US Federal Reserve chairman Ben Bernanke said the Fed would maintain an ultra-easy US monetary policy for as long as needed and would only begin to taper bond buying once it was assured that labour market improvements would continue. Bernanke also said that while the economy had made significant progress, it was still far from where officials wanted it to be. Agreeing with his successor Janet Yellen’s testimony, Bernanke said, “The surest path to a more normal approach to monetary policy is to do all we can today to promote a more robust recovery.” The Fed has held interest rates near zero since late 2008 and quadrupled its balance sheet to $3.9 trillion through bond buying.AtonementJPMorgan finally agreed to a $13-billion settlement with the US government on charges that the bank overstated the quality of mortgages it was selling to investors in the run-up to the financial crisis. The justice department trumpeted its settlement as a big step towards holding banks accountable for their behaviour before the financial crisis. The misdeeds that the largest US bank admitted to, authorities said, are at the heart of what inflated the housing bubble: lenders making bad mortgages and selling them to investors who thought they were relatively safe.Building UpYahoo said it had increased its share repurchase authorisation by $5 billion and that it planned to offer $1 billion in convertible notes. Yahoo has aggressively repurchased its common stock in recent quarters, using cash obtained from selling a portion of its stake in Chinese e-commerce giant Alibaba. In the first nine months of 2013, Yahoo spent $3.1 billion on share buybacks, which helped boost its scrip by around 74 per cent, even as the Web portal’s revenue growth has remained stagnant amid competition from Facebook, Google and Twitter.Emerging WorrySlowing emerging markets are a drag on the world’s economic recovery and advanced countries are struggling to pick up the slack after years of debt crises, the Organisation for Economic Cooperation and Development (OECD) said, trimming its global growth forecast. In its latest snapshot of economic activity, OECD forecast that the world economy would grow 3.6 per cent next year. Though an improvement from the 2.7 per cent expected for 2013, it was not as fast as the 4 per cent estimated for 2014 in its last twice-yearly Economic Outlook in May. The primary reason cited was the downgrade in growth in the emerging countries, hit by capital outflows triggered by the US Fed’s plans to rein in its exceptional monetary stimulus, and the inability of the advanced economies to make up for it.Handle With CareThere is no risk of deflation visible in the euro zone economy but its recovery is fragile with inflation low and credit subdued, said a European Central Bank (ECB) board member during a presentation in Frankfurt. The ECB cut interest rates to a record low in November and said it could take them lower still to prevent the euro zone’s recovery from stalling after inflation tumbled to 0.7 per cent — well below its target of just under 2 per cent. The member, Peter Praet, said inflation in the euro zone is low but inflation expectations solidly anchored. A cyclical upswing in the euro area “is confirmed... Things are improving, but it is still a fragile environment”, he added.Good NewsA surge in car shipments spurred Japanese exports to their biggest annual increase in three years in October, suggesting that a gradual pick-up in global demand will help underwrite a recovery in the world’s third largest economy. The 18.6 per cent increase in exports in the year till October was an acceleration from the 11.5 per cent gain till September, according to finance ministry data. Recovering demand for Japanese goods would also help address another concern — persistent red ink in the trade balance.Clean-Up ActChina will steer local governments away from the pursuit of economic growth at all costs and beef up their powers to punish polluters in order to reverse the damage done by three decades of unchecked expansion. In its recent wide-ranging economic and social reforms, the ruling party said it would put more emphasis on environmental protection, and also hold local authorities responsible for pollution. It also pledged to relax its ‘one-child’ policy.Free Float? With a shift in tone and language, China’s central bank governor has dangled the prospect of speeding up currency reform and giving markets more room to set the yuan’s exchange rate as he underlines broader plans for sweeping economic change. The People’s Bank of China under Zhou Xiaochuan has consistently flagged its intention to liberalise financial markets and allow the yuan to trade more freely, even before the Communist Party’s top brass recently unveiled the boldest set of economic and social reforms in nearly three decades.Smart MarketingSamsung Electronics said its Galaxy Gear has become the world’s most popular smartwatch with sales touching 800,000 units since its debut two months ago, defying market concerns that the accessory will fail due to a lack of compelling features. The South Korean firm said Gear sales have been better than its own expectations and it will expand promotions for the wearable device for the crucial year-end holiday sales. Samsung intends to step up Gear sales by expanding the number of mobile devices that work with it.(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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In the July-September quarter, dubbed by many as the most difficult, currency tailwinds helped exporters while austerity measures came to the rescue of many firmsClick here to view graphicCompiled by Shailesh Menon Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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I think it would also, in many ways, impoverish the European Union”Nick Clegg, deputy prime minister of the UK, on the consequences of the UK leaving the EU“I drank too much, I smoked some crack some time. What can I say? I made a mistake, I’m human”Rob Ford, mayor of Toronto, in a television interview“First, they try to block you; second, they try to infiltrate you; and third, you win. I really think that’s how it works. Because the power has shifted”Eric Schmidt, executive chairman, Google, on Internet censorship, in a lecture at Johns Hopkins University“A tea-seller is a better person than those who sell the country”Narendra Modi, responding to a Samajwadi Party politician who derided him over his past as a tea vendor“I don’t trust them and they don’t trust me”Hamid Karzai, President of Afghanistan, at a political meet, referring to the US Steve Ballmer (Bloomberg)“Thank you for helping try to find me work”Steve Ballmer, the outgoing CEO of Microsoft, to a shareholder who asked him if he would want to become the secretary of information technology“China is doing exascale and petascale computing. I am fighting with the government to invest money in computing”C.N.R. Rao, Bharat Ratna awardee and eminent scientist(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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Oil prices hit the skids on 25 November after Iran and six world powers sealed a deal curbing its nuclear programme, a fillip for global economic growth that found expression in heartier share prices from Tokyo to Seoul.The agreement gives Iran some relief from crippling sanctions and is considered a big step toward a more lasting treaty. While Iran will not be allowed to increase its oil sales for six months, any easing of Middle East tensions tends to lead to lower crude prices.Brent crude oil shed $2.47 to $108.58 a barrel, its biggest daily drop in a month. US oil lost 88 cents to $93.96 a barrel.If sustained, the drop would be a net plus for spending power globally given high petrol prices essentially act like a tax on consumers."Positive growth signals continue to trickle out across the global economy and there is growth convergence between developed and developing economies," said Peter Dragicevich, a strategist at CBA."Our world GDP "nowcasting" estimate points to accelerating global economic growth in the final months of 2013. This is the general trend we expect to occur in early 2014."Attention in Asia was again on Japanese markets as a sliding yen promises to boost exports and profits. The Nikkei sped ahead by 1.3 per cent, having gained almost 11 per cent in little more than two weeks.On Wall Street, the Dow ended Friday with gains of 0.3 per cent, while the S&P 500 added 0.5 per cent for its first ever close above 1,800. Early Monday, S&P 500 futures had added another 0.3 per cent.But with money flooding into developed world assets, emerging markets are getting cold-shouldered. It was notable that MSCI's broadest index of Asia-Pacific shares outside Japan failed to make any headway at all last week, even as Wall Street made new peaks.So far on Monday, the index was up 0.4 per cent, as Seoul shares led the way with an increase of 0.7 percent.Yen Pain Is Euro's GainIn currency markets, the yen remained under pressure as investors use it for carry trades - borrowing the currency at super-low rates to invest in higher-yielding assets elsewhere.The dollar was up at 101.78 yen having cracked the old July top of 101.53. Much of the action was in the euro against the yen, which has had a barnstorming run to reach four-year highs above 137.80 yen.Euro-yen bulls now have their eyes set on a series of peaks from 2009 ranging from 137.43 all the way to 139.18, the top for that year. A break of the 139.18 level would take the euro to territory not visited since October 2008 -- very bullish from a technical point of view.Oddly, the gains have come even as the European Central Bank sounds ever-more dovish on policy.Earlier on Monday, ECB Executive Board member Benoit Coeure reiterated the central bank would take further action should inflation slow further. The single currency was been particularly strong against the Australian dollar, which has been undone by threats of intervention from the Reserve Bank of Australia.The euro leaped almost four full cents last week as the Australian currency crumpled to a three-month trough.Traders said the commodity currency could continue to struggle particularly if tensions between China and Japan grew.China at the weekend suddenly imposed new rules on airspace over islands at the heart of a territorial dispute with Tokyo, prompting Japan and ally the United States to warn of an escalation into the "unexpected".There is no major economic data due in Asia on Monday, while most of the U.S. economic releases will be front-loaded this week ahead of the Thanksgiving holiday on Thursday.The US diary includes figures on housing starts and prices, consumer confidence, durable goods orders and manufacturing in the Chicago area.(Reuters)
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The rupee is trading at 62.55/56 versus its close of 62.87/88, on gains in the domestic sharemarket.Traders, however, expect further USD/INR losses to be limited on the back of month-end dollar demand from oil firms.The pair is expected to move in a 62.20-62.80 range during the session, two dealers say.The BSE Sensex is trading up 1.4 per cent.(Reuters)
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Negotiations between the Department of Atomic Energy (DAE) and French company Areva over the Jaitapur Nuclear Power Plant (JNPP) in Maharashtra have hit a hurdle as DAE has questioned the capacity of reactors to generate electricity and its high cost.The bone of contention between the two is the generation of electricity by the EPR reactor, which Areva is planning to give to Nuclear Power Corporation of India Ltd (NPCIL).DAE sources pointed out that the department has raised objections because the "reference plant", which was agreed upon between DAE and Areva, was a plant that generated 1430 MW of electricity, but it says, Areva now wants a plant with enhanced power generation capacity.A reference plant is a nuclear power plant project that has already been tested, commissioned and which has commercially started generating power.According to a top DAE official, the reference plant for building reactors was one at Flamanville nuclear plant in France, which Areva mentioned with a capacity of 1430 MW. But it has now asked the DAE to enhance the power generation capacity to 1600-1700 MW. The DAE has raised an objection to this, the official said."The problem here is Areva is asking us to enhance the power generation capacity. The reference plant mentioned by Areva has not generated electricity between 1600 MW and 1700 MW with this technology. The EPR technology is first of its kind. More importantly, if the technology has been enhanced, even then the reference plant cannot be changed," the official said. The Atomic Energy Regulatory Board (AREB), whose nod at various stages of building a nuclear plant is mandatory, too has raised concerns about it."Areva has said that it will get an enhancement certificate for the plant from French Nuclear Regulatory Body, but we have doubts about this," he said.According to Areva's website, it is building EPR reactors for nuclear plants in Finland, United Kingdom, China and France.Of these, Olkiluoto 3 in Finland is a 1600 MW project, while two reactors for the Taishan plant in China are of 1660 MW each. The Hinckley Point plant project in United Kingdom has two EPR reactors of 1600 MW each and the Flamanville 3 nuclear plant is 1630 MW.A well placed source in Areva, who refused to be quoted, however, denied it."Flamanville 3 has been a reference plant for the Jaitapur project. From the very beginning of the discussions regarding Jaitapur, Areva proposed its EPR design, which is a 1600 MW plant," the source said.Another factor is the issue of the price per unit.Sources said that the price per unit for the JNPP comes to more than Rs 9 in 2021, which, according to the DAE is very high. The initial capital cost for the project per MW is between Rs 27-30 crore.The cost per unit for the Kudankulam Nuclear Power Plant Project (KKNPP) unit I and II is between Rs 3.50 and Rs 4. The cost for the KKNPP III and IV is also under negotiation."Even if we take inflation into account, this rate is too high. We have conveyed that the maximum cost can be Rs 6 per unit," the official said.He also pointed out that both the sides are negotiating hard, but India has made it very clear that it wont accept this high cost for producing energy."We have made it clear that unless the cost comes down, we would not be able to go ahead. Senior French government officials have assured us that they will look into the matter, so that the cost comes down," the official said.PTI made calls and also emailed a questionnaire to seek response from Areva, but did not receive any response.The JNPP project in five villages- Madban, Karel, Mithgawane, Varilwada and Neveli villages- in coastal district of Ratnagiri in Maharashtra, some 350 kms south of Mumbai, is to have six nuclear reactors with the capacity of 1650 MW each with French cooperation.On ground zero, despite the agreement of few groups to the project, the opposition still exists.According to Pravin Khade, the sub-divisional officer of Rajapur tehsil/ taluka (where the site falls), there are some 2336 Project Affected People (PAPs), of which 1311 PAPs have accepted compensation of Rs 11.20 crore and Rs 3.57 crore is yet to be accepted.As per the new compensation package announced by the Maharashtra government in February 2013, Rs 155.61 crore have been disbursed to 1240 people, while the remaining Rs 55.44 crore is yet to be accepted by people.After the plant is fully commissioned, Maharashtra will be the highest nuclear power producing state with it producing over 11,000 MW of electricity (if combined the JNPP and Tarapur Atomic Power Plant, north of Mumbai), the highest in the country.(PTI)
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Stocks in Cairn India surged as much as 5 per cent after the oil explorer said its board would meet on 19 November to consider a proposal to buy back shares.Shares also gained as Brent crude jumped $2 to end at its highest in more than a month on 21 November, fuelled by a sharp run-up in gasoline and gas oil prices on news of dwindling stocks and refinery glitches in the United States and Europe.Higher crude oil prices help increase realisations at oil exploration firms such as Cairn India, which sells crude in dollars. The rupee also weakened, heading for a third consecutive session of falls against the dollar. (Reuters)
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The rupee is at 63.02/63.04 versus its close of 62.93/94, after foreign institutional investors (FIIs) sold a net Rs 598 million in shares on 21 November to snap a 32-day buying streak that totalled Rs 238.84 billion as per exchange and regulatory data.Traders say continued weakness could spark intervention from the central bank.Rallies in US and Japan stock markets are also sparking talk of a shift by global investors to developed markets, with emerging countries with current account deficits such as India seen as vulnerable to future Fed tapering.USD/INR gains also reflecting demand from state-run oil companies, traders say.Still, the Nifty gains 0.5 per cent, recovering from its biggest single-day percentage fall in nearly two months on Thursday, putting a lid on USD/INR gains.The rupee is seen in a range of 62.70/63.30 for the session, traders said.(Reuters)
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India's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering, says Fitch Ratings. However, Fitch adds the spillover effects of the Indian rupee's weakness have not significantly hurt India's credit worthiness and will therefore not trigger any ratings action at this point. "(India's ratings) already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions," Fitch said. Fitch adds India's economy has "not lost much momentum" on the back of "resilient" agriculture and exports, predicts economic growth of 4.8 per cent in 2013/14 and 5.8 per cent in 2014/15. Fitch also notes India's fiscal deficit remains under pressure, especially ahead of the general elections due next year, but says the government is likely to clam down heavily on spending. Fitch rates India at "BBB-minus", the lowest investment grade rating. It revised its outlook for the country to "stable" from "negative" in June. (Reuters)
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State oil group Petrovietnam and the overseas unit of state explorer Oil and Natural Gas Corp have signed a memorandum on joint exploration of crude oil, the Vietnam News Agency reported on Thursday.The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.Vietnam's Industry and Trade Ministry also signed a memorandum with Tata Power Company Ltd on the construction of a $1.8 billion thermal power plant in Vietnam's southern province of Soc Trang, the agency said.The pacts were signed on 20 November during a visit to India by Vietnam's Communist Party General Secretary Nguyen Phu Trong, the report said.(Reuters)
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