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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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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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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The sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in the current account deficit.Fitch Ratings says in a report published today that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point.The economy has not lost much momentum, with both agriculture and exports remaining resilient and providing a cushion. Fitch therefore expects the economy to recover with real GDP forecast to rise 4.8 per cent and 5.8 per cent in FY14 (financial year ending March 2014) and FY15, respectively, compared with a 5.0 per cent rise in FY13.The modest economic recovery, however, will continue to undermine India's banking sector, which is facing a combination of weakening asset quality, eroding profit and declining capital. Nonetheless, these factors are likely to have only a moderate effect on the banking sector's ability to supply credit to the economy.Inflation has risen only moderately, despite higher import prices stemming from the weaker rupee. The Reserve Bank of India (RBI) has also signalled that it has started to place a greater focus on capping CPI.The current account deficit is narrowing, following measures to curb gold imports, a weaker exchange rate, and softer domestic demand. Fitch forecasts the current account deficit to decline to 3.1 per cent of GDP in FY14 (versus 4.8 per cent in FY13). This fall, however, will not be enough to shield India from further pressures related to the eventual start of Fed tapering.India's budget remains under pressure as the central government's (CG) fiscal deficit in the first six months of FY14 stood at 76 per cent of the full-year target. The authorities have indicated that they are still committed to lowering the fiscal deficit to 4.8 per cent of GDP (versus 4.9 per cent in FY13). To achieve this, the CG is likely to clamp down heavily on expenditures in 2H FY14.The ability to implement fiscal consolidation and continue with the overall economic adjustment process would support India's sovereign credit ratings. Fitch, however, acknowledges that the authorities' resolve to implement both tighter fiscal and monetary policies may be tested as the general election, which must be held by May 2014, approaches.(Reuters)
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The annual headline inflation is expected to moderate to near 5 per cent as there was reasonable price stability in some major commodities, the finance minister said on 19 November.P. Chidambaram made the comment in a lecture at the National University of Singapore.India's wholesale price index based headline inflation rose to an eight-month high in October at 7 percent, driven by costlier fuel and manufactured goods, raising the prospect of a fresh interest rate hike.Chidambaram also said the fiscal deficit target of 4.8 per cent of gross domestic product in 2012/13 would not be breached under any circumstances, even as many private economists say the deficit could cross the 5 per cent mark. (Reuters)
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Federal Reserve Chairman Ben Bernanke, in his first public comments on personal plans after he steps down from the Fed in January, said on Tuesday (19 Nov) he will be "writing and speaking" on topics that have consumed his tenure at the US central bank."Before I became a policymaker I was an academic, and I worked on a lot of issues which are related to the things I have been doing for the last 11 or so years, such as the role of financial markets and financial stability in the economy," he told the National Economics Club after delivering a speech."I look forward to writing and speaking and having a little more time to contemplate some interesting issues," he said.President Barack Obama has nominated Fed Vice Chair Janet Yellen to replace Bernanke when his terms ends on 31 January. (Reuters)
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The Supreme Court on Tuesday (19 November) asked the unauthorised flats owners at the Campa Cola Society in Mumbai to vacate the premises by May 31, 2014 as no specific proposal could be worked out to provide them space in the compound for new construction.The apex court passed the order as Attorney General G E Vahanvati said, "after considering all aspects we are not in a position to work out any specific proposal".A Bench headed by justice G S Singhvi, which on November 13 had stayed the demolition of the unauthorised flats by taking cognizance of media reports, said it had taken the humanitarian ground into consideration to extend the date of demolition from November 11, 2013 to May 31, 2014 as the Attorney General had sought time to come out with a specific proposal for permanent solution.Read Also: Uncomfortable Questions"Having considered the matter in entirety, we deem it fit to extend the period till May 31 by which the occupants must vacate. This is subject to the undertaking to be given by occupants within six weeks," the bench said.It said "if no undertaking is given, the municipal corporation will be entitled to take action in accordance with the order of February 27".The court on February 27 had ordered the Brihanmumbai Municipal Corporation to demolish the illegally constructed flats and on October 1 refused to re-consider its earlier order and had set November 11 deadline to vacate 102 flats which were declared as illegal.However, on November 13, hours after over 100 agitated families clashed with the police while the civic squad was bulldozing its way into the premises, the apex court had stayed the demolition till further order,saying it was "badly disturbed by the development that is taking place at Campa Cola premises in Mumbai." In a ray of hope for the occupants of the unauthorised flats, the bench had taken note of the submission of the Attorney General that there was a need for permanent solution and he will come out with some specific proposal.Vahanvati had said unauthorised construction has to go but the flat owners should be given opportunity to build up building available in the campus without affecting the apex court order.He had said since there is space in the compound, the residents should be allowed to get approval of the building plan as originally it was planned to have nine towers and the builders came out with seven by accomodating all buyers in them.Seven high-rise buildings of Campa Cola Housing society were constructed between 1981 and 1989. The builders had permission for only six floors. One of the compound buildings, Midtown, has 20 floors and another building, Orchid, has got 17 floors.(PTI)
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