S&P Global Ratings on Monday cut India's economic growth forecast for current fiscal year to 7 per cent, but said the domestic demand-led economy will be less impacted by the global slowdown. S&P had in September projected the Indian economy to grow 7.3 per cent in 2022-23 and 6.5 per cent in next fiscal year (2023-24). "The global slowdown will have less impact on domestic demand-led economies such as India... India's output will expand 7 per cent in fiscal year 2022-2023 and 6 per cent in next fiscal year," S&P Global Ratings Asia-Pacific chief economist Louis Kuijs said.
The rupee depreciated 40 paise to an all-time low of 81.93 against the US dollar in early trade on Wednesday as the strengthening of the American currency and risk-averse sentiment among investors weighed on the local unit. Moreover, a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite, forex traders said. At the interbank foreign exchange, the rupee opened at 81.90 against the greenback, then fell to 81.93, registering a fall of 40 paise over its previous closing.
New Delhi was reluctant to spook investors by clipping the bank's wings
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The Reserve Bank of India sold dollars via state-owned banks around 62.3575 per dollar to contain the rupee's fall, traders said.
The Reserve Bank left interest rate unchanged.
The RBI's comments, announced after trading hours on Wednesday, comes as yields had risen by 60 basis points after a surprise hike in the repo rate on Friday and on worries about the fiscal second borrowing programme of the government.
SIBs are perceived as ones that are 'Too Big To Fail'
The Central bank primarily factors Consumer Price Index while deciding on policy rate.
'If you are invested in mid-cap and small-cap stocks, even if you are making losses right now, it is better to sell them now and sit on cash.'
Most immediately, he pledged to move slowly if needed in winding down an oil window that provides dollars directly to state-run oil companies
We as customers have to be conscious and careful to sidestep numerous types of frauds made possible under a mindless shift to a digital ecosystem without customer-redress procedures, warns Debashis Basu.
Falling for the fourth day in succession, the rupee today dipped by 23 paise to close at nearly three-week low of 59.38 against the dollar amidst the RBI announcing an SLR cut that is expected to release nearly Rs 40,000 crore into markets.
Bank credit offtake is expected to pick up following normalisation of economic activities aided by the government thrust on public expenditure in current fiscal year, a report said. According to the Care Edge report, the gross non-performing assets (GNPA) ratio hit a six-year low of 5.9 per cent in FY22 but remained above the pre-asset quality review of 2015-16. However, it said, India's NPA ratio is one of the highest among the comparable countries despite gradual decline.
The intervention was spotted when the rupee hit 59.90 to the dollar or below
'...over the long-term can be done only by investing in equities.' 'And during weak macros, one needs t1o allocate more than drawing it down, because they offer the best entry point.'
India needs foreign exchange buffer reserves to insulate itself from exchange rate volatility as we have "no friends" for swap lines and Japan was the only country that helped during the taper tantrum in 2013, former RBI Governor Raghuram Rajan said on Tuesday. Participating in a virtual event organised by economic think tank NCAER, Rajan said during the taper tantrum in 2013, India asked for swap lines, and only country who helped was Japan. "We need this (foreign exchange) reserve buffer to insulate ourselves because we have no friends.
The report said efforts to stabilise the economy through monetary policy interventions need to be complemented by appropriate fiscal policy measures.
India's rupee is likely to remain under pressure due to high prices of crude oil and other commodities, and may stabilise at around 79-80 against the US dollar in the near term, say experts amid limited headroom available with the Reserve Bank to check the weakening of the domestic currency. The currency has slumped over 5 per cent this year after Russia's invasion of Ukraine sent international crude oil prices soaring to a decade high. On Monday, rupee ended at a fresh all-time low of 78.34 (provisional) against the US dollar.
The industry also emphasised on supply-side interventions by the government to tackle persistently high food inflation.
To further strengthen the supervision on non-banking entities (NBFCs), the Reserve Bank on Tuesday issued revised guidelines on a Prompt Corrective Action (PCA) framework for such companies, excluding government-owned ones, effective from October 1, 2022, on the lines of what it had introduced for banks in 2002. The RBI came up with stricter supervisory norms under the PCA framework for banks after their bad loans mounted and balance-sheets bled badly. This involved restricting them from fresh lending, brand opening and, hiring, among others. The RBI said the revised PCA framework is also applicable to all deposit-taking non-banking financial companies (NBFCs), all non-deposit taking NBFCs in the middle, upper and top layers, including investment and credit companies, core investment companies, infrastructure debt funds, infrastructure finance companies and microfinance institutions.
The rupee depreciated 7 paise to an all-time low of 80.05 against the US dollar in early trade on Tuesday tracking the strength of the American currency and firm crude oil prices. At the interbank foreign exchange, the rupee opened at 80 against the American dollar, then lost ground to quote at 80.05, registering a fall of 7 paise from the last close. In initial trade, the local unit also touched 79.90 against the American currency.
Passenger vehicle dispatches to dealers in India rose over two-fold last month on a low base of Covid-19-hit May last year. As per the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle wholesales rose to 2,51,052 units last month as compared to 88,045 units in May 2021. The two-wheeler sales rose to 12,53,187 units in May as compared to 354,824 units in the year-ago period.
The sharp fall in rupee since the beginning of May will make things difficult for the central bank which is on the path of easing the monetary policy to revive growth.
India Inc expects the RBI to cut interest rates by early next year.
RBI's out-of-turn rate cut has surprise few economists.
Strong month-end demand for the US currency mainly from oil importers along with currency futures expiry related purchases predominantly weighed heavily on the forex market and haunted investor sentiment.
For now, the rupee is likely to remain dependant on global factors. The dollar held on to broad gains on Thursday after Fed chairman Bernanke said the central bank still expected to start scaling back its bond purchase programme later this year, but left open the option of altering that plan.
86.69 per cent of available stock of currency notes is being taken away from circulation and less than one-fourth of these are being replenished by newly printed Rs 2,000 notes
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The RBI has bought Rs 124.62 billion worth of bonds since its announcement on Aug. 20 that it would occasionally buy bonds to relieve some of the cash tightness in the banking system.
Finance minister Nirmala Sitharaman on Wednesday exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Replying to the debate on first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said inflation has come down and it is now in the tolerable band of the RBI. Inflation has been declining since April 2022 and it is declining further, she said.
Following are the highlights of the Economic Survey 2022-23 tabled in Parliament on Tuesday
The US dollar surged to fresh one-year high after the Fed chief's testimony to the US Senate on Wednesday bolstered the expectations of interest rate hikes, though gradually.
Most Asian currency and equity markets too suffered steep losses due to US rate hike fears.
Bank credit growth, still sluggish, could see a rise if the Reserve Bank of India decides to cut interest rates, believes Ashima Goyal.
It isn't Rajan ignoring money as much as it is Bernanke ignoring capital and exchange rates.
Reserve Bank Governor Shaktikanta Das on Monday said despite the latest headwinds arising from the Jackson Hole summit leading to extreme volatility, our banking system and financial markets are strong enough to withstand such pressures. Taking the markets by surprise, US Fed chair Jerome Powell had told the annual Jackson Hole summit of central bankers and economists last week that he would have to keep raising federal fund rates to tame inflation, which remains the biggest challenge to the world's largest economy. He also warned of the pains that such monetary policy actions would create on growth and jobs.
The large current account deficit and the growing vulnerability on the external front have largely contributed towards the secular decline and the current volatility of the rupee.
In worldwide trade, the US dollar continued its highly bullish trend against all major emerging market currencies
The Urjit Patel committee on monetary policy framework has proposed setting up of a monetary policy committee (MPC) that will be headed by the Reserve Bank of India (RBI) governor and accountable for achieving inflation target set by it.
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