The rupee's new-found strength will likely dissipate soon on concerns the US Federal Reserve will reduce its stimulus programme next year, giving a boost to the dollar, a Reuters poll showed on Thursday.Analysts in the poll were less optimistic about the rupee's prospects than they were in a similar poll last month, but said the currency is unlikely to weaken to the record low levels seen in August due to an improvement in the country's current account deficit.The Chinese yuan, on the other hand, is expected to continue to slowly appreciate over the next year as the economy improves and on expectations that its central bank will widen the currency's trading band.Median expectations from 20 strategists in the poll conducted this week were for the rupee to trade at 63 against the dollar at the end of February next year, weaker than its rate on Thursday.It is then seen weakening further to Rs 64 per dollar by May and Rs 63.43 by November 2014."A tapering in the Fed's stimulus would drive the sentiment in the rupee in the near term along with domestic political clarity and fiscal management," said Shakti Satapathy, analyst at A.K. Capital Services in Mumbai."However, a good show on the current account deficit and other inflow driving measures from the government and Reserve Bank of India would restrict any sharp depreciation henceforth."The US Federal Reserve is expected to begin reducing its $85 billion a month bond purchases by March next year as its economy improves.When that happens, rising bond yields in the US will likely attract investors, boosting the dollar against emerging market currencies, which have been historically reliant on foreign exchange inflows.In mid-May, when the Fed announced similar tapering intentions, most emerging currencies were dumped by investors leading to sharp falls in those currencies. The Indian rupee slumped 20 per cent.But recent data showed India's current account deficit has improved as the government and RBI rushed to put in place measures to stem the outflow of funds from the economy.From increasing foreign direct investment limits on retail, telecom and aviation industries to curtailing gold imports and providing off-the-market swap windows for oil companies to buy dollars, the steps helped stabilise the rupee.India's current account gap narrowed sharply in the September quarter to $5.2 billion or 1.2 per cent of GDP -- the lowest since the June quarter of 2009.Meanwhile, Finance Minister P. Chidambaram has vowed to lower the deficit to $60 billion for the fiscal year ending March 2014, counting on declining gold imports and double-digit export growth.But analysts said risks remain."The only data which has improved is the current account deficit but it still continues to be a deficit and will widen from the current level of $5.2 billion per quarter," said Samir Lodha managing director at QuantArt Market Solutions.Lodha says languishing economic growth, retail inflation of around 10 per cent, an out-of-control fiscal deficit and looming elections were some of the factors that could threaten the stability of the currency.General elections are due to be held in India by May next year and analysts said a hung parliament will adversely affect investor sentiment.Despite its rebound in recent months, the rupee is still down about 11 per cent for the year to date.Yuan StrengthMeanwhile, the poll also showed the Chinese yuan will continue to rise slowly to 6.08 per dollar in three months, 6.05 by May next year and 6.00 by November.It was trading at around 6.09 on Thursday.Those predictions are slightly better than last month and signal expectations that the People's Bank of China will gradually widen its trading band as the economy improves.The yuan has been the best performing currency in Asia so far this year, appreciating 2.3 per cent.The currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organisation SWIFT said on Tuesday (3 Dec).(Reuters)
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Prime Minister Manmohan Singh said a strong domestic manufacturing base in electronics and telecommunications will mitigate burden of growing imports for the sector. "India needs to develop a strong domestic manufacturing base in electronics and telecommunications," Singh said in his inaugural address at the industry event 'India Telecom 2013'.He said by 2020, it is estimated India will be importing electronics products worth about $300 billion, which will be more than the value of the country's imports of petroleum products."We need to act now to avoid a situation where we face difficulties in financing these huge imports. India should have manufacturing facilities which result in a balanced trade in electronics products and are a part of global supply chains," Singh said.Talking about policies in the telecom sector, Singh said National Telecom Policy 2012 has brought clarity on number of issues in the sector."I understand that the Department of Telecommunications has already started issuing Unified Licenses and will also shortly issue the Merger and Acquisition guidelines," he said.The Empowered Group of Ministers early this week firmed up their views on M&A rules and the same has to be placed before cabinet for approval. Elaborating on use of telecom technologies for modernising systems, Singh touched upon Telecom Ministry's plan to provide 3G connectivity with computers for students."Combining a computer with 3G connectivity can revolutionise the delivery of education. Students can learn the subject of their choice from quality teachers without leaving the place of their residence. I am told that the Telecom Commission is working on such possibilities and I wish them all success in this noble endeavour," he said.The Ministry is learnt to be in process of developing a project under which a tablet PC will be given to students with 3G connection. But the proposal is yet to receive nod of inter-ministerial panel Telecom Commission after which it may have to seek approval of Cabinet for final implementation. (PTI)
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In a strongly-worded message to WTO members, India said the food security issue was "non-negotiable" and the country also managed support for its stand from several nations from Africa and Latin America. "Agriculture sustains millions of subsistence farmers. Their interests must be secured. Food security is essential for over four billion people of the world," Commerce and Industry Minister Anand Sharma said addressing the plenary session of the 9th Ministerial Conference of the World Trade Organisation (WTO). "For India, food security is non-negotiable. Need of public stock-holding of foodgrains to ensure food security must be respected. Dated WTO rules need to be corrected." For its tough stand over the food security issue, India got support from several new members from Africa and Latin America, though some G-33 partners like Indonesia and China have shifted their positions. The second day of the WTO Ministerial Conference started with India saying "we have a half-baked agricultural package ... for India food security is non-negotiable".According to sources, the "strong and clear" message given by Sharma during the plenary session of the WTO meeting, "created a flutter" in Bali and a whole lot of enquiries were made.Sharma, on his part trimmed his speech to the allotted three minutes lest it should evoke some adverse remarks from the chair."China has got what it wanted in trade facilitation and Indonesia is a host country which wants a successful conclusion to the long stalled talks," Indian sources said.Earlier both were supporting India's stand.As the day progressed, in a meeting which was convened by WTO Director General Roberto Azevedo, as many as 25 nations including Nigeria, Argentina, Kenya, Jamaica, Brazil, Cuba, South Africa and Bolivia strongly supported India's view that a permanent solution is must for the smooth implementation of the food security programme.During the meeting, which went for about two-and-a-half hours, about 25 out of 55 members, supported India's stand on the food security issue. The DG was taking a close door meeting to assess the state of play of the meeting."About 25 members who made speeches clearly said that there was an imbalance in the overall Bali package and food security is an issue which cannot be compromised and a permanent solution is required for this," they said adding "some of them said there cannot be an interim solution".Sources said that as reported by few media that India has isolated on the matter is "wrong".During his bilateral meeting with Azevedo, Sharma conveyed to him that the current Bali package is not balanced for developing nations."The WTO chief too has clearly recognised that there is a problem," they said.Other WTO members who supported India's stand include Nepal, Egypt, Uganda, Namibia, Argentina, Zimbabwe, Ecuador, Venezuela, Mauritius and Nicaragua.Meanwhile addressing media, WTO Spokesperson Keith Rockwell said that during the long meeting in afternoon some members supported India's stand."Some African and Latin American countries have supported the India's position on peace clause," Rockwell said. Sharma's strong tone in the morning session did not go well with western media as several of them sought views on that from EU Trade Commissioner Karl De Gucht and Rockwell."Minister Sharma has a very strong view on that," Rockwell said. When asked about the tone of Sharma, Gucht said: "What Sharma said was straight forward ... he has to see what tone he has to use. That is his responsibility".Meanwhile a Pakistani diplomat said that India's food security programme has some problem as the foodgrain bought through public procurement may be released in the global market which may distort global prices."Delink social safety programmes from others...and ensure that it does not distort global trade and better shift to cash transfer schemes," the diplomat said.(PTI)
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Emerging economies need to make sure their exchange rates are flexible enough to deal with volatile capital flows, a senior International Monetary Fund official said.Billions of dollars have left emerging markets since May, when the US Federal Reserve first said it may need to begin reducing its $85 billion monthly bond-buying programme, which would deal a blow to emerging economies saddled with large current account deficits.But capital flows switched direction again in November as the Fed delayed its exit plan, IMF deputy managing director Min Zhu told Reuters, giving emerging economies breathing space to prepare defences for when the Fed decides to act."Exchange rate flexibility is really the first front line to go against this capital flow volatility," Zhu said on the sidelines of a financial conference in the Saudi capital."That's the most important line against the cross-border shocks. So make sure that exchange rates are flexible," he said without giving details.The IMF has urged China in the past to adopt a more market-based currency exchange rate with less intervention. Last month, China's central bank governor dangled the prospect of speeding up currency reform and giving markets more room to set the yuan's exchange rate.Developing countries called on the IMF in October to help them deal with heightened market volatility caused by the Fed's taper plan.According to the IMF, emerging economies have been working hard since the Fed's May warning signal to improve fundamentals through tightening fiscal policies and tackling inflation, which is a key issue in India, he said.Some emerging economies have also embarked on policies to encourage trade in order to slash their large current account deficits and raised interest rates to counter depreciation of their currencies, Zhu said without giving specifics.Last month, Indonesia's central bank raised its policy rate by 25 basis points to help reduce its large current account deficit and bolster the rupiah, Asia's weakest currency this year.Zhu also said that China may need several years to switch its economy from investment to consumption-driven growth."China is moving in the right direction but it is not an easy job. Investments account for 47 per cent of GDP (gross domestic product), which is way high, and consumption is way low," he said.The world's second-largest economy will need time to implement reforms such as opening up the services sector to help reduce investment as a proportion of GDP, he said."It will be a medium-term adjustment process. The government set a goal by 2020 that they want to double per capita income, change the growth model. We think it is reasonable," he said in the Fund's first comments on China's reform plans.Beijing's leadership last month unveiled its boldest set of economic and social reforms in nearly three decades to unleash fresh drivers of growth over the next decade.On Tuesday, China's leaders pledged to quicken economic reforms in 2014 while keeping policy stability and continuity at a meeting of the decision-making Politburo.According to the World Bank, China's per capita GDP was just $6,188 last year, compared with $22,590 in South Korea, $36,796 in Hong Kong and $51,709 in Singapore - Asian peers that have succeeded in making such a transition.A Reuters poll showed annual economic growth this year could slow to 7.6 per cent - the weakest in 14 years - but ahead of the government's target of 7.5 per cent.(Reuters)
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Business activity in emerging markets grew at the fastest rate in eight months in November, supported by momentum in Chinese manufacturing activity, a survey showed.The composite HSBC emerging markets index ticked up to 52.1 from 51.7 in October, moving further above the 50 line that divides expansions in activity from contractions even though growth in the services sector stalled at October's seven-month high.Manufacturers picked up the slack, led by China, where stronger domestic demand drove manufacturing growth to its sharpest increase since March, and also helped by India."In India, manufacturing business conditions are turning to positive after a few months of contraction," said Murat Ulgen, an emerging markets economist at HSBC."China is a huge weight, India is a huge country and has returned to (manufacturing) growth."Other emerging markets also saw faster growth in manufacturing, with Central and Eastern Europe and Turkey benefiting from the euro zone's ongoing recovery.But the manufacturers' index was dragged down by slowing growth in Brazil, Russia and South Korea and by a contraction in Indonesia.Overall, the HSBC index showed only modest growth in the services and manufacturing composite, and November's figure remains below the long-term trend level of 54.0.Despite returning to manufacturing growth, India's large but challenged economy weighed on the index, with a fifth month of overall contraction.Its private sector output also contracted for the fifth straight month, but at a slower rate than in previous months."For India, the whole picture including services is still contracting," Ulgen said.Despite a potentially challenging year ahead, manufacturing sentiment strengthened in most of the countries, with business outlooks in Brazil, Indonesia and the Czech Republic reaching record highs.The HSBC survey collects data from purchasing managers at about 8,000 firms in 17 countries. The index is calculated using data produced by Markit.(Reuters)
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It is called the game of survival, that which makes species like “In-Car Navigation Systems” reinvent themselves against the assault by alternate devices. In the mid 2000s, it was the advent of PNDs (Personal Navigation Devices) - which were available for less than $100,clung on to the wind shield and seemed to offer everything that a $500-$2000 in-car navi could offer. There were predictions of the entire infotainment systems market getting wiped out, but what looked like an explosive new product saturated and now shows significant decline. The in-car navi survived. In the recent past, it is the invasion of the all pervasive smart phones. With the smart phone market growing by 50 per cent and 2 billion devices expected to be sold to end consumers this year, it is obvious that the trend cannot be ignored. The threat of a new device disrupting many individual markets looms around all the time. But people do not seem to prefer a single ubiquitous device that could be your computer, mobile phone, audio player, video viewer and in-car navi system. The famous question of ‘convergence of devices’ pops up often, but coexistence of multiple devices appears to be the way. In the near term, smart phones will not outsmart in-car navihead-units. Rather, the trend is clearly towards strong integration, giving rise to a new symbiotic technology trend.Automotive Apps are leading at the forefront of this innovation wave due to integration. Broadly, two types of apps are emerging. There are apps that enable locking the car and switching on the heater/cooler remotely, which provide car functions on a smart phone. There are Apps like in-car version of Facebook or internet radio Pandora that runs on the infotainment platform and makes smart phone features available in the car. This makes the smart phone and the car infotainment system an inseparable pair, rather than a competition to each other. There are a wide range of utility apps available for users. The simple app called GasBuddy gives cheap gas prices nearby, helping users to save on fuel costs. Technology savvy users could use apps like “Dynolicious Fusion” which gives vehicle performance measurements – real time horsepower, 0-60 miles acceleration time, lateral G-forces etc.Diagnostic codes can be read and issues fixed faster by knowledgeable users. In the context of electro-mobility, Apps are indispensable. Apps help monitor charge levels, plan routes with charging schedule and act as a guide to charging stations.The ecosystem to support automotive apps is evolving rapidly. GM calls it Mylink, Ford calls it AppLink, Nissan offers Carwings for Leaf, almost all OEMs are creating platforms to explore the possibilities of automotive and smart phone integration. In every autoshow and Consumer Electronics event, new solutions with smart phone integration are showcased. Emerging open platforms allow independently developed apps to be launched. What remained as a closed space between OEMs and suppliers is opening up.The Apple model is getting replicated with business models and strong user communities. OEMs are seeing clear business benefits and brand value in establishing their own platforms to deploy Apps.Like any other emerging technology trend, there are challenges to battle. The idea of automotive apps is not to grant the pleasure of playing Angry Birds while driving. There is a definite risk of business models pushing pop-up ads which load the display. Till automatic driving becomes an everyday reality, driver distraction will remain a fundamental topic not to be ignored. Already there are concepts to disable certain distracting functions depending on driving conditions, these will get further strengthened.Looking in to the future, just replicating the screen from a mobile device on the in-car display would not be enough value. More and more automotive functions would get tightly coupled to smart devices. Enough has been done to bring the internet in to the car and now the effort is on to take the car on to the internet, on to the cloud. Automotive apps could continue to lead the innovation wave, connecting cars and its users.(The author is Sri Krishnan, Vice President, Robert Bosch Engineering and Business Solutions Limited)
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State-run gas utility GAIL India is in talks to buy a stake in the Tanzanian assets of British oil explorer Ophir Energy Plc, the Indian company's marketing head said.Ophir had offered to sell a 40 per cent stake in the Tanzania gas field, half of which has already been sold, said Prabhat Singh."There are various options. We are negotiating with them," Singh told reporters, without elaborating how much stake GAIL plans to buy.(Reuters)
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The rupee is weaker at 62.375/385 compared with previous close of 62.315/325 on global dollar strength after strong US ISM data.Dealer says sharp fall in the September-quarter current account deficit, though on expected lines, is positive for the rupee.The pair continuing to have strong technical support at 61.9.Power Grid Corp of India follow-on share sale opens for subscription, plans to raise Rs 7083 crore.Foreign funds were buyers of $127.05 million in Indian equities on 2 December, provisional data showed.Asian currencies are mostly trading weak.The yen remained on the backfoot early in Asia on 3 December, having succumbed to further selling pressure on prospects of more stimulus from the Bank of Japan.(Reuters)
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Belying hopes raised by a higher-than-expected GDP growth in the July-September period and expectations of manufacturing growth as PMI figures rose to the highest since March, output of eight core sector industries contracted by 0.6 per cent in October due to poor showing by coal, oil and gas sectors.The decline in output of eight core sector industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity — was especially disappointing as it followed a robust 8 per cent growth in September.According to the data released by the government on Monday (2 December), the output of eight infrastructure industries in April-October was a mere 2.6 per cent against 6.8 per cent in the same period of the last fiscal.The eight core industries have a combined weight of about 38 per cent in the Index for Industrial Production (IIP).The October IIP numbers will be released in the second week of December. Commenting on the data, Crisil's Chief Economist D K Joshi said the performance of the core sector is likely to remain subdued in the coming months as well.Natural gas output contracted by 13.6 per cent in October year-on-year.Coal production declined by 3.9 per cent.Crude oil output was also poor with 0.8 per cent fall in the month under review.Petroleum refinery production declined by 4.8 per cent.Read Also: Manufacturing Returns To Growth In NovAmong those which put up good performance, fertiliser output registered a growth of 4.1 per cent and steel production grew at 3.5 per cent.Cement and power generation sectors posted marginal growth of over 1 per cent each in the month under review. PMI GrowsIndian manufacturing returned to growth last month as a strong rise in orders pushed factories to step up production, a business survey showed on Monday, suggesting a slow economic recovery is on its way.After sluggish growth of the first quarter, the economy had grown at a higher-than-expected 4.8 per cent in the three months through September, helped by an uptick in farm, manufacturing, construction and services sectors.An expansion in manufacturing can only boost optimism after data on Friday showed Asia's third-largest economy grew at a higher-than-expected rate in the three months through September.The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6.The PMI index is the highest since March and marks its first time above the watershed level of 50 that divides growth from contraction in four months."Manufacturing activity picked up, led by a rise in new domestic orders, which helped pull up output growth," said Leif Eskesen, chief economist for India at survey sponsor HSBC.
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The rupee is trading higher at 62.31/33 from its previous close of 62.44/45 on marginally stronger-than-expected September quarter GDP numbers and stronger Asian FX.Asian currencies are mostly trading firmer.An expansion in farm output and some infrastructure helped India's economy recover slightly in the September quarter, but growth still hovered close to decade lows, tempering hopes of a sustained rebound ahead of elections due next year.RBI's special FX swap windows, which have garnered over $25 billion, closed on November 30, which will remove a key support for the rupee.Foreign funds were buyers of $119.22 million in Indian equities on 29 November, provisional data showed.(Reuters)
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