Rupee is the worst performer in emerging Asia as RBI tries to lift economy

The RBI bought has about $18 billion of foreign exchange since the end of September.

The Reserve Bank of India’s efforts to support the flagging economy are turning out to be a bane for the rupee. The currency is the worst performer in emerging Asia this quarter, and analysts say that’s because the central bank is mopping up dollars gushing into local stocks and bonds.

The RBI bought has about $18 billion of foreign exchange since the end of September, according to estimates by Bloomberg Economics. While the purchases have propelled reserves to a record, the rupee has fallen about 0.7% since Sept. 30.

Weakness in the rupee despite robust inflows is seen as a sign the central bank wants to curb a sharp appreciation in the currency that can hurt exports. With slew of data pointing to weak economic activity, boosting shipments is high on agenda for the government.

“Part of the rupee’s under performance is deliberate,” said Mitul Kotecha, a senior EM strategist at TD Securities in Singapore. “Higher reserves prove that the central bank is probably making determined efforts to keep the rupee’s competitiveness.”

The RBI has said it does not target any particular level of exchange rate and steps in only to curb undue swings in the currency. Though, as the rupee was heading for its worst quarterly decline in a year in the three months ended September, Governor Shaktikanta Das said September 19 that the currency is fairly valued, indicating tolerance for a weaker rupee.

US removes India from its currency monitoring list; China, Japan stay

India maintains ample reserves according to the IMF metrics for reserve adequacy

The Trump organization on Tuesday expelled India from its cash observing rundown of significant exchanging accomplices, refering to specific improvements and steps being taken by New Delhi which address a portion of its real concerns. Switzerland is the other country that has been expelled by the US from its cash checking list which among others incorporate China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia and Vietnam.

“India has been expelled from the checking list in this report, having met just one out of three criteria – a huge two-sided surplus with the US – for two back to back reports,” the Treasury Department said in its most recent semi-yearly report on macro economic and remote trade approaches of real exchanging accomplices of the US sent to the Congress.

In the wake of buying remote trade on net in 2017, the national bank relentlessly sold stores for the greater part of 2018, with net offers of outside trade achieving 1.7 percent of GDP throughout the year, it said. India keeps up adequate stores as indicated by the IMF measurements for hold sufficiency, it said. In both Switzerland and India, there was an outstanding decrease in 2018 in the scale and recurrence of remote trade buys, the report said.

“Neither Switzerland nor India met the criteria for having occupied with persevering, uneven mediation in either the October 2018 report or this report. Both Switzerland and India have been expelled from the observing rundown,” the Treasury said in its report running into more than 40 pages…

Rupee falls 38 paise to 74.06 over strengthening US dollar, RBI-govt rift

A stable crude oil prices, however, restricted the rupee fall to some extent, forex traders said

Share Market News: The rupee dropped by 40 paise to 74.08 against the US dollar in early trade Wednesday, amid increased demand of the American currencies from importers and sustained foreign fund outflows. Forex traders said, the US dollar’s strength against some currencies overseas and concerns around the rift between the government and the RBI also weighed on the local unit.

At the interbank foreign exchange, after opening lower at 73.91, rupee weakened further to quote at 74.08 against the dollar registering a fall of 40 paise over its pervious close. The rupee Tuesday depreciated by 23 paise to close at 73.68 against the US dollar.

A stable crude oil prices, however, restricted the rupee fall to some extent, forex traders said. Globally, Brent crude, the international benchmark, was trading 0.62 per cent up at $76.38 per barrel.   

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Meanwhile, the Reserve Bank of India has said that it will inject Rs 400 billion into the system in November by buying government bonds through open market operations (OMO) for maintaining liquidity in the market. On a net basis, foreign investors pulled out Rs 15.92 billion from equity markets Tuesday, as per provisional data.

Meanwhile, the benchmark BSE Sensex opened on a higher note up 158.99 points but soon pared the gains and was trading at 33,876.69, down 14.44 points or 0.04 per cent at 0948 hrs.

Rupee slumps to 71-mark first time ever, drops 26 paise against US dollar

Forex dealers said besides robust month-end demand for the American currency from oil importers, dollar's strength against its rival currencies on expectations of rising interest rates amid lingering

The rupee slumped to a fresh record low of 71 against the dollar for the first time ever by falling 26 paise on persistent demand for the US currency amid rising crude prices.

At the Interbank Foreign Exchange (Forex) market, the local currency opened lower at 70.95 a dollar and slipped further to hit its lifetime low of 71 from its previous close of 70.74.

Forex dealers said besides robust month-end demand for the American currency from oil importers, dollar's strength against its rival currencies on expectations of rising interest rates amid lingering Sino-US trade tensions, weighed on the domestic currency.

On Thursday, the rupee slid further by 15 paise to close at a fresh lifetime low of 70.74 to the dollar due to strong demand for the greenback from oil importers and surging crude oil prices stoking inflation fears.

Growing fears about rising inflation in amid high global crude oil prices and consistent outflow of foreign funds from the domestic equity market also weighed on the domestic currency.

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99.3% of demonetised notes are back; Rs 15.31 trillion returned, says RBI

500- and 1000-rupee notes worth Rs 15.41 trillion were demonetised

Demonetisation : As many as 99.3 per cent of the old 500 and 1,000 rupee notes, that was banned overnight in November 2016, have been returned, the Reserve Bank of India said in its annual report.

Of the Rs 15.41 trillion worth 500 and 1,000 rupee notes in circulation before November 8, 2016, notes worth Rs 15.31 trillion have been returned.

The "humungous task of processing and verification of specified bank notes (SBNs) was successfully achieved," it said.

The SBNs received were verified, counted and processed in the sophisticated high-speed currency verification and processing system (CVPS) for accuracy and genuineness and then shredded, it added.

SBNs refer to the demonetised old 500 and 1,000 rupee.

RBI said the processing of SBNs has since been completed. "The total SBNs returned from circulation is Rs 15,310.73 billion".

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Rupee set to shed gains, weaken to 65 if dollar revives: Reuters poll

Chinese yuan is forecast to weaken to 6.90 per dollar a year

In 12 month's time the Chinese yuan will have erased most of its gains made this year, provided the US Federal Reserve sticks to its tightening path, boosting the greenback, a Reuters poll showed.

Having strengthened more than 3 per cent since the start of 2017, the yuan is forecast to weaken to 6.90 per US dollar in a year, according to the poll of over 60 foreign exchange analysts taken July 27-Aug 2.

It was trading around 6.72 on Wednesday.

While the US dollar should benefit when the Fed starts shrinking its balance sheet, which it has said it expected to do "relatively soon", it could falter again if the central bank fails to follow through with a rate hike later this year. 

At the start of the year, traders had expected faster rate hikes from the Fed and some form of stimulus from the new Trump administration would drive the dollar up strongly against emerging currencies.(economy policy)

But, the greenback has instead taken a beating on fading hopes that President Trump will be able to push through deep tax cuts and massive infrastructure spending.

That has brightened the outlook for Asian currencies.

Strong Chinese economic data over recent months has cooled worries over the yuan's weakening, leaving further scope for the People's Bank of China (PBOC) to tighten the country's domestic liquidity conditions.

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