Indian rupee hits record low in biggest fall in 18 years

[CityFarmer]

India is worse than Indonesia in the battle of currency...

Indian rupee hits record low in biggest fall in 18 years

MUMBAI/NEW DELHI – The Indian rupee hit a record low and posted its biggest percentage fall in 18 years on Tuesday after parliament’s approval of a US$20 billion (S$25.7 billion) plan to provide cheap grain to the poor renewed doubts about government resolve to control spending ahead of elections due next year.

The alarm over India’s fiscal deficit eclipsed an announcement by Finance Minister P. Chidambaram that the government had approved infrastructure projects worth 1.83 trillion rupees (S$35.5 billion), a step aimed at reviving economic growth and shoring up investor confidence.

Instead, the rupee plumbed new depths while shares plunged after Mr Chidambaram spoke as his promise that the government will meet its fiscal deficit target failed to turn sentiment.

“I have already said that 4.8 per cent of GDP and the absolute number that was indicated in the budget is a red line. The red line will not be breached,” Mr Chidambaram told a news conference. “I think we’ll simply have to be patient, be firm, do whatever is required to be done, and the rupee will find its appropriate level.”

Traders said the currency market was working in a climate of fear as repeated efforts by authorities to turn the markets around failed to have a holding impact.

The rupee has lost 17 per cent against the dollar so far this year - making it the worst performer by far among Asian emerging market currencies tracked by Reuters - despite frantic attempts by the government and central bank to support it and repeated comments by the finance minister that the rupee is oversold.

The partially convertible rupee slumped to a record low of 66.30 to the dollar, despite central bank intervention to ease the pace of the decline, surpassing its previous all-time low of 65.56 hit last Thursday.

The currency fell 2.9 per cent on the day to close at 66.24/25, its biggest single-day percentage fall since October 1995 according to Thomson Reuters data and its biggest fall ever in absolute terms.

Shares also slumped, sending the benchmark BSE index down more than 3 per cent.

http://www.todayonline.com/business/indi...l-18-years

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Further action after the falling of rupee...

India approves S$35.5b worth of projects to revive economic growth

NEW DELHI — The Indian government said yesterday it had approved a raft of infrastructure projects worth 1.83 trillion rupees (S$35.5 billion) to revive economic growth and restore investor confidence.

“The message that we are sending is that the investment cycle has restarted, and we are pushing it. It is gathering pace,” Finance Minister P Chidambaram told a news conference to announce the kick-start for 36 stalled projects in sectors from oil, gas and power to roads and railways. He said a Cabinet panel had cleared 18 power projects worth 830 billion rupees.

The news came yesterday when the partially convertible rupee slumped to a record low of 66.30 to the dollar, surpassing its previous all-time low of 65.56 hit last Thursday. The currency fell 2.9 per cent on the day to close at 66.24/25, its biggest single-day percentage fall since October 1995, according to Thomson Reuters data, and its biggest fall ever in absolute terms.

Dealers said the currency was partly depressed by concerns over the approval of a plan to provide cheap grain to the poor at a cost of nearly US$20 billion (S$25.7 billion). The landmark food security Bill, which was approved by the Lower House of Parliament on Monday night, proposes to reach more than 800 million people across India.

http://www.todayonline.com/chinaindia/in...mic-growth

[AlphaQuant]

1m USDINR NDFs > 70 now.

http://www.zerohedge.com/news/2013-08-28...nies-every

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The aftermath of the biggest crash in the Indian rupee in history is becoming clear: business are scrambling to refine budgets, import and export activity is disappearing as there is zero clarity what the actual transaction prices net of FX are, purchases of hard assets are exploding as people are desperate to protect what little purchasing power they have left, capital controls are being instituted virtually everywhere, and the overall economy - at least that part that is reliant on foreign trade flows - is grinding to a halt. In fact, it got so bad, that moments ago the 1 month USDINR forward hit a ridiculous 70.



However, what is scariest is that so far the Indian Central Bank, the RBI has failed to reassure markets that it has anything up its sleeve. At least until moments ago, when the RBI finally announced its first band aid solution in the form of this: "RBI introduces Forex Swap Window for Public Sector Oil Marketing Companies"

On the basis of assessment of current market conditions, Reserve Bank of India has decided to open a forex swap window to meet the entire daily dollar requirements of three public sector oil marketing companies (Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp). Under the swap facility, Reserve Bank will undertake sell/buy USD-INR forex swaps for fixed tenor with the oil marketing companies through a designated bank. The swap facility gets operationalized with immediate effect and will remain in place until further notice.
Translation: instead of doing a shotgun liquidity injection targeting everyone (ala Fed, ECB, BOE and BOJ), and be sure the USD shortage is everywhere not just at these three oil companies - the RBI will instead proceed with surgical USD liquidity injections based on its perceived importance of the dollar recipients. In this case, the companies most exposed to the vagaries of the petrodollar system, because last we checked a barrel of Brent can be bought only for USD, not for INR.

However, what is more troubling is that while the RBI may have just bailed out its critical oil industry, if only for a few days or weeks, it means everyone else is left hung out to dry and the exodus of all INR positions into USD will only accelerate to a point where the USDINR may surge well over 70 when it reopens for trading, leading to an ever deteriorating currency collapse toxic loop (and one which most likely will inevitably result with the RBI leasing out its several hundreds tons of gold to those in greater need for physical).

Which also means that the only winners are those who bought gold, or rather smuggled it thanks to numerous capital controls, as only their purchasing power has been preserved: gold in rupee terms is at an all time high.



For everyone else: please keep reading Krugman.

[CityFarmer]

India's growth never able to catch-up with China, even China's growth is at lower gear now. Elephant will never move faster than dragon...

India’s growth sinks to four-year low

NEW DELHI — India’s economy expanded at the weakest pace since 2009 last quarter, increasing worries for the authorities who are already struggling to stabilise a crashing currency.

Gross domestic product rose 4.4 per cent in the three months through June from a year earlier, compared with 4.8 per cent in the prior quarter, the Statistics Ministry said yesterday.

The expansion is the weakest since the global financial crisis and a far cry from ambitions for growth of 8 to 9 per cent.

The country is saddled with hefty fiscal and current account deficits, and the rupee has fallen in recent weeks to successive record lows.

The latest data will add to the political and economic challenges Prime Minister Manmohan Singh’s government is facing with elections just a few months away.

http://www.todayonline.com/business/indi...r-year-low

[specuvestor]

China grew because the political leaders pulled up their socks. Indians are more resourceful and found a way out because they grew IN SPITE of their political leaders.

If I am the PBoC I would hire Indians to analyse the loopholes while I internationalise the RMB. The indians have been finding loopholes and developed parallel economies, underground networks in their controlled currency environment for decades

[sgd]

If they get their act together and that's a very very big if.

My ex-colleague tells me there's so many obstacles in the way of that, india is 1 big political racial castse and class divide. India have few thousand ethnic groups he says every group has some politics going on with somebody, from the province level all the way down to the kampung level like rojak on steroids. Their racial tensions are so deep he says mobs of christians hindu and muslims often raid and whack each other all the time have been doing this I think for long long time.

Even the mnc company that I work in who hire Indian nationals to come here to work, we locals think maybe they from same kampung they kaki kaki together against us - WRONG OK! they won't even call and talk to each other and often somebody have to relay between both parties, they bring their india country politics and practice it here in sg.

[specuvestor]

I don't disagree with sgd. Indian culture with their very apparent caste system and religious beliefs inbuilt into their paradigm is even evident in the Indian immigrants here in Singapore, which are supposed to be more educated. For that reason I personally don't like to deal with the North Indians because of their deep rooted superiority complex.

Chinese control religion. Religion control Indians. The difference in ideology has huge implication on the socio-economic progress.

Nonetheless India is an interesting enigma where democracy rules yet minority caste rights are constantly trampled on. The president comes from the "untouchable" caste is a case in point. But they are definitely resourceful and never-say-die in always trying to find a way out.

[shoeboxlife]

My little interaction with Indian coworkers only shows me that they like bringing their own lunch boxes and that some of the men hold hands as a sign of brotherhood and brotherly love.

They are generally very nice to work with and very accommodating.

[sgd]

using lunch tiffin containers partly save money, also they not used to our food. But is a choice there are some who take effort to localize themselves like my ex-coworker. He tells me his new wife was a professional worked for cisco before married. He didn't want to marry but his parents like the girl so he kuai kuai follow orders. Once settle down traditions and culture expectation dictate women stay home do housework and make baby. My ex-coworker actually used to eating spore food already told his wife don't bother cooking any meals (he secretly says she is not very good yet at cooking ) but since she alone in a foreign place, cannot work, how many times in a week can you clean out a small flat so she is very boring every morning will get up at 5am to prepare veg food, she veg but he not so now his life also very boring lah

[shoeboxlife]

using lunch tiffin containers partly save money, also they not used to our food. But is a choice there are some who take effort to localize themselves like my ex-coworker. He tells me his new wife was a professional worked for cisco before married. He didn't want to marry but his parents like the girl so he kuai kuai follow orders. Once settle down traditions and culture expectation dictate women stay home do housework and make baby. My ex-coworker actually used to eating spore food already told his wife don't bother cooking any meals (he secretly says she is not very good yet at cooking ) but since she alone in a foreign place, cannot work, how many times in a week can you clean out a small flat so she is very boring every morning will get up at 5am to prepare veg food, she veg but he not so now his life also very boring lah

Hahahaha cute story. Thx for sharing to beat monday blues. Yes a lot of them are appreciative of wives cooking even though lack standard. You will be amazed how much money can save by bringing own lunches everyday. Esp if u work in cbd or marina bay area. Decent lunch min $10.

[CityFarmer]

India factory activity shrinks in August for first time in 4-1/2 years

BANGALORE – Indian factory activity shrank for the first time in more than four years last month, adding to the country’s deepening economic malaise even as the central bank struggles to defend the battered rupee currency, a survey showed.

The bleak Purchasing Managers’ Index (PMI) comes hard on the heels of data on Friday that showed Asia’s third-largest economy grew at its slowest quarterly rate in the three months to June since the global financial crisis, suggesting more pain ahead.

The HSBC Manufacturing PMI, compiled by Markit, sank to 48.5 in August from 50.1 in July, the lowest reading since March 2009. Economists polled by Reuters had expected a far shallower fall to 49.9.

The index, which gauges business activity in Indian factories but not utilities, had been close to the 50 mark that separates growth from contraction since May but falling orders dragged it under last month.

“Manufacturing activity contracted in August for the first time since March 2009. This was led by a decline in new orders, especially export orders,” said Mr Leif Eskesen, chief economist for India at survey sponsor HSBC.

The survey showed new export orders shrank for the first time in a year.

In a sign that domestic demand is also faltering, new orders, which include domestic orders, shrank at a faster pace. The index fell for the sixth straight month to 47.5 in August, its lowest since February 2009.

That prompted factories to cut production, with the sub-index measuring output falling to its lowest since early 2009.

Data on Friday showed the Indian economy grew 4.4 per cent in the April-June quarter, the slowest quarterly rate since Jan-March of 2009, hurt by a contraction in mining and manufacturing.

Indian economic growth has nearly halved in the last two years to a decade-low rate of 5 per cent in the fiscal year that ended in March, and a majority of the economists surveyed by Reuters last week expect this year to be worse.

...

http://www.todayonline.com/business/indi...4-12-years