Gold rallied 2 percent on Wednesday as the dollar retreated after a downbeat U.S. jobs report raised expectations that the Federal Reserve could be more cautious in tightening monetary policy. The dollar fell 0.2 percent against a basket of currencies, after weaker-than-expected ADP private jobs data raised concerns that Friday's impending jobs report could also point to worsening conditions in the labor market. "There is so much discord in the U.S. data that is difficult to find what exactly the next report is going to be. It's the uncertainty that pushes people towards safe-haven assets such as gold," ING Bank senior strategist Hamza Khan said. Spot gold rose 2.2 percent to a session high of $1,208.90 an ounce, and was trading up 1.8 percent at $1,204.90 at 2:12 p.m. EDT (1812 GMT). U.S. gold futures for June delivery settled up 2.1 percent at $1,208.20. A strong reading from the U.S. jobs data on Friday could boost bets the Federal Reserve will hike interest rates sooner rather than later, lifting the opportunity cost of holding non-yielding gold. However, a worse-than-expected report could support views that the Fed will hold off any rate hike until next year. Gold is particularly sensitive to shifts in U.S. interest rates, which also move the dollar, in which the metal is priced. "There's a lot of concern about the employment report that's coming out on Friday, that it might be worse than expected," said Phillip Streible, senior commodities broker at RJO Futures in Chicago. "Because of that, traders are positioning themselves with some safety ahead of the report." The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, in March recorded its biggest monthly outflow since December 2013. Buying interest in China, the world's second-largest gold consumer after India, has been relatively soft of late, but dealers reported some interest overnight after prices eased. "Following yesterday's sell off, China was back as a buyer today," MKS said in a note. "We saw gold add a few dollars in Tokyo before Shanghai took over and sent the yellow metal to a session high." Silver rose 1.9 percent to $16.93 an ounce, while platinum was up 2 percent at $1,161.60 an ounce and palladium climbed 1.9 percent to $746.50 an ounce. Silver saw the biggest gain among the precious metals in the last quarter, rising 6 percent, while palladium fell 7.6 percent. Platinum fell just over 5 percent. (Reuters)
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More than 250 companies, including Adani Power, Adani Ports, Essar Oil and GVK Power, on Tuesday appointed women directors to meet the Securities and Exchange Board of India (Sebi) deadline of midnight on March 31 for having at least one female member on their boards. The companies have, however, mostly appointed wives, daugthers or sisters of their promoters or top executives, while some have also replaced their independent directors with their female family members. The numbers can rise further as board meetings were scheduled till late in the night to comply with the norms, which were first announced in February 2014 with an initial deadline of October 1, 2014. It was extended by six months. About 200 companies had made such appointments on Monday amid a rush that began late last week after a stern warning from the regulator. The companies now without a woman director may face penal action under the Sebi regulations, as also under the Companies Act, including monetary fines. While Sebi norms provide for penalty of up to Rs 25 crore, the penalty under the Companies Act can be from Rs 5,000 to Rs 5 lakh. Compliance StatusSources said the stock exchanges were asked by Sebi to submit a compliance status tonight (March 31), while a final update would be provided tomorrow after taking into account late-night filings. Sebi will look into the final compliance status and begin the process for undertaking necessary action against the non-compliant companies. Similar action would be initiated by the Corporate Affairs Ministry for non-compliance to the Companies Act provisions. The companies are required to appoint women directors as per the new Corporate Governance regime ushered in by Sebi last year, which also included various measures with regard to independent directors and top management salaries to safeguard the interest of small investors. The new regime was applicable to all the listed firms earlier. Sebi later exempted smaller companies - those having equity share capital of up to Rs 10 crore and networth not exceeding Rs 25 crore, as also those listed on the SME platforms of the stock exchanges - from the mandatory compliance "for the time being". There are more than 5,000 companies listed on the BSE, while NSE has nearly 1,650 entities on its platform. Till early evening on Tuesday, nearly 200 NSE-listed companies were yet to comply, while the number could be higher at the BSE. However, nearly half the appointments made by the companies were of the persons from within the families of the promoters or top executives. The companies that have decided to appoint women directors as independent members of their boards seem to have preferred bankers and chartered accountants, shows an analysis of the announcements made by listed firms in last few days. A few companies, such as United Breweries Holdings Ltd, have opted for a foreign national to be appointed as a woman director, while many of them have decided to promote a senior management personnel to the board. To meet the deadline, many firms are appointing the same women executives to boards of their various group companies. Some companies have expressed their inability to meet the deadline, citing reasons ranging from a sudden exit of existing women directors to "lack of quorum" in their board meetings to make an appointment. Sebi Chairman U.K. Sinha recently said it was "really shameful" that many companies were not being able to appoint even one woman director. The companies which appointed women members on their boards as independent directors included Adani Power, Adani Ports and SEZ, Golden Tobacco, Prime Capital Market, Linc Pen and Plastics and Kohinoor Foods. Other companies that announced appointments of women directors today were GVK Power, Dhampure Specialty Sugars, Ashoka Buildcon, ABG Infralogistics, Surya Roshni Ltd, Bharati Shipyard, India Home Loan Ltd, Landmark Property, Donear Industries Ltd and Nitesh Estates. On Monday, at least 80 companies announced appointment of women directors as independent board members, while another 110 appointed non-independent female directors. (Agencies)
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The Federal Reserve is "widely expected" to begin raising interest rates this year though the policy path remains uncertain, the central bank's second-in-command said on Monday, appearing to lay the groundwork for a less predictable future. Fed Vice Chair Stanley Fischer said the stronger dollar and weak oil play a role in U.S. policymaking, but he stressed that the central bank is "trying to look through those phenomena." Much of his speech to the Economic Club of New York focussed on the period after rates rise from near zero, which Fischer said could be "June or September or some later date or some date in between." Afterward, he said, the Fed would tighten or even loosen on a meeting-by-meeting basis based on economic data and unexpected geo-political risks. Explicit policy promises, he said, would play less of a role. "Whatever the state of the economy, the federal funds rate will be set at each FOMC meeting," Fischer said of the policy-making Federal Open Market Committee. A smooth series of future rate rises "will almost certainly not be realized because, inevitably, the economy will encounter shocks," he added, stressing that the Fed would be considering moving its key policy rate "up and down" in the future. The Fed last week took another step in preparing the market for its first rate hike since 2006, but its dim economic forecast and dovish comments from Fed Chair Janet Yellen signalled that the central bank would not be prepared to move until later in the year. The news prompted many economists to shift their expectation of a tightening from June to September or later. "It is well expected that the rate will lift off before the end of this year," Fischer said. "We will be moving from an ultra expansionary monetary policy to an extremely expansionary monetary policy." His mostly upbeat remarks cited significant economic progress and a labour market nearing full employment. He did, however, say the rising dollar may offset some benefits of monetary accommodation. The dollar and weak oil are putting downward pressure on already low U.S. inflation, which is staying the Fed's hand at tightening. Fischer said both are "transitory," and stressed "further improvement" in the labour market was also needed to hike rates. Turning to the mechanics of tightening policy, Fischer said he expected the Fed's tools would be adequate, though some, such as its overnight reverse repurchase programme (ON RRPs), contained risks. "For example, a large and persistent programme could have unanticipated and adverse effects on the structure of money markets," Fischer said, explaining that in times of stress, flight to quality demand for the programme could disrupt money flows. (Reuters)
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President Barack Obama's administration is proposing that a new Chinese-led development bank over which Washington has voiced concerns work collaboratively with Western development groups like the World Bank, The Wall Street Journal reported on Sunday. The United States, worried about China's growing diplomatic clout, has been urging countries to think twice about joining the Asian Infrastructure Investment Bank, or AIIB, considered by some as a challenge to the World Bank and the Manila-based Asian Development Bank. Despite US misgivings, Britain said earlier this month it would join the AIIB. France, Germany and Italy quickly followed. Chinese Finance Minister Lou Jiwei said on Sunday that 27 countries had now signed up to participate in the new bank, a $50 billion fund set to begin operations at the end of the year providing project loans to developing countries. The Journal reported that the US Treasury undersecretary for international affairs, Nathan Sheets, said: “The US would welcome new multilateral institutions that strengthen the international financial architecture." He told the Journal that co-financing projects with existing institutions like the World Bank or the Asian Development Bank would help ensure the new bank complements rather than competes with existing institutions. The US Treasury Department had no immediate comment. World Bank President Jim Yong Kim said in a statement on Sunday that his institution was discussing with the AIIB "how we can closely work together. We have every intention of sharing knowledge and co-investing in projects throughout Asia.” The World Bank has welcomed the setting up of the Asian Infrastructure Investment Bank and promised full cooperation. "Any new initiative that will mobilise funding in order to fill infrastructure gap is certainly welcome," World Bank Managing Director Mulyani Indrawati said on Sunday. Indrawati dismissed worries that the AIIB will compete against World Bank or existing regional development banks, saying the global need of infrastructure is huge and the market is large enough. "What's important is whether you are going to be able to match the funding with the need of infrastructure," she told state-run Xinhua news agency. US allies Japan, Australia and South Korea are still absent from the AIIB's list of members. Leaders of the International Monetary Fund and the Asian Development Bank told a conference in Beijing on Sunday they were in talks with or happy to cooperate with the AIIB. (Agencies)
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The Reserve Bank of India has entered a $1.5 billion currency swap agreement with the central bank of Sri Lanka, Prime Minister Narendra Modi said on Friday after meeting Sri Lankan leader Maithripala Sirisena. Sri Lanka rupee has been under pressure since early January and fallen around 1.5 per cent so far this year despite the central bank defended it with selling dollars. "The Reserve Bank of India and the Central Bank of Sri Lanka have agreed to enter into a Currency Swap Agreement of $1.5 billion. This will help keep the Sri Lankan rupee stable," said Modi, who reached Colombo on the last leg of his three-nation tour that included Seychelles and Mauritius. At the current valuation, one Indian rupee is equivalent to 2.12 Sri Lankan Rupee. It has lost almost three per cent value in comparison to the Indian rupee so far in 2015. Modi is the first Indian Prime Minister to come to Sri Lanka on a standalone bilateral visit since 1987. Last month, Sirisena visited India on his first foreign trip as Sri Lankan president. Modi said that economic ties are "a key pillar of relationship between the two countries" and the bilateral trade has grown impressively over the past decade. "Economic ties are a key pillar of our relationship. The progress we have made reflects our shared commitment to stronger economic cooperation," he said. "I am aware of your concerns about trade with India. As I said in Delhi, we will try and address them," the prime minister said. The two sides signed four agreements on visa, customs, youth development and building Rabindranath Tagore memorial in Sri Lanka. The prime minister said his meeting with Sirisena has been very productive. It "gives me confidence and optimism about the future of our relations," Modi said. "The agreement today on cooperation between our customs authorities is a step in that direction. It will simplify trade and reduce non-tariff barriers on both sides," he said. "Our trade has seen impressive growth over the past decade. I am aware of your concerns about trade with India. As I said in Delhi, we will try and address them," he said. Trincomalee Petroleum HubModi said India stands ready to help Trincomalee become a petroleum hub and announced that New Delhi will provide a fresh Line of Credit of up to $318 million for the railways sector in Lanka. "This will be used to procure rolling stock, and to restore and upgrade existing railway track," he said. He lauded the efforts of Sirisena to improve relations with India and assured him of all help from Delhi. "We stand with you in your efforts to build a future that accommodates the aspirations of all sections of society, including the Sri Lankan Tamil community, for a life of equality, justice, peace and dignity in a united Sri Lanka." (Agencies)
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Britain said it has sought to become a founding member of the Asian Infrastructure Investment Bank (AIIB), making it the first Western nation to embrace the China-backed institution, but the United States reacted frostily to the development. The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure. Analysts have said it could challenge the Western-dominated World Bank and Asian Development Bank. However, Britain's finance ministry said on Thursday that the AIIB could complement work already done in the region by those organizations. Britain would meet other founding members this month to agree on the principles of the bank's governance and accountability arrangements, the ministry said. Finance minister George Osborne said joining the bank would boost the country's push to foster business and investment ties with countries in the region, chief among them China. "Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together," he said in a statement. Britain's announcement was not welcomed in Washington. A spokesman for the White House National Security Council said the United States had concerns about whether the AIIB would have sufficiently high standards on governance and environmental and social safeguards. "It is important to note that countries that become prospective members of the AIIB will be responsible for the standards adopted in the articles of agreement and their implementation," the spokesman said. "This is the UK’s sovereign decision. We hope and expect that the UK will use its voice to push for adoption of high standards," he said. China's Ministry of Finance said it welcomed Britain's decision, and would consult with the AIIB's existing founding members on its proposed entry. "If all goes well, the UK will become a founding member of the AIIB by the end of March," it said in a statement on its website. The articles of agreement of the AIIB, which will include its shareholding and lending strategy, will not be finalised until the end of 2015, Chinese officials have said. Twenty one countries were represented at the announcement of the bank in October - Bangladesh, Brunei, Cambodia, China, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam. Indonesia later said it would join, but Japan, Australia and South Korea, the other notable absentees in the region, have not yet announced any decision. Japan, China's main regional rival, has the highest shareholding in the Asian Development Bank along with the United States, while Australian media said Washington put pressure on Canberra to stay out. Vice Finance Minister Joo Hyung-hwan told reporters on Thursday that South Korea was still in discussions with China and other countries about its possible participation. Sources in the finance ministry said South Korea is undecided because its concerns about governance and operational transparency had not been addressed. One source, who has direct knowledge of the discussions, said one of the concerns for South Korea was that the country would not be given sufficient representation in the bank. "China is reported to be holding 50 percent," the source said. "And if that's the case, there's a likelihood that Korea will end up being a minor member." (Reuters)
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Measure Monetising Gold The government has introduced a gold monetisation scheme that will allow investors in gold deposit schemes and gold loan schemes to earn interest. The government is also trying to structure a sovereign gold bond that could act as an alternative to physical gold
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Reserve Bank of India (RBI) Governor Raghuram Rajan Wednesday said "sorry" for a "misleading" comment that he never made with regard to the central bank's stance on interest rates. Addressing students of Guru Nanak College here on Monday, Rajan had said India is witnessing an "avalanche" of capital flows as central banks around the world are reducing interest rates to very low levels but the RBI is unable to cut interest rates very quickly to the bone due to "high" inflation in India. He was speaking at an off-media event, but his comments found their way to the news reports and were construed by some analysts as an indication that RBI was not going to cut rates. After RBI surprised with a cut in the interest rate this morning, Rajan was asked during an analyst conference call on Wednesday about "sudden change in his stance as one day ago he was quoted by the media as saying that RBI is unable to cut interest rates very quickly due to high inflation. To this he replied with a "sorry", while quickly adding that he was quoted "out of context" and he did not "mislead" the markets while speaking to students at a "closed-doors" event about inflation and interest rates in general. Earlier on Monday, Rajan had said that many central banks around the world were printing money and reducing interest rates to very low levels to deal with the global financial crisis. With countries like India offering high interest rates, significant foreign inflows have been witnessed in debt, he had said. (PTI)
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