The Reserve Bank of India (RBI) is expected to cut interest rates for the first time in nearly five years in Governor Sanjay Malhotra's first monetary policy committee (MPC) meeting on Wednesday. The meeting of the six-member MPC, which will culminate on Friday, aims to boost sluggish economic growth, which is seen falling to a four-year low. Malhotra took charge as the 26th RBI governor in December last year.
Planning Commission on Thursday said a desicion was expected shortlyon using foreign exchange reserves for infrastructure projects.
India's exports in April jumped nearly three-fold to USD 30.63 billion from USD 10.36 billion in the same month last year, according to government data released on Friday.
India's management of foreign exchange reserves has generally been in accordance with International Monetary Fund guidelines and comparable to global best practices.
After a long debate with Planning Commission, Finance Minister P Chidambaram has finally agreed to consider funding infrastructure projects through the country's booming foreign exchange reserves that currently stand at about $170 billion.
A pregnant Sri Lankan woman, who had been in a queue for two days to obtain a passport to leave the crisis-hit country for employment overseas, went into labour while waiting for her turn on Thursday and delivered a baby girl.
'India's sizeable foreign exchange reserves should serve as a buffer.'
The Indian rupee is expected to trade between 80 and 84 against dollar in the first three months of 2023 with support from overseas inflows though worsening current account deficit (CAD) and reduced interest rate differential between the US and India pose challenges. According to a Business Standard Poll of 10 participants, most said the rupee could gain strength in January due to foreign inflows, and the Reserve Bank of India (RBI) is not expected to allow the currency to depreciate ahead of the Union Budget scheduled on February 1. The rupee depreciated 10.15 per cent in 2022, its worst performance since 2013 as the war in Europe and the interest rate increase by the US Federal Reserve prompted investors to flee emerging markets.
India's current account deficit (CAD) may dip further in the March quarter of FY24 as pressure from the negative net exports during the January-March period eased to an 11-quarter high. A part of the gross domestic product (GDP) data, net export- which is usually negative for India - captures the difference between exports and imports of both goods and services, while the CAD data, released by the Reserve Bank of India (RBI), also factors in private transfer receipts.
Contradicting the International Monetary Fund, which does not want India and other countries to use any of its foreign exchange reserves for building infrastructure
The government is planning to introduce legislative changes to the Foreign Exchange Management Act (Fema) regulations, with a focus on easing the pathway for inflows from a foreign portfolio investor to transition seamlessly into foreign direct investments (FDI) once the FPI surpasses the 10 per cent ownership threshold in a company. This move stems from multiple requests by foreign investors seeking to streamline the reporting requirements that arise when their stakes in Indian firms cross the 10 per cent mark.
Since Sanjay Malhotra took office as governor in December, the Reserve Bank of India (RBI) has adopted a more accommodative stance, which bodes well for banking and the economy as they navigate a growth slowdown, according to analysts.
A trends study conducted by India's Financial Intelligence Unit (FIU) has expressed suspicion that cryptocurrency is being used across the country in serious criminal acts like terrorist financing, fuelling secessionist activities, cybercrime, narcotics trafficking, illegal betting and gambling. The report, which was based on suspicious transaction reports and operational analysis, shared these trends and credible intelligence with law enforcement agencies.
State Bank of India, Tech Mahindra, Larsen & Toubro, Tata Steel, Sun Pharma, Infosys, HCL Tech, Axis Bank, Tata Consultancy Services and NTPC were among the biggest laggards among Sensex shares. Nestle, Hindustan Unilever, Titan, Power Grid, UltraTech Cement and ITC were among the gainers.
The government on Monday ruled out making public the RBI report detailing the reasons why the central bank could not keep inflation within the targeted 6 per cent upper limit for the three consecutive quarters. "Yes sir, RBI has furnished a report to the central government, as mandated under Section 45ZN of the RBI Act, 1934 and Regulation 7 of RBI Monetary Policy Committee and Monetary Policy process Regulations, 2016," minister of state for finance Pankaj Chaudhary said in a written reply. The said provisions of the RBI Act, 1934, and regulations therein does not provide for making the report public, he said.
Government is also will also enter into an agreement with Japan for a $50 billion swap.
The surge is a stark turnaround from 2013 when the country's current account gap hit a record high due to outflows on expectations the US Fed would rein in its stimulus programme
The central bank had in July last year imposed curbs such as doubling of margin requirement and a ceiling on position limits on exchange-traded currency derivatives.
Based on the current momentum, the funds likely to be raised through the RBI's relaxed window would be $3.5 billion-$4 billion.
From the Sensex pack, Bajaj Finserv, Mahindra & Mahindra, Axis Bank, Bajaj Finance, Adani Ports, ICICI Bank, Zomato and UltraTech Cement were among the biggest gainers. However, ITC, Nestle, State Bank of India, Reliance Industries, Asian Paints and Tata Consultancy Services were among the laggards.
India's large foreign exchange reserves can cushion a short-term jump in oil prices, but a long drawn conflict in Iraq could hurt the economy
Equity benchmark indices Sensex and Nifty rallied for the third session on the trot, helped by a rally in global markets after lower-than-expected consumer inflation in the US ignited hopes of more rate cuts by the Federal Reserve. The 30-share BSE index climbed 318.74 points or 0.42 per cent to revisit 77,000 level at 77,042.82.
If net forex outflows turn out to be relatively high in the next few years, the rupee could depreciate beyond Rs 80 to a dollar by 2022. The causal reasons could, for example, include unmet expectations of FPI and FDI investors about the performance of the Indian economy, sharp rise in prices of imported oil and decrease in FX remittances. The RBI has to ask itself whether guaranteeing future rupee-dollar exchange rates on FX forward contracts is a reasonable way to use its risk-bearing capacity, says Jaimini Bhagwati.
With huge accumulated foreign exchange reserves at their disposal, developing countries, mainly India, China, Russia, Brazil and Mexico, are giving invaluable reverse aid to the United States, although it is not counted as aid.
In July, the Pakistan government's debt swelled to USD 2.44 billion, including USD 2.07 billion in non-guaranteed debt owed to China, as per Geo News.
Speaking in the Rajya Sabha on the precarious condition of state finances, Congress leader Manmohan Singh on Tuesday said the state finances were in dismal shape.
India's foreign exchange reserves surged $5.04 billion in the week ending March 28, its biggest weekly rise in four months, as the central bank started to buy dollars regularly in an effort to build up its defences against any potential global turmoil.
According to sources, the central bank is keen on such a scheme to attract foreign exchange, as the country's reserves have seen a depletion in the wake of a weakening domestic currency.
Raghuram Rajan has described the fall in reserves as dip in valuation with appreciation of dollar against other currencies
Global brokerage firm CLSA has reversed its early tactical shift from Indian equities to Chinese stocks, and has decided to raise India allocation while cutting exposure to China. In its report titled 'Pouncing Tiger, Prevaricating Dragon', CLSA cited challenges facing Chinese markets in the aftermath of Donald Trump's victory in the US elections as the reason for the move. "Misfortune can happen in threes. So it has played out for Chinese equities over the past week.
Recently, Prime Minister Manmohan Singh had also ruled out the possibility of India witnessing a repeat of the 1991 balance of payments crisis and reversing the path to globalisation of economy.
From the 30 blue-chip Sensex pack, Tech Mahindra, IndusInd Bank, Axis Bank, Mahindra & Mahindra, Tata Motors, Larsen & Toubro, State Bank of India, Tata Consultancy Services, UltraTech Cement and Reliance Industries were the biggest laggards. In contrast, JSW Steel, Nestle and Titan were the gainers.
Warning commerical banks about credit risks from unhedged foreign exchange positions of corporates and importers, Reserve Bank of India on Monday said accumulation of foreign exchange reserves remained a "matter of concern" for monetary and exchange
The US Fed interest rate decision, inflation data and FIIs are the key factors that are expected to drive stock markets this week, analysts said. Global trends will also be tracked by investors for further cues, they added. "The Indian stock market's future trajectory will be influenced by a blend of global and domestic factors.
India decisively withstood global headwinds in 2023 and is likely to remain as the world's fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rate regime and robust foreign exchange reserves. Despite widespread pessimism witnessed among the developed nations and the worsening geopolitical situation, India recorded a gross domestic product (GDP) expansion of 6.1 per cent in the March quarter. The growth moved up to 7.8 per cent in the June quarter and was 7.6 per cent in the September quarter. For the first six months of this fiscal, the growth was 7.7 per cent.
The Indian government has appointed Finance Secretary Tuhin Kanta Pandey as the new chairman of the Securities and Exchange Board of India (SEBI). Pandey, a 1987-batch IAS officer, will replace Madhabi Puri Buch, whose three-year tenure ends on February 28. Pandey's appointment comes at a time when the markets are experiencing bear pressure due to withdrawals by foreign institutional investors (FIIs). Pandey has extensive experience in the finance ministry, having served as the longest-serving secretary in the Department of Investment and Public Asset Management (DIPAM) and the Department of Public Enterprises (DPE). He also played a key role in the framing of the 2025-26 Budget and the drafting of the new Income Tax Bill. Pandey's appointment is for an initial period of three years.
The Enforcement Directorate (ED) on Friday said it has issued show-cause notices to the Indian arm of Chinese mobile phone manufacturer Xiaomi, its chief financial officer and director Sameer B Rao, former managing director Manu Kumar Jain and three foreign banks for alleged violations of the foreign exchange law to the tune of more than Rs 5,551 crore.
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