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Fiscal-monetary coordination key to India's economic resilience, says RBI Governor Das

At a high-level policy conference of central banks, RBI Governor Shaktikanta Das asserted that macroeconomic stability is a shared responsibility of monetary and fiscal authority. Das stated that effective fiscal monetary coordination was at the core of India’s success in the face of series of adverse shocks.
Business Standard, Nov 21, 2024, 10:40 AM IST

Gautam Adani indicted in U.S. with bribery; bond deal pulled

Gautam Adani, the billionaire chair of Indian conglomerate Adani Group and one of the world’s richest people, has been indicted in New York over his role in an alleged multibillion-dollar bribery and fraud scheme, according to U.S. prosecutors.
Authorities said Mr. Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay about $265 million in bribes to Indian government officials to obtain contracts expected to yield $2 billion of profit over 20 years, and develop India’s largest solar power plant project.
The Hindu, Nov 21, 2024, 09:03 AM IST

RBI wary of more than just food inflation: What else is a headache for Das & Co

For the Reserve Bank of India (RBI), food inflation has been a headache, so much so that Governor Shaktikanta Das & his colleagues in the Monetary Policy Committee (MPC) have often considered it a major factor in rate-cutting.
However, the latest RBI bulletin has cited another problem: the ‘edging up’ of the core inflation alongside. In its article, ‘State of Economy’ the central bank has said that India’s October CPI inflation brought troubling signs of rising core inflation, amplifying its cautionary tone.
Beyond the sharp rise in food prices, core inflation—a key measure that excludes volatile items— has also edged higher, hinting at broader economic pressures. It increased to 3.8 per cent in October from 3.6 per cent in September.
Economic Times, Nov 20, 2024, 08:35:41 PM IST

Delhi versus Mumbai: How the interest rate battle is playing out

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided in its meeting held last month to keep the policy rate unchanged for the tenth consecutive time. In April last year, the MPC stopped its rate-hike cycle by retaining the key lending rate at 6.5 per cent. The RBI had hiked rates six times in a row before it decided to pause in April last year. The impact of those rate hikes was not believed to have percolated to the ground by then.
As inflation seemed to be coming under control in recent months, expectations about a rate cut grew. Though the RBI changed the stance to ‘neutral’ from the earlier ‘withdrawal of accommodation’ unanimously, it retained the key rate at 6.5%. in its last meeting in October due to high inflation. The inflation further touched a 14-month high at 6.2% for October, led by a spike in vegetable prices. It is above the RBI’s mandate of 4% with a tolerance band of 2 percentage points on either side. Now, many expect the RBI to cut rates in February next year, instead of earlier expectations of a rate cut in December.
Economic Times, Nov 20, 2024, 02:27:00 PM IST

Trump picking Warsh for Treasury would empower a critic of both the Fed and tariffs

One of the major unanswered questions of President-elect Donald Trump’s consideration of Kevin Warsh for the post of Treasury secretary is whether he wants the former Federal Reserve governor to be a public critic of the central bank.
In the run-up to the presidential election, one of Trump’s closest economic advisers, Scott Bessent, floated the idea of what he called a ”shadow Fed chair” to weigh in on the Fed’s actions.
MarketWatch, November 19, 2024 / 03:09 PM ET

A growing chorus for rate cut from Delhi to be RBI's next challenge

If you thought that making of monetary policy has become sufficiently independent of political pressure, because it is being set by a committee of 6 persons who are governed only by data and by a parliament-given mandate of getting inflation to 4 percent, then think again.
In the past few months and especially in the past few days, the pressure from Delhi on the Reserve Bank and its Monetary POlicy Committee (MPC), to cut interest rates has been growing. The first hint came in the Economic Survey, where in a box item, the Chief Economic Advisor (CEA) asked if the mandate to the MPC to bring inflation to 4 percent should exclude food inflation. The CEA argued, as many worthy experts before him, that food prices rise due to climate and other reasons and are not amenable to being brought down by interest rates.
Moneycontrol, November 19, 2024 / 21:23 IST

Economists warn against RBI cutting interest rates amid high inflation

The debate over whether the Reserve Bank of India (RBI) should reduce interest rates during a period of high inflation has intensified, with leading economists cautioning against potential destabilising effects, after Union finance minister Nirmala Sitharaman said that banks interest rates will have to be far more affordable.While the government’s push for lower rates reflects its focus on accelerating industrial activity and job creation, economists argue that easing rates too soon could risk reversing the gains made in inflation control.The discussion comes ahead of the RBI’s December monetary policy meeting, where all eyes are on Governor Shaktikanta Das’s next move.
“When you have such a large fiscal deficit, the interest rates are bound to be high. Taming inflation does require the RBI to keep up the guard by keeping interest rates high. RBI has no choice,” M. Govinda Rao, economist and former member of the Economic Advisory Council to the Prime Minister,told MoneyControl.
Moneycontrol, Nov 19,2024,18:38

Africa Finance Corporation taps Indian debt market, raises $300mln

Africa Finance Corporation (AFC) has mobilised $300 million in capital from lenders in India. The funds were secured from seven Indian banks, including State Bank of India, Canara Bank, Bank of India, Indian Bank, UCO Bank, SBI (Mauritius) and Indian Overseas Bank.
Oversubscribed by 50%, the transaction underscores that there is an appetite for Africa risk in markets like India, according to Said Adren, CEO, Bank of Africa, which acted as the sole mandated lead arranger and bookrunner for the syndicated loan. AFC, which has recently returned to the global debt capital markets with the issuance of a $500 million bond, will use the new capital to finance projects across Africa.
Moody’s has also recently reaffirmed its A3 credit rating on AFC, with an outlook change from negative to stable.
ZAWYA, Nov 19,2024

Interest rates need to be 'far more affordable': FM Nirmala Sitharaman

MUMBAI: Finance minister Nirmala Sitharaman on Monday called for bank interest rates to be “far more affordable”, arguing that several people found the cost of borrowing “very stressful”.Making a case for lower lending rates, she said that India required its businesses to ramp up and invest in new facilities so that the goal of “Viksit Bharat” can be achieved.
“When you look at India’s growth requirements, many voices are saying that the cost of borrowing is very stressful. At a time when we want industries to ramp up and move building capacities, bank interest rates will have to be far more affordable. So, we need to have a lot more conversation on this,” Sitharaman said at the SBI Conclave on Monday. She on using interest rates to control food prices and sought to comfort the market by stating that govt was taking measures to address food supply issues to prevent price spikes.
Times of India, Nov 19,2024

Services tax surplus and robust remittances may help India in overcoming tariff hikes by US: CRISIL

The tariff hikes proposed by Donald Trump may pose threat to India’s exports but the country’s surplus in services trade and robust remittances flow may provide comfort, highlighted a report by CRISIL.
The report stated that India’s export sector is navigating multiple challenges, including geopolitical uncertainties and these factors could pose risks to India’s export performance.
It said “the surplus in services trade and robust remittances flow provide some comfort and should help keep the current account in safe zone”.
Economic times, Nov 19,2024, 08:19 AM IST

Sebi orders four online bond platforms to cease operations

Mumbai: The Securities and Exchange Board of India (Sebi) has directed four online bond platform providers to cease and desist from offering securities for public subscription and from being offered for sale on their platforms after it found them operating without registering with stock exchanges.
These entities include AI Growth and Texterity – owner and operator of altGraaf, Purple Petal Invest, which owns Tap Invest, and Berkelium Technologies, which operates Stable Investments.Rules mandate entities operating as online bond platform providers to be registered as a stock broker in the debt segment of a stock exchange.
Economic times, Nov 19,2024, 05:43 AM IST

Non-financial CPSE dividend target may be retained in FY25 revised estimate

New Delhi: The Centre is likely to maintain its budgeted target for dividends from non-financial central public sector enterprises (CPSEs) and entities in which it holds minority stakes at ₹56,260 crore in the revised estimate for 2024-25, said a person aware of the development.
The dividends touched ₹30,226 crore in just over seven and a half months of this financial year, constituting 54% of the full-year target, showed the latest data by the Department of Investment and Public Asset Management (DIPAM).
But the bulk of the mop-up is expected in the crucial March quarter, pushing up the dividends to the targeted level, according to the person.
Economic times, Nov 19,2024, 12:53 AM IST

SBI to open 500 new branches in the Financial year 2025, says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Monday said SBI will open another 500 branches to take its overall network to 23,000 by the end of FY25.
Speaking at an event to mark the 100th anniversary of the state-owned lender’s main branch in Mumbai, Sitharaman recalled that the size of the bank has increased substantially since 1921 when three presidency banks merged to form the Imperial Bank of India (IBI).
The government passed an Act of Parliament to form SBI in 1955 out of what used to be IBI, and what was a network of 250 branches in 1921 has grown to 22,500 now, she said.
“SBI today has grown to become 22,500 branches, and I understand that another 500 branches are going to be opened in FY25. So, 23,000 branches,” Sitharaman said.
Economic times.

Go for gold! Goldman predicts $3,000 breakthrough in 2025

Gold prices are expected to hit new heights in 2025, driven by rising central-bank demand and US interest rate cuts, according to Goldman Sachs. Analysts, including Daan Struyven, have set a target of $3,000 an ounce by December 2025. Central-bank buying and US interest rate cuts are expected to drive the gold price surge, with a cyclical boost from exchange-traded funds (ETFs) as the Federal Reserve eases its policy.
Gold’s rally this year has been impressive, with prices reaching successive records, although a pullback followed Trump’s election victory due to a stronger dollar. Goldman analysts, in a note, foresee continued support from central banks, particularly those holding large US Treasury reserves, as they diversify into gold.
Economic times.

Indian bonds see biggest outflows since index addition

Overseas investors are cutting their holdings of Indian bonds at the fastest pace since at least June, as rising US yields damp the appeal of the Asian nation’s fixed-income securities.
Global funds sold a net 49.6 billion rupees ($588 million) of the so-called Fully Accessible Route bonds last week, according to Clearing Corporation of India Ltd. data. That’s the biggest weekly outflow from the securities since they were included in JPMorgan Chase & Co.’s largest emerging-market bond index in June, according to Bloomberg calculations.
Money control,November 18, 2024 11:00 IST

Rupee gains 8 paise to 84.38 against US dollar amid crude price support

The rupee recovered from its lowest level and appreciated by 8 paise to 84.38 against the US dollar in early trade on Monday despite a stronger American currency and sustained outflow of foreign funds.
Lower level of crude oil prices in the international market supported the recovery of local unit, forex traders said.
At the interbank foreign exchange, the rupee opened at 84.42 and strengthened further to 84.38 against the greenback, trading 8 paise higher from its previous close.
On Thursday, the rupee fell 7 paise to settle at its all-time low of 84.46 against the US dollar. Forex markets were closed on Friday on account of Guru Nanak Jayanti.
Business Standard,November 18, 2024 10:40 AM IST

10-year Treasury yield ticks up slightly following week of gains

The 10-year Treasury yield ticked up marginally on Monday as investors looked ahead to fresh data and central bank commentary after closing out a week of gains.
The yield on the 10-year Treasury note shifted half a basis point higher to 4.4316%. Meanwhile, the 2-year Treasury yield traded less than a basis point lower at 4.2992%.
CNBC,November 18, 2024 02:22 AM EST

Lebanon’s Prime Minister asks Iran to help secure a cease-fire in Israel-Hezbollah war

Lebanon’s caretaker Prime Minister Najib Mikati on Friday (November 15, 2024) asked Iran to help secure a cease-fire in the war between Israel and Hezbollah and appeared to urge it to convince the militant group to agree to a deal that could require it to pull back from the Israel-Lebanon border.
As a top adviser to Iran’s supreme leader Ali Khamenei visited Lebanon for talks, Lebanese officials said an American proposal for a cease-fire deal had been passed on to Hezbollah, aiming to end 13 months of exchanges of fire between Israel and the group.
The Hindu,November 16, 2024 01:35 am IST

Fed Chair Jerome Powell says no need to hurry rate cuts with strong economy

Federal Reserve Chair Jerome Powell said the recent performance of the US economy has been “remarkably good,” giving central bankers room to lower interest rates at a careful pace. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said Thursday in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
US central bankers began lowering borrowing costs in September with an aggressive half-percentage-point cut, and then lowered the policy rate again by a quarter point last week. They’ve signaled a willingness to cut rates further so long as inflation continues to slow. Powell’s comments appear in line with some of his other colleagues who are advocating a go-slow approach to future rate reductions.
Business Standard,Nov 15 2024 | 8:04 AM IST

India cannot risk another bout of inflation: RBI governor

India cannot risk another surge in inflation, and the best approach would be to wait for clearer evidence of inflation aligning durably with the target, Reserve Bank of India governor Shaktikanta Das said in the minutes of the monetary policy meeting released on Wednesday. He said that uncertainties such as heightened geopolitical tensions, volatile commodity prices, and the risk of adverse weather affecting food inflation present significant risks, and their impact should not be underestimated.
“At this stage of the economic cycle, having come so far, we cannot risk another bout of inflation. The best approach now would be to remain flexible and wait for more evidence of inflation aligning durably with the target,” said Das, as per the minutes of the Monetary Policy Committee (MPC) meeting held earlier in the month. “Monetary policy can support sustainable growth only by maintaining price stability,” he said.

RBI should cut rates: Piyush Goyal

The Reserve Bank of India (RBI) should cut the key benchmark interest rates to boost economic growth and ignore food prices while deciding on monetary policy, Union minister of commerce and industry Piyush Goyal said here on Thursday.
Speaking at the Global Leadership Summit organised by CNBC TV18, Goyal said that it’s an “absolutely flawed theory” to consider food inflation while deciding on rates. He, however, clarified that these statements were his personal views and not those of the government.
Financial Express, Published: November 14, 2024 / 20:55 IST

Respite from food inflation in 4 months likely; agri will grow at 5% in FY25: Ramesh Chand of NITI Aayog

India’s food inflation, which recently surged to 10.9 percent — its highest in 15 months — is expected to ease around March-April 2025 with the arrival of fresh onion, potato, and other vegetable crops, Ramesh Chand, Member, NITI Aayog said. He highlighted that the current inflation is largely due to soaring vegetable prices, particularly onions and potatoes, compounded by high international food prices, but ruled out imports or an export ban on onions for now.
“Food inflation is a worry and concern. Around March-April, food inflation should start easing. Much of the inflation is from the vegetable side, and in March-April we get a new crop of onion and potato. Winter is good for vegetable production, and pulses also start arriving in the market,” the NITI Aayog Member told Moneycontrol in an interview. He added that international prices for staples remain high, limiting options for import-based inflation relief, particularly with onions.
Money Control

India's merchandise exports surge 17% in Oct, fastest pace in 28 months

India’s merchandise exports grew at the fastest pace in 28 months in October, witnessing double-digit growth of 17.3 per cent year-on-year (Y-o-Y) to touch $39.2 billion, due to inventory build-up in the Western countries ahead of the Christmas season.However, the imports hit an all-time high of $66.34 billion in October, growing at 3.9 per cent, leading to a widening of the trade deficit, or the gap between imports and exports, to $27.1 billion from $20.8 billion in September, data released by the commerce department on Thursday showed.
On the brighter side, non-petroleum and non-gems and jewellery exports, an indication of a clearer parameter of exports’ health and domestic manufacturing, grew 27.7 per cent to touch $31.36 billion in the previous month.
Business Standard, Published: November 14, 2024

India’s October trade deficit widens to $27.14 billion on rise in imports

India’s merchandise trade deficit in October widened more than expected to $27.14 billion, driven by a rise in imports despite exports increasing year-over-year. Economists had expected the country’s October trade deficit to be $22 billion, according to a Reuters poll, compared to $20.78 billion in the previous month.
India’s merchandise exports in October rose 17.26% year-on-year to $39.2 billion while imports rose 3.88% to $66.34 billion, government data released on Thursday showed. In the previous month, merchandise exports were $34.58 billion and imports stood at $55.36 billion .”
Financial Express, Published: November 14, 2024 / 16:33IST

VRRR auction gets muted response from banks

The Reserve Bank of India’s variable rate reverse repo (VRRR) auction conducted on Thursday received a muted response from the banks. They parked only Rs 8,405 crore crore in the 15-day auction, amounting to just 5% of the notified amount of Rs 1.75 lakh crore.
“Banks are not comfortable in locking their funds in longer-duration VRRR auctions because it is difficult for them to predict the liquidity situation. Compared to longer duration auctions of 14-15 days, banks prefer to park their funds in overnight or two-day VRRR auctions, as these shorter tenures provide greater flexibility to manage their liquidity positions,” V Ramachandra Reddy, head of treasury, Karur Vysya Bank, told FE. “There will be outflows of nearly Rs 1.25 lakh crore related to GST after November 20, which may put some strain on liquidity in the month end.”
Financial Express, Published: November 14, 2024 / 03:45 IST

Foreign investors sell nearly $1 billion of JPM index-linked Indian government bonds in Nov

Foreigners have sold 82.1 billion rupees ($973 million) of Indian government bonds, which are part of the JPMorgan index, so far in November, according to clearing house data on Thursday.
A rise in U.S. yields along with a stronger dollar have driven the selling, traders and analysts said. They expect the outflows to persist until global market volatility settles.
“Foreign inflows will likely wait for U.S. yields and dollar index to stabilise before reverting to its pre-October pace,” said Nitin Agarwal, head of trading at ANZ India.
Economic Times, Published: November 14, 2024 / 03:32 PM IST

Banks flood US debt market in biggest single-day raise since 2016, BMO says

Banks raised $23.5 billion by issuing investment-grade bonds on Tuesday, the biggest debt issuance by financial institutions in a single day since the beginning of 2016, as they anticipate potentially higher interest rates next year.
The $23.5 billion in debt issued by financial institutions accounted for 78% of Tuesday’s total $30.15 billion in high-grade bond sales, which was the fifth-largest day of overall issuance in 2024, according to a Wednesday report by BMO Capital Markets.
“From yesterday’s flood of issuance, it seems like banks are issuing bonds now to get ahead of what could happen next year with rates” under President-elect Donald Trump’s administration, said Jack McIntyre, global fixed income portfolio manager at Brandywine Global.
Reuters, Published: November 14, 2024 / 03:37 AM GMT+5:30

Gold drifts higher amid bargain hunting ahead of US inflation data

Nov 13 (Reuters) – Gold prices edged up on Wednesday as investors sought bargains after steep declines in the previous session, while the spotlight shifted to U.S. inflation data, which could shed more light on the Federal Reserve’s path for monetary policy. Spot gold firmed 0.5% at $2,610.99 per ounce by 0437 GMT, after hitting its lowest since Sept. 20 on Tuesday. U.S. gold futures rose 0.4% at $2,617.20.”There is currently some bargain hunting as prices fell below the $2,600 mark,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific. “Recent sessions saw gold negatively impacted due to a stronger dollar, driven by expectations of inflationary policies by (U.S. President-elect) Donald Trump affecting the rate cut cycle.”

Reuters, Published:Nov 13 2024| 10:30 AM GMT+5:30

Japan's rising wholesale inflation heightens uncertainty on BOJ's rate hike timing

TOKYO: Japan’s wholesale inflation accelerated in October as renewed yen falls pushed up import costs for some goods, data showed on Wednesday, complicating the central bank’s decision on how soon to raise interest rates.
The corporate goods price index (CGPI), which measures the price that companies charge each other for goods and services, rose 3.4% in October from a year earlier, Bank of Japan data showed, above market forecasts for a 3.0% gain.
Economic Times, Published:Nov 13 2024| 07:04:24 AM IST

India's Oct wholesale inflation accelerates to four-month high

NEW DELHI, India’s wholesale price-based inflation (INWPI=ECI), opens new tab accelerated to a four-month high of 2.36% year on year in October due to elevated food prices, government data released on Thursday showed.Inflation for October was higher than the 2.2% projected by economists in a Reuters poll, and up from 1.84% in September.
Food prices rose 11.6% year on year, compared to a 9.5% gain in September, with vegetable prices soaring 63% on-year, compared to a 48.7% jump in September. Cereal prices rose 7.9% over last year versus an 8.1% rise a month ago.
Reuters

Retail inflation surges to a 14-month high of 6.2% in October

NEW DELHI: Retail inflation jumped to a 14-month month high in Oct on the back of stubborn food prices, breaching RBI’s upper tolerance band and dashing hopes of any interest rate cut for now, while industrial output growth rebounded in Sept, led by manufacturing, data showed on Tuesday.
Vegetables, cereals, fruits, oils and fats led the price surge, which pushed the food and beverages inflation rate closer to double digits at 9.7%. High food inflation has been identified as a key reason for the slowdown in demand in urban areas by some consumer goods companies as households have been hurt by soaring prices.
The data released the National Statistical Office showed retail inflation, as measured by the consumer price index (CPI), soared to 6.2% in Oct, higher than the 5.5% in Sept.
The Times of India, Published:Nov 13 2024| 00:50 IST

Emerging markets drive 15% YOY increase in global green bond issuance

There were 742 green bonds issued globally in the three months to September-end, up 15.2% year over year and 3.5% quarter over quarter, according to data from the Climate Bonds Initiative. The 193 bonds issued in Asia-Pacific — home to many of the emerging markets that drove the overall increase — was the region’s second-highest quarterly figure since at least the beginning of 2022. By comparison, the 347 green bonds issued in North America — which had the highest overall issuance by region — was just the seventh-most since the start of 2022.
At the same time, the $2.30 billion cumulative value of issuance in Latin America, home to other key emerging markets, was its third-best quarterly tally since the start of 2022, the Climate Bonds Initiative data shows.
S&P GLOBAL, Published:Nov 12 2024

RBI rolls out rules to reclassify FPI investment as FDI

MUMBAI: The central bank Monday laid down the rules a foreign portfolio investor (FPI) must follow, including seeking the Centre’s approval for raising equity ownership, once its holding in an Indian company breaches the prescribed 10% regulatory threshold. These norms come in the wake of additional scrutiny by New Delhi to monitor ownership of local financial assets by countries with which it shares a frontier.
The current law says an FPI cannot hold more than 10% of the total paid-up equity capital as portfolio investment in an Indian company. The investment is categorised as foreign direct investment (FDI) if the holding exceeds the 10% limit.
Until now, there was lack of clarity on how the offshore portfolio manager could go about classifying and reporting the stake once the holding crosses 10%.
Economics Times, Published:Nov 12 2024| 12:05:00 AM IST

RBI may defer rate cut call to February as inflation's still hot

India’s central bank is likely to defer a decision on slashing rates to at least February, economists said, illustrating the risks posed by imported inflation from a sliding currency and higher US vields after the election of stiff tariffs backing Donald Trump as the incoming president.
Reserve Bank of India (RBI) Governor Shaktikanta Das has said the October inflation print could exceed September’s 5.5%, and odds have lengthened on a durable win against inflationary pressures after the Trump victory raised the likelihood of both higher US borrowing and consumer prices – a combinaqtion that limits headroom to lower rates more quickly in the world’s biggest economy.
Economics Times, Published:Nov 11 2024| 12:55:05 AM IST

RBI rate cut: After the US Fed action, it’s a matter of when and not if

In an earlier column, “Why the RBI should reduce interest rates”, published on September 19, we had discussed why the stance of withdrawal of accommodation is outdated, and had called for changing the stance to neutral. We had also mentioned that in the context of the review meeting of the Monetary Policy Committee (MPC) on October 9, if not a rate reduction per se, it is high time for change of stance to neutral, in tune with the global scenario.
MoneyControl, Published:Nov 10 2024|12:19 IST

Investing in FD? Avoid these common mistakes to get full benefit

Almost everyone invests in FDs (or fixed deposits),which are also known as term deposits in some circles. All investment strategists suggest parking a part of every portfolio in FDs.
It is difficult to locate any investment portfolio in India that does not allocated any money at all in a FD. It carries low risk and a predictable interest income.
However, to maximise the benefits of FDs, one has to avoid a few common mistakes.
News9, Published:Nov 10 2024

Equity markets can’t ignore rising bond yields in US: Chris Wood

Jefferies’ global equity strategist Chris Wood said the stock market at some point will not be able to ignore the rising US bond yields in the wake of the election of Donald Trump as the US President.He said the other negative for equities is that the liquidity situation has begun to deteriorate at a time when valuations are at historic highs.”What seems clear is that the new president is likely to confront at some point negative bond market sentiment in the face of America’s deteriorating fiscal fundamentals,” said Wood in his newsletter Greed & Fear.
Yield on 10-year US Treasury has risen to 4.31%, from 3.6% in mid-September, ahead of the elections as Trump’s pre-election promises such as higher import tariffs and reduction in taxes are expected to drive up the economy’s debt.
ET, Published:Nov 09 2024 | 09:32 AM IST

Booming offshore Rupee bond market set for record year of supply

India’s offshore rupee bond market has made a big comeback this year, with deals from issuers such as the World Bank and the Asian Development Bank pushing annual volumes to an all-time high.
Investors have this year bought more than Rs 42,000 crore ($5 billion) of offshore rupee bonds, which are rupee denominated but settled in dollars. That is almost double last year’s tally and has already beaten the full-year record set in 2017, according to data compiled by Bloomberg.
MoneyControl, Published:Nov 08 2024 | 11:33 AM IST

Currency Market News: Rupee falls 5 paise to all-time low of 84.37 against US dollar

The interbank foreign exchange, the rupee opened at 84.32 against the greenback, then it fell further to an all-time low of 84.37, registering a rise of 5 paise over its previous close.The rupee fell 5 paise to an all-time low of 84.37 against the US dollar in early trade on Friday, weighed down by persistent foreign fund outflows and a muted trend in domestic equities. Forex traders said the US Federal Reserve’s recent decision to cut interest rates signals a shift in the global financial landscape. Moreover, with Donald Trump’s tax and trade policies influencing global markets, volatility could re-enter the rupee’s trajectory.
ZeeBusiness, Published: Nov 08, 2024, 05:37:00 AM IST

Sovereign green bonds now eligible under FAR

Mumbai: The Reserve Bank of India has made the 10-year sovereign green bonds eligible in the fully accessible route category, which will be opened fully for non-resident investors without any restrictions, apart from being available to domestic investors.
This inclusion of green bonds in the FAR category is expected to increase investor appetite for the paper, experts said. The RBI has issued a total of ₹36,000 crore in green bonds since 2022-23.The government plans to issue ₹20,000 crore in green bonds in four tranches in the second half of 2025. The next auction for the 10-year green bond will be held in the last week of November. These green bonds are intended to help the government raise funds for public sector projects with sustainable goals.
ET, Published: Nov 08, 2024, 05:37:00 AM IST

What’s happening with the UK Government bond market

The first Budget from a Labour government in 14 years continues to stir heated debate and sceptics point to the increase in the yield in the UK’s 10-year gilt to a one-year high to support their case that Chancellor Rachel Reeves is on the wrong track.
It doesn’t look great that yields are rising in the wake of August’s interest rate cut from the Bank of England, but 10-year government bond yields are rising in France and the US, too, and faster than they are here in the UK, to perhaps suggest there is a wider issue at work.In principle, the price of benchmark government bonds should rise and the yield should fall once a central bank cuts interest rates, especially if the monetary authorities give strong hints that further reductions in headline borrowing costs are on the way.
This is because the coupons on existing issue may look more attractive relative to the coupons that will come with newly issued bonds, so investors will look to buy the bonds that are already available to lock in higher returns (at least in nominal terms). The price of existing benchmark bonds, such as those with a 10-year maturity, should rise and so the yield should fall, since the coupon payments continue to come at their pre-set level at the pre-set time.
AJBell, Published: November 7, 2024

Federal Reserve lowers interest rates by 0.25 percentage points in second cut of 2024

The Federal Reserve on Thursday announced its second interest rate cut of 2024, trimming its benchmark rate by 0.25 percentage points amid cooling inflation. The expected move by the U.S. central bank provides additional relief to millions of Americans grappling with high borrowing costs. The Fed cut, half the size of its September reduction, lowers the federal funds rate — the interest rate banks charge each other for short-term loans — to a range of 4.5% to 4.75% from its current 4.75% to 5% level.
CBS News, Published: November 7, 2024 / 5:07 PM EST

U.S. dollar jumps as Donald Trump recaptures the White House

The U.S. dollar strengthened against the Mexican peso and other major global currencies Wednesday as former president Donald Trump recaptured the White House, becoming just the second president in history to return to win two nonconsecutive White House terms. NBC News projects Trump’s victory, making the 78-year-old the oldest person ever to win a U.S. presidential election.
On currency markets, the greenback gained 2.6% against the Mexican peso, hitting its highest level since 2022. The dollar was also stronger against the Swiss france, Japanese yen and Chinese yuan. The ICE U.S. Dollar Index
rose 1.4%, hitting its highest level since July.
CNBC, Published: Nov 06, 2024,04:20 PM IST

GST collection rises 9% on domestic demand

NEW DELHI: The Goods and Services Tax (GST) revenue in October grossed over ₹1.87 lakh crore — the second highest monthly collection since the new tax regime started in July 2017 — on the back of robust domestic demand and stricter compliance, indicating a better-than-expected beginning to the second half of FY25.
The GST collection in the month saw an 8.9% year-on-year jump in gross revenue at ₹1,87,346 crore, and surpassed the previous second-highest monthly collection of ₹1,87,035 crore in April 2023 despite strong global headwinds and single-digit growth posted by some of the key states such as Tamil Nadu, Telengana, Uttar Pradesh (UP), Jharkhand, and Karnataka. Chhattisgarh posted a 1% y-o-y contraction at ₹2,656 crore.
Hindustan Times, Published: Nov 02, 2024,10:18 AM IST

India's forex reserves fall by $3.5 bn

The Reserve Bank of India’s foreign exchange reserves fell by $3.5 billion to $684.8 billion in the week ended September 25, latest data showed. The central bank likely sold dollars to prevent a sharp depreciation in the rupee, traders said.Foreign currency assets fell $4.5 billion to $593.7 billion, while gold reserves rose $1 billion to $68.5 billion.
The Indian rupee traded in a narrow range of 84.05/$1 to 84.08/$1 in the week ended September 25, as foreign portfolio investors bought dollars.Likely dollar sales from the RBI prevented a sharp depreciation in the rupee.Outflows from Indian stocks and bonds worth $11.5 billion added more pressure on the rupee. The rupee closed at 84.08 per US dollar on September 25, LSEG data showed.
Economic Times, Published: Nov 01, 2024,11:43 PM IST

US economy adds fewer jobs than expected in October amid hurricanes, strikes

Investing.com — The US economy added far fewer jobs than anticipated in an October, although the figures were impacted by devastating recent hurricanes and ongoing labor actions.Nonfarm payrolls rose by 12,000 during the month, falling from a downwardly revised 223,000 in September. Economists had expected a reading of 106,000.
The Labor Department noted that it was the first survey collected since Hurricanes Helene and Milton smashed into the US Southeast, causing severe damage in the region. However, officials were not able to say exactly how much the storms dented the jobs report.
“It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events,” the Labor Department said in a statement.
Investing.com, Published: Nov 01, 2024,06:36 PM IST

With Growing Economy, India Has 4th Largest Forex Reserves Globally

With its growing economic strength, India has achieved the significant feat of joining the ranks of the world’s largest foreign exchange reserves, securing the 4th position globally after China, Japan, and Switzerland. While there was a time when India’s economy was considered a part of the ‘Fragile Five’. But India’s rise from the “Fragile Five” to the fastest-growing major economy is an example for other developing countries.
Today, India has not only become the fifth-largest economy in the world but has also set a new record in terms of foreign exchange reserves. For the first time in history, India’s foreign exchange reserves have reached above USD 700 billion. According to the Reserve Bank of India, India’s foreign exchange reserves increased by USD 12.588 billion in a week to reach an all-time high of USD 704.885 billion in the week ending 27 September.
Business World , Published: Nov 01, 2024

ETMarkets Smart Talk: $9 bn selloff in October by FIIs; smart money moving to China: Hemant Kanawala

“FIIs sold equities in excess of $9 bn in October as they are increasing their exposure in China post policy announcement by the Chinese government to stimulate the economy,” says Hemant Kanawala, EVP & Head of Equity at Kotak Life Insurance.
In an interview with ETMarkets, Kanawala said: “The market is trading at a 1 year forward P/E of 22 on the consensus estimate, which is at a slight premium to long term average.”
Economic Times, Published: Nov 01, 2024, 12:59 PM IST

India Inc turns to bond derivative trades to hedge against rate risks

Mumbai: Indian corporates are beginning to embrace new products to hedge against interest rate fluctuations, with HSBC and a large information technology firm recently executing a specialised bond derivative trade hitherto mainly used by insurers to lock in desired returns.
A senior HSBC India executive told ET that the UK-based bank has carried out a rupee sovereign bond forward rate agreement (FRA) with a major Bengaluru-based information technology company, marking one of the first such transactions outside of the insurance space.The move comes amid market expectations of the Reserve Bank of India (RBI) embarking on a rate-cut cycle in coming months.
Economic Times, Published: Nov 01, 2024, 08:29 AM IST

RBI to cut rates in Dec to 6.25%, say narrow majority of economists: Poll

India’s central bank will cut its key policy rate in December by a quarter point to 6.25 per cent to bolster slowing economic growth, according to a slim majority of economists in a Reuters poll who also expect inflation to moderate in the near-term.
Inflation unexpectedly spiked to 5.49 per cent in September, but was forecast to cool to an average 4.9 per cent this quarter and drop to 4.6 per cent in January-March, giving the Reserve Bank of India (RBI) room to ease policy.
The central bank has held interest rates at their highest since early 2019 for the past 10 meetings.
Business Standard, Published:Oct 30 2024, 9:16 AM IST

The rising impact of retail investors on debt capital markets

Traditionally, the debt market has been the domain of banks, mutual funds, pension funds, and insurance companies, which are the primary institutional heavyweights. However, times are changing. The Rs 2.64 trillion debt market (Source: SEBI and ICCL) is seen as a significant opportunity for retail investors and is on the cusp of a major transformation. It’s encouraging to see the regulator stepping forward with substantial reforms that have driven the ‘retailization’ of the bond market, the most notable being the reduction of the face value for retail debt participation from Rs 10,00,000 until January 2023 to Rs 10,000 now
Economics Times, Published:Oct 27 2024, 11:02:00 AM IST

SBI raises Rs 5,000 crore through AT-1 bonds at coupon of 7.98%

State Bank of India has raised Rs 5,000 crore through the sale of additional tier-1 (AT-1) bonds on Wednesday, with the country’s largest mass lender augmenting its core equity capital amid firm credit growth in the economy.
The bank issued the AT-1 bonds at a coupon rate of 7.98%, debt capital market sources said. SBI’s AT-1 bonds have a call option after 10 years. The coupon rate is the rate of investors paid out to investors.
ET had reported on October 15 that SBI was likely to raise up to Rs 5,000 crore through the issuance of AT-1 bonds in the current week. AT-1 bonds are perpetual bonds which have certain equity-like characteristics and features. These instruments are used by banks to boost their core equity capital.
Economics Times, Published:Oct 23 2024, 04:46:06 PM IST

Interest rate cut at this stage will be ‘very premature, very risky’: RBI Governor Das

At a time when consumer price-based inflation (CPI) is expected to remain above 5 per cent, and growth holding on, a cut in the interest rate would be “premature, and very risky”, Reserve Bank of India (RBI) Governor Shaktikanta Das said Friday.
Retail inflation, which surged to a nine-month high of 5.49 per cent in September from 3.65 per cent in August, is expected to remain elevated in October before moderating in November, Das said in a fireside chat at the India Credit Forum hosted by Bloomberg.“I would like to say that certainly, we are not behind the curve. The Indian growth story remains intact. India is poised to grow at 7.2 per cent according to the projection which we made in the last Monetary Policy Committee meeting. Growth is holding on, steady and resilient. Inflation is moderating with certain risks about which we have to be very vigilant,” he said.
Indian Express, Published : October 19, 2024 07:47 IST

How Sebi’s liquidity window may help investors sell bonds

The Securities and Exchange Board of India (Sebi) has introduced a three-day liquidity window facility to encourage retail participation in the corporate bond market.In a 16 October circular, the market regulator said it would allow bond issuers to give investors voluntary put options to sell bonds back at specific intervals before maturity.A put option will give investors the right but not the obligation to sell the bond back to the issuer during the liquidity window.
According to Sebi, India’s corporate bond market is perceived to be illiquid due to low levels of secondary market transactions, as large institutional investors hold them to maturity.The liquidity window, it said, would help change that perception.
Mint, Published :October 18, 2024

ECB Cuts Rates For Third Time To Prop Up Weakening Economy

The European Central Bank lowered interest rates for the third time this year as a hastier retreat in inflation allows it to offer support to the region’s stuttering economy. The key deposit rate was cut by a quarter-point to 3.25% — as predicted by all analysts in a Bloomberg survey. The ECB said the process of taming prices should be complete “in the course of next year” .
NDTV Profit, Published :October 17, 2024 06:30 PM IST

Sebi moots voluntary 'Put' to boost liquidity in corporate bonds

Mumbai: The Securities and Exchange Board of India (Sebi) has said that it will establish a framework for a liquidity window facility for corporate bonds via a voluntary ‘put option’ that investors could use to sell bonds back to issuers.
Economics Times, Published :October 17, 2024 06:18:01 AM IST

RBI accepts nearly Rs 25,000 crore bids in bond buyback

Mumbai: The Reserve Bank of India on Thursday accepted bids worth ₹24,453.3 crore for government securities at the buyback auction, versus the notified amount of ₹25,000 crore. The amount offered by banks was more than double the notified amount, indicating strong appetite from the market to participate at the buyback auction. This auction was one of the most successful buyback auctions conducted by RBI since the central bank resumed such operations in May this year after a gap of six years.
Economics Times, Published :October 11, 2024 05:47:00 AM IST

RBI holds repo rate steady, shifts to Neutral stance; asks NBFCs to carefully evaluate their exposures

RBI Policy Meeting News Live: RBI Guv Shaktikanta Das kept the repo rate unchanged today, as rising food prices maintain economic pressure. However, easing core inflation and decreasing global borrowing costs prompted the central bank to shift to a neutral stance.
RBI MPC Meeting News Live: The Reserve Bank of India (RBI) kept interest rates unchanged today, as rising food prices continue to maintain economic pressure. However, easing core inflation and decreasing global borrowing costs prompted the central bank to shift to a neutral stance .
In a poll conducted by ET with 12 respondents, all participants predicted that the RBI’s Monetary Policy Committee (MPC) would maintain the repo rate at 6.50% after its three-day meeting concluding on August 8. This would be the ninth consecutive bi-monthly meeting with no change in rates.
Economics Times, Published :October 9, 2024 10:37:40 AM IST

RBI Monetary Policy Meeting LIVE Updates: Shaktikanta Das-led MPC to keep repo rate unchanged, may alter policy stance

RBI Monetary Policy Meeting LIVE Updates: The Reserve Bank of India (RBI) is set to announce its fourth bi-monthly monetary policy for FY25 today, October 9. The three-day meeting of the six-member RBI Monetary Policy Committee (MPC) ends today and the RBI Governor Shaktikanta Das will announce the policy decision at 10:00 AM. The RBI’s rate-setting panel is widely expected to keep the benchmark repo rate unchanged at 6.5% for the tenth straight meeting, with a view to balance inflation and economic growth. However, most economists estimate a change in policy stance of ‘withdrawal of accommodation’. This is the first RBI MPC meeting after three new external members appointed by the government on the panel last week.
Livemint, Published :October 9, 2024 07:57 AM IST

Newly reconstituted MPC with 3 new members to begin maiden meeting on Monday

Newly reconstituted Monetary Policy Committee of the Reserve Bank of India with three new appointed external members will commence its maiden meeting on Monday. The outcome of the three-day meeting of the MPC would be revealed by MPC Chairman RBI Governor Shaktikanta Das on next Wednesday (October 9).It is widely anticipated that the MPC will keep interest rate unchanged despite change in composition of external members.
This would be tenth time in a row when the Reserve Bank of India (RBI) will maintain status quo as far as policy rate is concerned. The MPC last revised interest rate in February 2023, when it was hiked to 6.5 per cent.
ET, Published : Oct 02, 2024, 06:14:00 PM IST

Jerome Powell says US Fed not in a hurry, will lower rates ‘over time’

Federal Reserve Chair Jerome Powell said the central bank will lower interest rates “over time,” while again emphasizing that the overall US economy remains on solid footing.
Powell also reiterated his confidence that inflation will continue moving toward the Fed’s 2% target, adding that economic conditions “set the table” for a further easing of price pressures.
CNBC, Published : Oct 1, 2024, 07:01:30 AM IST

Even in FD, your money is not 100% safe, investors should know these 5 risk factors of Fixed Deposit

Fixed Deposit is still the preferred investment option for most people because people feel that their money is safe in it. If you also have such a misconception, then get rid of it because it is not so at all.FD is indeed much safer than the market, but even in this your money is not 100% safe. Most people are not aware of this. Know here 5 risk factors of Fixed Deposits.
Usually, people consider bank FD completely safe and invest their large amount in it. Although the money in FD is safe, but if the bank defaults in any condition, then only the deposit of up to 5 lakhs of the investors is safe because DICGC guarantees insurance of only up to Rs 5,00,000 on bank deposits.
Dailyhunt , Published: Aug 14 2024

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