Tag: rupees

India makes first crude oil payment to UAE in local currency

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India and the United Arab Emirates have initiated a paradigm shift in their bilateral trade dynamics by instituting transactions denominated in their respective domestic currencies.

Notably, India’s leading petroleum refiner, Indian Oil Corp, recently concluded a transaction wherein it conducted payment in rupees for the procurement of one million barrels of oil from the Middle Eastern nation.

This pivotal move underscores a pivotal shift in trade modalities and was executed through a payment to the Abu Dhabi National Oil Company (ADNOC), as confirmed by an official statement from the Indian embassy in the UAE.

This reflects India’s endeavor to leverage its trade landscape by reducing reliance on the dollar and consequently streamlining transactional intricacies.

Of particular significance is the agreement inked in July between India and the UAE, which sanctioned trade settlements to be conducted in rupees rather than dollars.

This landmark accord substantiates India’s strategic approach to optimising trade processes by mitigating the need for cumbersome dollar conversions.

A crucial aspect of this evolving economic relationship is the introduction of a real-time payment linkage. This innovative mechanism, established during Indian Prime Minister Narendra Modi’s visit to the UAE, aims to facilitate seamless cross-border fund transfers, fostering heightened ease and expediency.

Delving into the statistical dimension, bilateral trade volumes between India and the UAE for the fiscal year 2022-23 amounted to a substantial $84.5 billion.

With inputs from Reuters

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rupee gets a boost as govt allows foreign trade payments in INR for export promotion schemes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In a move aimed at facilitating trade in the domestic currency, the Narendra Modi government on Wednesday allowed international trade settlements in Indian rupees for export promotion schemes under the Foreign Trade Policy (FTP).

The Ministry Of Commerce and Industry stated, “The government of India has made suitable amendments in the Foreign Trade Policy and Handbook of Procedures to allow for international trade settlement in Indian rupees.”

“Given the rise in interest in internationalisation of the Indian Rupee, the given policy amendments have been undertaken to facilitate and to bring ease in international trade transactions in Indian rupees,” it said.

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The ministry added that the changes have been notified for international trade, export performance for recognition as status holders, realisation of export proceeds under advance authorisation and duty-free import authorisation schemes, and realisation of export proceeds under the Export Promotion Capital Goods scheme.

Back in July, the central bank, in a circular, said it has put in place additional arrangements for export and import transactions in Indian rupees in view of the increasing interest of the global trading community in the domestic currency.

The RBI said, “For settlement of trade transactions, the concerned banks will require special rupee vostro accounts of correspondent bank/s of the partner trading country.”

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“Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier,” it said.

Exporters undertaking overseas shipments of goods and services through this mechanism will be paid the export proceeds in Indian rupees from the balances in the designated special vostro account. This mechanism may enable Indian exporters to receive advance payment against exports from overseas importers in rupees.

As per the circular, the rupee surplus balance held can be used for permissible capital and current account transactions with mutual agreement.

Also Read: Commerce Ministry may be looking to include steel in export incentive scheme

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI accepts $5.135 billion in USD/INR sell-buy swap auction

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India has accepted USD 5.135 billion in USD/INR sell-buy swap auction conducted on Tuesday against the notified amount of $ 5 billion. Last month, the RBI had announced to undertake a USD/INR two-year sell/buy swap auction of $ 5 billion. In today’s auction, the total amount bid by participants was $ 13.565 billion, the RBI said in a release.

The central bank received 246 bids but accepted 86 bids in the auction, the release said. The bid to cover ratio was 2.71. Under the sell-buy swap auction, a bank buys US dollars from the Reserve Bank and simultaneously agrees to sell the same amount of US dollars at the end of the swap period.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fresh IPO inflows, low oil prices to strengthen rupee

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fresh FIIs’ inflows for upcoming IPOs as well as lower crude oil prices are expected to strengthen the Indian rupee during the upcoming week.

However, concerns over COVID-19 variant — Omicron — will keep the Indian rupee’s strength in check.

“Last week of December is strong for rupee and Indian equities on a last 10-year track record,” said Sajal Gupta, Head, Forex and Rates at Edelweiss Securities.

“Oil prices are expected to be below $80 per barrel in near future on a slow down in demand on back of Omicron re-emergence. Possibility of bond index inclusion and IPO flows shall be helpful.”

Last week, the rupee covered lost ground on the back of decisive intervention by the RBI and slowed FPI redemption in Indian equities.

Gupta expects the Indian rupee to test 74.50 this week on a strong note.

Rupee had closed at Rs 75.03 to one US dollar on Friday after a strong show.

“On the domestic front, investors will be keeping an eye on the fiscal balance number and increased expenditure could restrict sharp appreciation for the rupee,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“FII participation has been subdued in the last few sessions, but increased inflow as we get into the New Year could further support the currency.”

Market participants are expected to track macro-data such as the Index of ECI (eight core industries) and fiscal deficit numbers which will be released during the trade week starting December 27.

Somaiya expects the USDINR (Spot) to quote in the range of 74.70 and 75.80 next week.

According to Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities: “As it’s a holiday season in the US, most major currency pairs are going to trade in a narrow range for the next few sessions.”

“Rupee is likely to trade in a narrow range between 74.8 to 75.3 for the next few sessions.”

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Slowing Indian economy spells tough times ahead for the rupee

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A slowing domestic economy will prevent India’s rupee from recouping this year’s losses against the dollar in 2020, with optimism around an easing in the US-China trade dispute not enough to give it a further boost, a Reuters poll showed.

After falling nearly 9 percent in 2018, the Indian currency has shed another 4 percent this year to touch a 2019 trough of 72.40 per dollar on September 3. It has since popped up over 2 percent, along with other emerging market currencies, on hopes of a possible trade deal between the world’s two largest economies.

But nothing has been agreed yet, let alone a meeting scheduled.

A barrage of rate cuts from the Reserve Bank of India this year – five reductions in succession for a total of 135 basis points off the repo rate, now at 5.15 percent – has done nothing concrete so far to revive a slowing Indian economy.

Neither have several government fiscal stimulus measures introduced this year, which have become a negative for the rupee’s outlook given it will be difficult for Prime Minister Narendra Modi’s government to meet its fiscal deficit targets.

“We expect the INR to weaken as risks of sluggish growth and fiscal slippage intensify,” said Rini Sen, India economist at ANZ.

“Stable portfolio flows led by equities and global cues like trade negotiations, on top of rate cuts, have led to bouts of optimism. However, we think the currency market is under-pricing downside risks to domestic growth.”

The November 1-6 Reuters poll of over 40 strategists predicted the rupee to weaken about 1.3 percent to 71.90 against the greenback in 12 months from around 71.00 on Wednesday.

The RBI, the most aggressive major central bank in the world this year for easing, is expected to cut the repo rate at its sixth meeting in a row in December, a Reuters poll showed last month, which could put further pressure on the currency.

“Unlike the previous cuts, additional cuts could erode the allure of the rupee as a higher yielder, while (the) growth prospect remains a concern,” said Saktiandi Supaat, head of foreign exchange research at Maybank based in Singapore.

Indian economic growth has steadily slowed to a six-year low of 5.0 percent in the April-June quarter from an 8.1 percent peak in the January-March quarter of 2018 and recent business surveys indicate it will slow further.

While the year-ahead consensus in the latest poll was slightly stronger than 72.50 per dollar predicted last month, it reflects the currency’s gain over the past month.

However, nearly two-thirds of 24 common contributors in the October and November Reuters polls either downgraded or kept their year-ahead forecasts unchanged.

Currency speculators have cut short bets on the rupee to the lowest since mid-August, a separate Reuters poll showed.

The rupee’s outlook was also driven by renewed interest among foreign portfolio investors for Indian assets. They bought 160.69 billion rupees of Indian securities in October, the highest in six months, according to Foreign Portfolio Investors’ data.

“If whatever measures taken by the government so far do not result in improving the onshore growth scenario, then there is risk that whatever portfolio flows which have come so far might reverse…and could result in INR weakness,” said Rohit Garg, emerging market FX strategist at BofAML based in Singapore.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget expectation, Q3 results to guide Indian equities

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ongoing third quarter earning results, budget expectations, developments in the US-China trade relations and the Brexit issue will chart the course of the markets in the weeks to come.

Also any volatility in crude oil prices will continue to affect the rupee, which has weakened for two consecutive weeks.

“Traders should trade cautiously for the next 10 days as markets prepare and discount budget expectations,” said Sahil Kapoor, Chief Market Strategist, Research, Edelweiss Wealth Management.

The NSE Midcap Index has closed at a five week low and is beginning to witness broad based selling. Nifty on the other hand has been able to eke out gains based on a select few bluechip stocks.

The quarterly results will remain in focus in the upcoming weeks as major third quarter results by Kotak Mahindra Bank, Maruti Suzuki, Larsen and Toubro, Yes Bank, Asian Paints and ITC is scheduled to be announced.

“Trading woes will be dictated by the upcoming interim budget with investors preparing to reshuffle their portfolio according to their expectations.” said Rahul Sharma of Equity99.

In November, the Bank of England had warned that a no-deal Brexit can cause a recession worse than the 2008 financial crisis. After the Brexit deal was rejected by British Parliament with a significant margin, investors will keep a close watch on developments in the same.

On the partial US government shutdown, New York Federal Reserve President John Williams has raised a red flag saying that the shutdown is an emerging headwind to the economic growth. The prolonged shutdown is causing uncertainty among the investors.

According to Viral Berawala of Essel Mutual Fund, investors awaited the next steps for the UK after Prime Minister Theresa May’s government narrowly survived a no-confidence vote. Losing the vote has made it harder to have a smooth Brexit.

Regarding the US-China trade relations, Berawala said that reports of Beijing offering to ramp up imports from Washington and the latter considering to lift some tariffs on Chinese products would boost the global investor sentiments.

“The Nifty would need to convincingly close above the recent highs of 10,931, for it to move towards the 11,200 levels in the coming week; else range bound price action could
continue. Crucial support to watch in the coming week for weakness is 10,692,” Jasani said.

The S&P BSE Sensex gained 376.77 points, or 1.04 per cent, to close at 36,386.61, whereas the Nifty gained 112 points, or 1.04 per cent, to settle at 10,906.95 during the week gone by.

The Indian rupee continued to depreciate for the second week on the trot, as it weakened by 69 paise to Rs 71.18 against the US dollar from its previous close of Rs 70.49.

Provisional data from the BSE since the start of year showed that foreign institutional investors offloaded stocks worth Rs 2,318.76 crore as against domestic investors buying Rs 1,842.31-crore shares.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global cues, derivatives expiry to chart stock market’s course

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian equity market is expected to be influenced by global cues such as the US government shutdown, the rupee’s volatility and derivatives expiry during the upcoming week.

Additionally, investor sentiments will be swayed by developments in the ongoing winter session of Parliament and global crude oil price movement.

“Going forward, developments in the winter session of parliament, domestic and global macroeconomic data, trends in global markets, the movement of rupee against the US dollar and crude oil price movement will dictate trend of the market,” said SMC Investments and Advisors’ Chairman and Managing Director D.K. Aggarwal.

Globally, concerns over a slowdown in international growth and the ongoing partial US government shutdown are expected to be major themes during the truncated weekly trade.

According to Sahil Kapoor, Chief Market Strategist, Edelweiss Investment Research, said: “Since we are entering an expiry week, the momentum will decide how far this downward movement goes.”

“In case Nifty breaks 10,650 points (level) on Monday and closes lower, then the index can slide towards 10,500 over the week.

“Indian equity’s out-performance over global peers may roll over quickly. With no more events coming up this week, the index may trade on expiry cues.”

The November series F&O expiry will take place on December 27.

However, factors such as lower crude oil prices will provide a support to the Indian rupee and the key indices.

“Domestic macro outlook has turned positive in recent times with the fall in oil prices from a peak of $86 per barrel to $53 per barrel and a pick-up in industrial production,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Additionally, softening of CPI inflation has opened up scope for the Reserve Bank of India (RBI) to change its stance from ‘calibrated tightening’ to ‘neutral’ will maintain optimism in the market.”

On the flip side, extreme volatility in the rupee’s strength against the US dollar will erode investors’ risk-taking appetite.

“The rupee is witnessing extreme volatility these days, which is detrimental to local businesses,” said Edelweiss Securities’ Head of Forex and Rates Sajal Gupta.

“Expect the rupee to be under pressure this week and move towards 71 or 72 on the back of extreme weakness seen in the US and global equity markets.”

On a weekly basis, the Indian rupee strengthened by 1.75 to 70.15 against the US dollar from its previous week’s close of 71.90.

On technical charts, the short term trend of the National Stock Exchange’s (NSE) Nifty50 has turned negative after the sharp correction that was witnessed last Friday.

“Further downsides are likely once the immediate support of 10,739 points is broken; in which case the next support could come in at 10,590 points,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.

“Any pullback rallies could find resistance at 10,850-10,895 points band.”

Last week, global cues such as the US interest rate hike, along with concerns over a slowdown in global growth and threat of a partial US government shutdown, dragged the key domestic equity indices lower.

However, the equity market had begun the last week on a positive note led by a strong rupee backed by narrowing trade deficit and inflow of foreign funds.

Consequently, the S&P Bombay Stock Exchange’s (BSE) Sensex lost 220.86 points, or 0.61 per cent, to close at 35,742.07 points, whereas the 50-share Nifty of the NSE declined 51.45 points, or 0.47 per cent, to settle at 10,754 points.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow