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Swiss cement maker Holcim said on Wednesday, 24 July it would increase its stake in Ambuja Cements Ltd as part of a restructuring of its operations in India.Holcim will increase its shareholding in Ambuja to 61.39 per cent from its current stake of just over 50 per cent, the Zurich-based firm said in a statement.Ambuja will in turn acquire Holcim's 50.01 per cent stake in ACC Ltd. Both Ambuja and ACC will continue to operate as separate entities."The transaction is expected to be neutral on Holcim's earnings per share in the first full year following the completion of the transaction and accretive thereafter", said Chief Executive Bernard Fontana.(Reuters)
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The rupee posted its biggest single-day gain in nearly a month on 24 July' 2013 as the Reserve Bank of India's renewed efforts to shore up the currency by tightening cash conditions began to yield results. The RBI took new steps on 23 July' 2013 to support the rupee, including making it even harder for lenders to access funds with measures such as lowering the amount banks can borrow under its daily liquidity window. The efforts signal the RBI will stay the course with its defence of the currency despite the risks to economic growth. "I think these measures will stay in place for at least three to four months. These are not temporary," said Param Sarma, chief executive at NSP Forex. "These steps will only eliminate volatility from the market but for real appreciation bias to set in we need real flows, which can come in through an overseas bond sale. The rupee will hold between 58.50-60 band as long as these measures stay,". The partially convertible rupee closed at 59.13/14 per dollar compared with 59.76/77 on Tuesday. It rose to as high as 59.0150, its strongest since July 1. The unit gained 1.1 percent on the day, its biggest single-day gain since June 28. Rates and equity markets, however, reacted negatively to the further tightening of liquidity with the benchmark 10-year bond yield rising to a 14-month high of 8.50 percent while the 1-year overnight swap rate rose to a near 5-year peak. Traders will continue to monitor any comments from policymakers for near-term direction. "Rupee is likely to strengthen further towards 58-57 levels in the coming days as the central bank's actions are giving some strength to the local currency," the head of foreign exchange trading at a private bank said. Expectations of further tightening of domestic rupee liquidity pushed up onshore forward rates. The one-year onshore forward premium rose as high as 518.75 points, its highest since August 1998. Traders said the spot rupee was also helped by some long unwinding seen in the offshore non-deliverable forwards. The one-month NDF contract was at 59.57 while the three-month was at 60.46. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 59.13 with a total traded volume of $3.3 billion.(Reuters)
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India's cash rate jumped to 10 per cent, bond yields surged and banking stocks tumbled on Wednesday after the RBI's intensified defence of the beleaguered rupee raised concerns about the cost to the economy if the attempted rescue failed.The Reserve Bank of India's strategy will be tested with a series of debt sales this week, starting with Wednesday's auction of $2 billion of treasury bills one week after it rejected yields demanded in the previous sale as too high.The sharp reaction in credit markets showed the tightrope the RBI is walking -- in trying to keep the rupee above a record low of 61.21 hit on July 8, it risks forcing up borrowing costs for companies as the economy grows at its slowest in a decade."The establishment has been telling the nation that the measure is only short term in nature and there is no change in the stance of the central bank on long-term interest rates. Believe it at your own peril," Jyotheesh Kumar, executive vice president of HDFC Securities, said in an email to clients.A week after it first announced measures to drain cash from the market and raised short-term rates sharply, the RBI on Tuesday (23 July) further cut the amount banks could borrow from it and also compelled them to meet reserve requirements daily.Markets are concerned about the collateral risks to the economy while long-term weights on the rupee such as a record current account deficit and stalled reforms remain unaddressed, and are worried more measures may be coming from the central bank.Yields SurgeThe benchmark 10-year bond yield hit a 14-month high of 8.50 per cent, up 33 basis points on the day and 95 basis points since the RBI's first round of measures on 15 July.The one-year overnight swap rate jumped to 9.30 per cent, its highest since September 2008 when the collapse of Lehman Brothers was roiling global markets. The overnight cash rate jumped to 10 per cent, its highest since March 28, from a close of 6.50/6.55 per cent.Banking shares, especially for those who are more dependant on short-term funding dropped. Yes Bank lost 6.6 per cent while non-bank financial companies fell, with Shriram Finance Transport Co down 3.2 per cent.In contrast, the rupee was little moved. It was at 59.42 per dollar, stronger than its 57.76/77 close on Tuesday but not too far from a 15 July close of 59.89/90.The RBI is due to sell Rs 12k crore in 91-day and 364-day treasury bills on Wednesday. Six of 15 traders polled by Reuters expected the auction to be scrapped again, while others thought buyers would only be interested at yields above 10 per cent. Results are expected after 1:30 p.m.That will be followed by auctions of 60 billion rupees in cash management bills on Thursday and 150 billion rupees in a government bond auction on Friday.A failure to significantly boost the rupee would raise concerns the RBI would take stronger action to create demand for the currency, such as raising banks' reserve requirements.It could also resort to an outright hike in the policy rate, analysts said, undoing the 1.25 percentage points in rate cuts since April 2012 to support a slowing economy. Its next policy review is on 30 July.The government is considering options of its own, including raising money from citizens abroad in a bid to reduce its record current account deficit, the key strain on the rupee.(Reuters)
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The rupee on Wednesday (24 June) gained 26 paise to 59.50 in early trade at the Interbank Foreign Exchange market on fresh dollar selling by exporters after the RBI announced additional measures to arrest the local currency's slide. Forex dealers said additional tightening measures announced by the RBI last night to contain excessive speculation and volatility in the foreign exchange market, supported the local currency.RBI has reduced the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.5 per cent, thus limiting the access to borrowed funds from the central bank. Read: Rupee Keeps Govt HangingIn another measure to suck out liquidity from the system, RBI has asked banks to maintain higher average CRR (cash reserve ratio) of 99 per cent of the requirement on daily basis as against earlier 70 per cent. CRR is portion of deposits that banks are required to keep with RBI.The rupee had lost four paise, to close at 59.76 against the dollar yesterday on sustained demand from importers and a rise in the US currency overseas.Sensex Down 76 Pts In Early Trade; Banks HitSnapping its five-day rally, the Bombay Stock Exchange (BSE) benchmark Sensex on fell nearly 76 points in early trade pulled down by financial sector stocks, including ICICI Bank and HDFC Bank, after the RBI announced additional liquidity tightening measures to check rupee slide.The 30-share barometer fell by 75.94 points, or 0.37 per cent, to 20,226.19 with banking, realty and consumer durables leading the fall. The index had gained over 451 points in the past five sessions. The wide-based National Stock Exchange index, Nifty shed 38.20 points, or 0.63 per cent to, 6,039.60.Brokers said fresh round of selling by participants after the RBI last night announced additional liquidity tightening measures to check rupee slide mainly dampened the trading sentiment.The BSE banking index suffered the most by falling 3.16 per cent to 12,424.40 points as stocks of SBI fell by 2.10 per cent to Rs 1,822, ICICI Bank by 2.97 per cent to Rs 960.40, HDFC Bank by 2.57 per cent to Rs 665.20 and Yes Bank by 4.44 per cent to Rs 419.25.In the Asian region, Hong Kong's Hang Seng index traded lower by 0.35 per cent, while Japan's Nikkei Index shed 0.58 per cent, in early trade.The US Dow Jones Industrial Average, however ended 0.14 per cent higher in yesterday's trade. PTI SUN(PTI)
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