Tagged: Exchange Rate

NTH :: Seven macro triggers that may move your market today

Nandini Sanyal | May 16, 2016, 08.38AM IST | ECONOMICTIMES.COM

NTH

News about progress of monsoon, next batch of quarterly earnings , wholesale inflation data along with outcome of assembly polls in five states and will be key driving factor for the stock market this week.

Here’s a look at seven triggers that may move the market today

Under Mauritius pact, no tax exemption for quasi equity investments: There will be no free ride for those wanting to invest in India through quasi equity investments such as convertible debentures via Mauritius under the recently amended treaty between the two countries, officials said. Those holding such instruments would do well to convert them into shares before April 1, 2017, to enjoy the exemption on capital gains tax, or grandfathering, that’s available until then. There has been some confusion over whether entities making an investment in such instruments before April 1, 2017, can enjoy grandfathering with the full capital gains tax exemption benefit even after the amended India-Mauritius Double Taxation Avoidance Convention comes into effect.

Shareholder base for private banks may be broadened: Wealthy individuals and finance companies can pick up more equity in private banks while non-state lenders struggling to make money could emerge as acquisition targets for those on the hunt, following the Reserve Bank of India’s recent relaxation of rules aimed at shoring up capital and encouraging consolidation. Analysts said lenders of interest may include IndusInd Bank , Yes Bank , Kotak Mahindra Bank , Karur Vysya Bank , Lakshmi Vilas Bank , Tamilnad Mercantile Bank and Dhanlaxmi Bank.

Monsoon over Kerala may be delayed by a week: The onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the weather office said, the first negative signal since it forecast above-normal rainfall this season after two years of drought. “The statistical model used by IMD for predicting the onset of monsoon indicates that the southwest monsoon is likely to set over Kerala on June 7, with a model error of ± 4 days,” the India Meteorological Department said on Sunday . Last year, the monsoon arrived six days late on June 5, compared with the forecast onset date of May 30.

FSSAI plans comprehensive recall policy: Almost after a year of no food product being pulled out of the market, The Food Safety and Standards Authority of India (FSSAI) has decided to bring a comprehensive recall policy this financial year. The last big food recall was in June 2015, of Nestle India’s Maggi noodles. In the making for five years, the draft procedure for a food product’s recall was put up for public comment on the body’s website last year by FSSAI. Its latest newsletter lists “final notification of recall regulations” as among the 12 important things it plans for 2016-17.

EPFO may invest over Rs 6,000 cr in equity market in 2016-17: Union Labour Minister Bandaru Dattatreya has said the Employees Provident Fund Organisation (EPFO) may invest more than Rs 6,000 crore in equity market during the current financial year. The minister, however, said a final decision will be taken by the Central Board of Trustees at the next meeting. Last year, EPFO had invested about Rs 6,000 crore through SBI Mutual Fund’s two index-linked ETFs (exchange-traded funds) — one to BSE’s Sensex and the other NSE’s Nifty.

Sebi planning to tighten listing norms: The Securities and Exchange Board of India (Sebi) is planning to attach bank accounts and properties of promoters who repeatedly flout listing and disclosure norms and fail to take corrective steps. The penalty structure may also be changed to deter publicly traded firms from taking listing regulations casually.Sebi’s latest proposals come amid widespread violations of listing and disclosure norms

Employees’ rights to be foremost in Bankruptcy law: The new Bankruptcy Law will fast- track recovery of dues from defaulters and employees will be first in line to get their share from liquidation of assets if a company goes belly-up, says Union Minister Jayant Sinha. Besides, it would also bring down drastically the time taken to wind up a sick company while making the entire process much easier, the Minister of State for Finance said.

Rupee down: The rupee ended weak by 15 paise at 66.77 due to increased demand for the us dollar from importers amid a weak domestic equity market. Rupee sentiment was also hit as the IIP growth plunged to 0.1 per cent in March and retail inflation soared to 5.39 per cent in April.

Bonds: The 7.88 per cent government securities maturing in CG2030 traded value at Rs 300.00 crore at weighted yield of 7.75 per cent, the 7.59 per cent government securities maturing in CG2026 traded value at Rs 225 crore at weighted yield of 7.45 per cent and the 7.72 per cent government securities maturing in CG2025 traded value at Rs. 100 crore at weighted yield of 7.63 per cent. The weighted yield on government securities with a maturity period of 0-3 years, 3-7 years, 7-10 years and more than 10 years was quoted at 7.11 per cent, 7.51 per cent, 7.52 per cent and 7.76 per cent, respectively.

NSE bond auction on May 16: The National Stock Exchange (NSE) will auction investment limits for overseas investors on May 16, for the purchase of government debt securities worth Rs. 3,340 crore. The auction will be conducted on NSE’s ebid platform from 3.30 pm to 5.30 pm, after the close of market hours, the exchange said in a circular today.

Source : http://goo.gl/ntxH8X

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ATM :: How does a falling rupee affect you?

Priya Nair | May 18, 2015 Last Updated at 00:10 IST | Business Standard
Be prepared to pay more if travelling abroad or if your child is studying there. Other impacts can be varied

ATM

Your family and you are flying to the US next week on holiday. Flight tickets and hotel bookings were done in advance. So, why should the rupee depreciation bother you? It should because all other expenses, such as sightseeing, local transfers and food will increase as a result of the fall in the rupee.

Similarly, if your child is studying in a foreign university, don’t be surprised if tuition fees increase substantially over last year.

There are also some advantages of a falling rupee. Those working abroad will gain, as the same amount they remit will translate into more rupees.

“It looks like the rupee will be in the 64-65 range (to the dollar). As the rupee tends to be overvalued and exports are not growing much, the Reserve Bank might be willing to let the rupee depreciate,” says Madan Sabnavis, chief economist, CARE Ratings.

The immediate impact will be on foreign travel and students studying abroad. The indirect impact will be on other expenses, too, as oil prices will go up and this could push up prices of other commodities. However, this time, as the price of crude oil in the international market is low, there might not be much of an impact on domestic oil prices, says Sabnavis.

Below is a look at some ways a weaker rupee will impact your life and what you can do about it.

Foreign travel
Europe tours are popular with Indians in the summer months of April to June. Most people book in October for departures starting in April. Those who have booked and paid earlier, including the forex component, will not feel much of an impact. However, travellers who don’t pay the forex component in advance might feel the pinch. Usually, travellers pay the deposit and for flight tickets in rupees, in advance. The forex component, which covers accommodation, meals, sight-seeing and excursions, can be paid later. “For trips in April, packages are booked as early as October. We pushed many of our customers to pay in advance. Those who did not pay then might feel the pinch now,” says Daniel D’Souza, head of sales, Tour Operating, Kuoni India.

One way to avoid last-minute heartburn is to pay for your entire package in advance and not only the rupee component. If booking last-minute, choosing a short-haul holiday to a destination closer to home rather than a long-haul holiday is also a way to save some costs.

Tips to save

  • Reduce the number of days from 10 to, say, eight
  • Reduce the number of excursions
  • Switching to a lower category hotel or staying in a bed and breakfast or home stay
  • Cut on shopping rather than sight-seeing, since it is the experience that matters
  • Opting for public transport such as trains, subway or buses, rather than renting a car
  • While sightseeing, choose days when tourists are allowed to go for free or given discounts. Most monuments abroad have such days
  • While shopping, buying from flea markets can work out cheaper than from stores
  • Take a decent amount of cash with you, as you might not get good rates while travelling
  • Pre-paid travel cards that allow you to load multiple currencies are a good option. In these cards, the value of the rupee is of the date the money is loaded to the card

Foreign education
Students studying abroad also suffer when the rupee falls. The US, Britain, Canada, Singapore and Australia are popular countries for Indian students. The university will not offer any leeway in tuition fees. Students will have to pay the entire amount. In most cases, you will have to pay before a term starts.

Given the high tuition fees in foreign universities and the cost of living, most students take some loan and pay for the rest by scholarships or taking a part-time job. “When the rupee falls, it becomes difficult for the entire family, not only the student. And, not many individuals know how to hedge themselves against currency fluctuations by using derivative products. What you can do is try and pay the entire fee upfront when the exchange rate is low. Most universities give a discount of one or two per cent if you do so,” says Naveen Chopra, of The Chopras, a foreign educational consultancy.

Neeraj Saxena, chief executive, Avanse, a non-banking financial company that gives education loans, says there is an option to enhance the loan amount during the course. “We don’t usually disburse the full loan amount at one go. We do as per the semester. So, if the fees increase in the third semester, we can increase the loan amount,” he advises.

Saxena suggest students going abroad should look for scholarships or part-time jobs like teaching assistantships. “We find of the Rs 30-35 lakh required for a foreign university course, students often are able to earn Rs 8-10 lakh through part-time jobs, which pay by the hour,” he says.

Tips to save:

  • Using discount coupons given by universities and accepted at all major stores
  • Using cards like the ISIC (a specialised card for students) for travelling, eating out, even shopping at some departmental stores
  • Going for free concerts, to movie halls which offer student discounts
  • Going to budget pubs, during happy hours, for leisure
  • Use special cards that offer discounts to students for eating out and shopping

Medical costs
The rupee’s weakness will push up medical costs, too. About 30-40 per cent of a hospital’s cost is on account of medical equipment and of these, 80 per cent is imported, says Vivek Desai, managing director, HOSMAC, a health care management consultancy. “Many common procedures in cardiology and cancer care use imported equipment. Even orthopaedic implants and consumables used in laboratories are imported. Any increase in their costs will be passed on to patients and there is nothing the latter can do about it. That is why medical insurance is a must. That, too, comes with a ceiling,” he says.

Other costs like air-conditioning and flooring in hospitals, also imported, will also see an increase and hospitals are likely to pass these on to patients by way of higher charges.

Patients going abroad for treatment will also see an increase in cost due to the rupee’s fall.

Tips to save:

  • Health insurance is one way you can deal with rising medical costs. Buy one early in life
  • Even if covered under your employer’s group medical insurance, take a separate family floater
  • Buy a top-up medical insurance to increase your sum assured without too much increase in premium

A weak rupee will benefit
Remittances
Non-resident Indians (NRIs) sending money home will benefit from the rupee’s weakness, as they will get more returns for what they send. Typically, NRIs with higher disposable incomes send more money to India when the rupee falls, says Sudesh Giriyan, chief operating officer, Xpress Money. “We will see an increase in remittances when the rupee crosses 64 to a dollar. In the case of cash remittances, we don’t see much increase because these are smaller ticket-size. But in direct remittances, which are bigger ticket-size, currency value has a bigger impact,”

Many NRIs also take loans from banks abroad, since the interest rates are lower, and remit money to India in order to invest, he adds.

There is usually an increase of seven to 10 per cent in remittances on account of rupee weakness, says K A Babu, head-retail and NRI banking, Federal Bank. Remittances from the Gulf countries tend to increase in such times than those from elsewhere.

With regard to investments, those from the lower income group prefer bank fixed deposits – NRE rupee deposits or FCNR deposits which are in foreign currency. The NRE deposits offer the same rates as domestic FDs and can be liquidated easily. The FCNR deposits will provide protection from exchange rate volatility, though the rates are lower.

“Ideally, investors should have a mix of both kinds of deposits. That way, they can earn high interest rates and also get a hedge from currency fluctuation,” Babu says.

For NRIs in the high income segment, banks and wealth management firms offer portfolio management services, through which they can invest in stocks, PMS schemes, mutual funds, fixed income products, real estate, etc. The preference is usually for land or residential property. Some NRIs might also look to expand their business in India and buy commercial property.

International funds
International equity funds that invest abroad will benefit from the fall in the rupee. Investors of such funds would have seen their portfolios rise in the past few months. According to data from Value Research, over the past three-month period, returns from international funds have been the highest at 6.19 per cent, while equity multi-cap funds have seen their returns fall 3.19 per cent.

But these gains are marginal and should not be the only reason for investing in international equity funds. For instance, over a one-year period, multi-cap funds have given returns of 34.84 per cent, while in the case of international funds, it is 7.78 per cent.

The US market is currently doing well and will definitely give better returns in the near term, as it will not be as volatile as the Indian equity market. But over a longer term, that is a five-year period, Indian equities will definitely give better returns. So, one can look at international funds provided they have sufficient exposure to Indian equities, say experts.

Anand Radhakrishnan, chief investment officer at Franklin Equity, Franklin Templeton Investments – India, also says investors should not look to time the markets, but invest on a regular basis and in a systematic manner. “Typically, the exposure would depend on the individual’s risk profile and investment objective, but as a thumb rule, one should have at least 20 per cent of their investment portfolio allocated to international assets. Equity investments warrant a longer investment horizon and we recommend investors come in with a three-to-five year horizon or more,” he says.

Source : http://goo.gl/SUyRgr

NTH :: Students aspiring to study overseas may have to borrow more as rupee weakens

By Sangita Mehta, Economic Times Bureau | 13 Jun, 2013, 03.10AM IST|

NTH

MUMBAI: Students aspiring to study overseas will have to take a higher quantum of loan as rupee has dipped sharply just when they are seeking education loans for the new academic year. Rupee weakened 8% against dollar since May 1.

A weak rupee means that Indian students paying fees in US currency will have to arrange for more rupee funds for the same amount of dollar fees. Since August 2011, rupee has weakened by 20%, reflecting the higher cost that students have to pay now compared to two years ago. Also, the other cost such as accommodation cost also would go up as rupee weakens.

USA is most favoured destination for Indian students as it attracts 25,000 to 30,000 students each year. A rough estimate shows that it fees of studying is USA ranges from $ 20,000 to 30,000 for undergraduates and from $ 30,000-40,000 for MBAs. Although lenders pay fees in US currency to the overseas university, the loan amount is converted into rupee for the student.

“As rupee weakens, overall cost will go up and those borrowing from banks will have to arrange for a higher margins,” says Ms R Saraswati, trainer and counsellor at Clear Perception, which guides students on overseas studies. “But this may not deter them studying overseas since the cost of converting currency is marginal compared to the overall cost of going overseas.” Also, the actual payment to the universities will be made in the month of July and August, so the value of dollar at that time will be more significant for students.

Experts say there is ray of hope despite weakening of rupee. “Often students, in US, take part time jobs in the first year while some are awarded a scholarship for the subsequent years. Therefore, the impact of weak rupee is felt maximum in the first year if they are able to find a part time job or a scholarship,” said Rajiv Raj, co-founder and director at CreditVidya.com

“Secondly, students who earn in foreign currency as part-time employees have a natural hedge against the weaken rupee,” says Mr T S Srinivasan, former GM of Indian Overseas Bank who is in a process of arranging loan for his daughter’s education at University of Wisconsin Madison.

Source: http://goo.gl/I1tWK

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NTH :: Falling rupee to make PCs, TVs, cars, imported food & liquor, foreign travel costlier

By ET Bureau | 12 Jun, 2013, 04.00AM IST0 comments |Economic Times|

NTH

NEW DELHI: The weakening of rupee is set to pinch the consumer. Prices of PCs, laptops, tablets, cars, TVs, premium food, luxury items and a slew of other consumer products are likely to go up, despite subdued demand, as a rapidly depreciating rupee takes its toll on high import-content industries. In certain high margin categories like smartphones, companies might absorb the impact of depreciation as they strive to increase market share, but this luxury is not available to all.

Car sales have dropped for seven consecutive months in the country but manufacturers say they have no option but to hike prices if the rupee continues to slide. The rupee has weakened by 7.5% against the US dollar since last month.

“A sustained depreciation of 10% in the rupee will lead to a 60 basis points increase in headline inflation. But it will be a lagged impact over 2-3 months,” said Shubhada Rao, chief economist, YES Bank. While Rao said weak demand would force companies to absorb higher costs and take a hit on their bottom lines, most firms that ET spoke to said they were considering price hikes. Desktops, laptops and tablets could get dearer by 5-12% by the month end. The industry works on an inventory period of just two-three weeks and new stocks will be brought at higher prices.

Cost of PCs, TVs, cars, imported food & liquor, foreign travel to go up as rupee continues to depreciate against US dollar.

“In less than a month, the rupee has depreciated more than 8%. If it’s a gradual depreciation we can plan out better. This has been sudden and we will increase prices by June end by 5-8%,” said Amar Babu, managing director, Lenovo India. S Rajendran, chief marketing officer, Acer India said the combination of depreciation and higher costs would result in prices increasing by around 10% by the month-end. Adds Rothin Bhattacharya, head of strategy, HCL Infosystems, “For the hardware industry, its been a tough two years during which the rupee has depreciated almost 30% (from Rs 43 to Rs 58 now). This time around prices will increase by at least 8%.”

Television and white goods makers such as LG, Samsung and Panasonic said the price hike could be in the range of 2-5% but said they would monitor the situation for next 10-14 days before deciding on the quantum. “There is a rolling inventory of around 30 days in the market and hence we have sometime to decide on the price hike.

If the rupee does not gain, prices would definitely go up from next month,” said Panasonic India managing director Manish Sharma. LG India managing director Soon Kwon said if the rupee situation remains the same or worsen further, it will definitely have an impact on pricing. The consumer electronics companies are monitoring currency movements and prices for categories such as LED and Plasma television as well as premium home appliances such as side-by-side refrigerators, front-loading washing machines and inverter AC. These products are either fully imported or are assembled in India with imported components. The slump in sales over the last several months has resulted in car makers resorting to discounts and price cuts but the weakening rupee is likely to reverse this trend, even as companies admit that margins will be under pressure.

“We will be left with no other option, but to increase prices if this slide continues. We are going to review our car prices at the end of this month. In normal market conditions, you can take decision on price rise much faster. But when the market is not doing well, it is not only about how the rupee is moving.. we also have to see how the competition is reacting,” said Sandeep Singh, DMD and COO, Toyota Kirloskar. Similar sentiments were echoed by other car makers. “Car companies are left with no choice but to increase prices as they are not able to absorb the impact. The affect on demand depends on the quantum of price increase on the product .

We do not expect any immediate impact on demand by the small price hike on Amaze and CR-V which came into effect from June 1,” said Jnaneswar Sen of Honda Siel Cars India Ltd. A Hyundai Motor India executive said margins of car companies will be under pressure in the medium term. “Any increase of input costs may lead to a further drop in already stagnating demand. Compounded with the depressed market conditions, margins also will be under squeeze in the medium term,” said R Sethuraman, director (finanace & corporate affairs) at Hyundai.

But its not just big ticket items like cars, TVs and laptops that could get expensive. Retail chains Future Group and Spencer’s said imported chocolates and spreads such as Ferrero Rocher, Nuttela, Orion Choco Pie, Snickers, Skippy peanut butter and American Garden will also see a jump in prices, once the current stock finishes in a few weeks time. Spencer’s Retail chief executive Mohit Kampani said for every 1% the rupee devalues, the end-price on imported food goes up by 3-4%. For imported liquor, the impact is 6% and 2-3% for imported homeware such as crockery, plastic products and home convenience products. “The net impact on consumer prices could be as high as 20-25% for imported products,” Kampani said. Sales of imported products, which were growing upwards of 20%, may sober down, he said. Foreign travel, too, has become more expensive.

The rupee’s free fall has pushed up the cost of tour packages by 5% to 8% over the last month’s rates. Travel to regions like the UK, the US or Europe would cost around 8% more, affecting the overall budget of a traveller,” says Sunil Hasija, executive director, TUI India. Given the increase in cost of tour packages, travellers are shortening their holidays by a day or two or are rethinking their hotel options. Many tourists are opting for short haul destinations such as Thailand, Malaysia, Singapore, Hong Kong over long haul ones to offset the increase in cost.

Some travel companies insulate their customers from fluctuations in package costs due to currency pressures as they book at forward market rates to offset any actual fluctuation at the time of holiday.

Source: http://goo.gl/tf2iU

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NTH :: Rupee slide: Car companies may go in for another round of price hike

Nandini Sen Gupta, TNN | Jun 8, 2013, 11.12AM IST| Times of India|

NTH

CHENNAI: The sliding rupee and creeping increase in input costs has already led to a number of car companies opting for price mark ups ranging from Rs 2000-10,000. However, the price hike season is definitely not over and companies that have either not taken a high enough hike or not gone in for a mark up yet are watching the situation and will take a call on future price increases depending on how badly the input costs bite.

Said Vinay Piparsania, head of marketing, Ford India: “We are monitoring the exchange rates as well as other factors that are pushing up costs. Should the situation continue to sustain, we would need to have a look at possible price increases.” Ford is not the only company that has a price hike on the agenda. Others like Toyota too told a similar view. According to a top Toyota Kirloskar official, the company is currently watching the situation and the extent to which its foreign exchange hedging can neutralise the rupee slide. “But if the situation continues and other factors like input costs also pinch, we will think about a price increase,” said the official.

A number of companies have already taken price hikes in April and May. Take Honda which took a price hike in two phases through April and May.

“We raised prices of the City (Rs 3000), Brio (Rs 2000-10,000) and Accord (Rs 5000) in April and followed it up with a Rs 3000-8000 increase in Amaze prices and Rs 6000-14,000 hike in CRV prices effective June 1,” said Janeshwar Sen, senior VP-marketing and sales, Honda.

Similarly General Motors India has taken a price increase of upto Rs 10,000 from this week and others like Hyundai Motor India are watching the situation closely. Most car companies take an “inflation call” in March-April for small price increases that neutralise some of the increase in input costs. But the rupee’s constant slide has come as a mid-year shock to the auto industry.

Source: http://goo.gl/5mA58

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