thanos Pappasavvas, head of currency management at London-based Investec Asset Management, which oversees $67 billion in assets.

Greek Prime Minister George Papandreou warned Friday that Greece is one step away from being unable to borrow on international markets.

National Bank's Spitz said the wrangling among E.U. leaders on the situation in Greece is weighing on the common currency. “There's a fair bit of political rhetoric that's being tossed around,” Spitz said.

Germany appears to be leaning toward involving the International Monetary Fund in any solution of Greece's problems, while insisting that the Greek government hasn't asked for aid so far. France and the European Central Bank would prefer a E.U. resolution without outside assistance.

“The euro is once again suffering at the hands of European discord to end the week,” said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. “From the perspective of the investor, events continue to be frustratingly opaque.”