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Rupee slips 6 paise to 72.41 against US dollar

MUMBAI: The rupee depreciated 6 paise to 72.41 against the US dollar in opening trade on Thursday tracking weakness in Asian peers. At the interbank forex market, the domestic unit opened at 72.35 against the US dollar, then lost further ground and touched 72.41, registering a fall of 6 paise over its previous close.

On Wednesday, the rupee had settled at 72.35 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.19 per cent to 90.

“Most of the Asian currencies have started weak this Thursday morning and could weigh on sentiments,” Reliance Securities said in a research note.

Technically, the USD-INR spot pair holds a support near 72.25-72.30 levels and only a sustained trade below could see a bearish momentum up to 72.10-71.95 levels. However, a bounce back from 72.30 could take the pair up to 72.45-72.60 levels, the note added.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 414.04 points higher at 51,195.73, and the broader NSE Nifty advanced 135.95 points to 15,117.95.

Foreign institutional investors were net buyers in the capital market and purchased shares worth a massive Rs 28,739.17 crore on Wednesday, according to exchange data.

Brent crude futures, the global oil benchmark, advanced 0.16 per cent to $67.15 per barrel.

Weak rupee: Importers stop fresh cement import orders from Pakistan

CHANDIGARH: Cement imports from Pakistan through Attari-Wagah route has almost come to a halt with record rise in US dollar against rupee, eliminating the viability for its import, traders said here.

“There are no fresh orders taking place for import of cement from Pakistan because of weakening of rupee against the US dollar,” Amritsar-based leading cement importer M P Singh Chattha told PTI on Friday.

Importers pointed out that there was now no viability of importing cement from the neighbouring country as weakening of rupee had completely brought the pricing of Pakistan’s cement on par with that of Indian one.

“Now, price of Indian cement is on par with as Pakistan’s cement price because of rise in US dollar against rupee. After import, cement from Pakistan now costs at wholesale price of Rs 250 per bag, while Indian one is available at Rs 242 per bag,” he said. “If an importer does not get a profit of Rs 2-4 per bag, then why he will import,” he questioned.

Import of cement from Pakistan got a boost in the past as it was cheaper by Rs 20-25 per bag as compared to Indian cement. Moreover, the quality of cement from Pakistan is better than that of Indian cement, importers said.

A large number of traders are engaged into the import of cement which mainly comes from Islamabad and it is consumed in Punjab, Haryana, Himachal Pradesh and some other parts of the country. Financial transactions between traders of Pakistan and India at Attari-Wagah route is carried out in dollar terms.

Indian rupee touched a record low of 68.85 against the dollar earlier this week. Currently, against 40-50 trucks, now 10-15 trucks carrying cement are coming from Pakistan. “Whatever cement is coming now is the result of previous orders,” said another import Rajdeep Uppal.

Meanwhile, importers further said that rates of dry fruits and dry dates coming from Pakistan would go up by 20 per cent. “Prices of dry fruits and dry dates have gone up by 20 per cent due to weakeing of rupee,” said a dry fruit importer Anil Mehra. It is estimated that more than 15 lakh bags of dry fruits, including almond, fig, raisins, are imported annually from Pakistan.

Importers said that there was drastic fall of import of dry fruits and dry dates as traders are worried over uncertainty prevailing in rate of rupee against dollar.

Capital goods industry demands zero duty on stainless steel imports due to falling Rupee

KOLKATA: The Plant & Machinery and capital goods manufacturers have urged the government for zero duty on stainless steel and special steels due to fall in the rupee value.

“The Capital Goods manufacturing companies exporting Process Plant machinery have been demanding removal of import duties on import of stainless steel hot rolled sheets, coils and cold rolled products. Government had imposed anti dumping duties as well on imports originating from European Union , South Korea, Taiwan and USA and South Africa despite the fact that there are so many grades and forms which are presently not manufactured in India” said Mr V.P.Ramachandran , Secretary General, Process Plant and Machinery Association of India (PPMAI).

“The continuing depreciation of Indian currency against US dollar since one year and the steep depreciation in past one week by 10% has already given a protection margin of over 30% to the domestic manufacturers. Capital goods industry has to import products as per International quality which are not produced in India and therefore imposition of duty is a disadvantage to us” he added.

The capital goods industry manufactures equipments for critical segments of infrastructure and are end users of specific grades and sizes of stainless steel for catering to energy, oil and gas, desalination, nuclear energy, automotive, infrastructure projects and the petrochemicals industry.

Tata group undertakes investment in Swiss solar company

ZURICH: Tata group has invested in a Swiss start-up solar company as several companies from the European country vie for a share in the Indian solar energy market which is seen as having a huge potential due to its growing energy needs.

“Tata is an investor in Flisom and has a significant investment in the company,” Chief Operating Officer of Flisom Sudheer Kumar said speaking at the company’s research office in Dubendorf here.

Asked about the Tata share of investment in the Swiss start up that deals with Solar energy generation equipment, Chief Executive Officer of Flisom Ulfert Ruhle merely said there were no majority stakeholders in the company.

“We have several investors and no one is a majority stakeholder but we can tell you that Tata is among the top investor,” Ruhle added.

Ruhle and Kumar are of the view that India has a huge potential for exploiting the solar energy to meet its future energy requirements.

The energy requirements are growing in India and they have to look for sources of new and renewable energy, they said adding a country like India can generate significant electricity from Sun light.

Kumar said the copper indium gallium selenide (CIGS) solar cells developed by his company were suited for a country like India.

“We have developed these cells on a thin film which can be folded and stored inside the house at night.

While the cost of manufacturing and installation is lower than other solar cells, the efficiency is good and processing takes place at high speed,” he added.

Meyer Burger, another company dealing with Photovoltaic materials which is setting up two Solar power plants in Gujarat and Kerala, is also hoping to do more business with Indian companies and is ready to pass on the technology as well.

“Nuclear energy may not be enough for India. This will provide energy to big cities like Mumbai but there will be energy requirement in rural parts of the country too. This is where solar energy can be of help,” Peter Pauli, CEO of the Meyer Burger, said.

Pauli said his company will be able to set up the solar power plants which have a cumulative capacity of generating over 950 megawatts of power within 18 months of getting approval from the government.

“We are ready to be faster. It is now for the other side (Government of India). We hope the change in the Government will expedite the process,” Pauli added.

The Meyer Burger official said the cumulative cost of the two solar power plants would be in the range of US Dollar 800 million, including the cost of buildings.

Several other Swiss companies involved in research in Solar energy field are hoping that Indian companies and government take keen interest in renewable energy equipment.

They felt China was dumping huge quantities of such equipment to put companies based in the West nearly out of business.

“China is the market leader in photovoltaic field. In fact it controls the huge segment of the market. India is one of the few countries which can emerge as a viable alternative as the Chinese have brought down the prices which is to such a low that no one can compete with that,” a researcher at Ecole Polytechnique Federale de Lausanne (EPFL) said.

India’s diamond industry hit by falling Chinese demand: GJEPC

NEW DELHI: The country’s diamond industry has been affected due to a 40 per cent fall in demand from slowdown-hit China, industry body GJEPC said today.

“We are feeling the pinch of slowdown in Chinese demand for diamond jewellery. Our market share in China has come down by 40 per cent due economic slowdown,” Gem and Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah told PTI.

India exports mostly polished diamond jewellery to China. “Things have not been great since April as demand has been continuously falling not only in China but other markets as well due to strengthening of the US dollar against other currencies,” he said.

Falling demand in China and other markets like Middle East due to weak economy has forced domestic traders to cut down production and jobs, he added.

“Right now, there is over dependence on the US market. We are pushing exports to the US markets. All other markets are also difficult right now because world economy is disturbed. Most currencies are trading down as compared to the US dollar,” he said.

As per the GJEPC data, India’s export of cut and polished diamonds dropped by 13 per cent to Rs 9,625.57 crore in July this year, as against Rs 11,126.02 crore in the year-ago period.

In volume terms, the shipments of cut and polished diamonds fell to 27.97 lakh carats from 32.62 lakh carats in the said period.

Tech hubs feel the pinch as rupee continues southern voyage

NEW DELHI/KOLKATA: The plummeting rupee has cast a lengthening shadow across India’s tech and appliances hubs such as Delhi’s Nehru Place and Lamington Road in Mumbai, with footfall down by a fifth as prices of imported electronic items have shot up 15% over the past month alone. Traders fear that sales during the upcoming festive season may fall as much as a half of the year-ago period.

“Prices of imported products are going up and this is bound to have an impact on sales this festive season, not that we have had anything to cheer for in the past few months either,” says Rishi Kumar Agarwal, owner of Harmony Computers in Nehru Place which clocks at least 20% of its annual sales during the festive season.

The mood is equally sombre in Kolkata’s Fancy Market and Five Star Market, Gaffar Market in Delhi and Chennai’s Ritchie Street. With the rupee sliding past 64, prices of laptops, desktops, tablets, mobile phones and accessories have been on a sharp and steady rise. On Wednesday, the rupee closed at 64.02 to a US dollar, the lowest for the Indian currency.

The rupee has tumbled over 13% against the dollar since the beginning of April and several measures by the Reserve Bank of India have not managed to arrest its free fall.

A Deutsche Bank report on Wednesday said the rupee could drop to 70 against the dollar in a month. Customer spending has been slackening over the past few months and business is down 50%, says Rajan Madaan, owner of Vidhit Electronics in Gaffar Market, where imported TVs, phones, electronic pianos and other appliances are on sale alongside imported shoes, watches, perfumes and cosmetics.

Traders in Kolkata’s popular Fancy Market and Five Star Market in Khidirpur say month-onmonth sales have declined 15-25% in July-August. The markets are popular for imported large-screen LED and LCD televisions, gaming consoles such as PS3 and Xbox, Blu-ray players, imported perfumes, personal care products, home decor and musical instruments.

The recent ban on free imports of flat-screen televisions from neighbouring countries has come as a double whammy. “While our prices will be still lower than the main market, the sharp increase in prices is acting as big deterrent for consumers. We are now planning to offer EMI scheme for our regular customers,” says Akbar Ali, a shop owner in Fancy Market who deals in musical instruments.

On Ritchie Street in Chennai, which is touted as the biggest IT market in India after Nehru Place, shop owners are bracing themselves for dull festive months after footfall declined 40% in August.

“People are delaying their purchases. They are waiting for prices to come down. To keep up the sales we have even taken a margin hit, but even then prices are high. We cannot sustain it for long,” says Padam Singh of Kaba Infotek. Some importers are trying to salvage the situation by selling at revised prices the stock imported earlier.

“But if the rupee reaches 70 to a dollar, even this might not suffice,” says an importer, who does not wish to be named. Sanjay Jain of Ultra Peripherals, on Lamington Road, says not just inpiduals but also corporations have deferred their purchases. “Many of our orders have gone on hold. For some of the orders we have to submit re-quotations. We have seen a dip of nearly 25% in the number of orders we are executing,” says Jain.

Several traders have even stopped imports and opted to wait for the rupee to stabilise. But this has led to a shortage of products in the market, further accentuating the price rise and deterring customers.

Free fall of Rupee to make consumer goods costlier

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 twothree weeks and new stocks will be brought at higher prices.

“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.

government finances | Rupee plunges 32 paise to close at 73.42 against US dollar

MUMBAI: The rupee plunged by 32 paise to close at 73.42 (provisional) against the US dollar on Tuesday, tracking a strong American currency in the overseas market and muted trend in domestic equities.

Forex traders said the fall in the domestic unit was in line with other Asian peers.

At the interbank foreign exchange market, the local currency opened at 73.12 and dropped to a low of 73.44 in the day trade.

The domestic unit finally settled at 73.42 against the greenback, down 32 paise over its previous close. On Monday, the local unit settled at 73.10 against the greenback.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.22 per cent higher at 92.23.

According to Dilip Parmar, Research Analyst, HDFC Securities, the rupee depreciated in line with other Asian currencies.

“Profit booking in domestic equities, after touching lifetime high, and dollar outflows weighed on rupee. Traders expecting dollar outflow related to pidend from a steel company and central bank’s intervention could add pressure on the local currency,” Parmar said.

Brent crude futures, the global oil benchmark, fell 0.01 per cent to USD 72.21 per barrel.

On the domestic equity market front, the BSE Sensex ended 17.43 points or 0.03 per cent lower at 58,279.48, while the broader NSE Nifty declined 15.70 points or 0.09 per cent to 17,362.10.

Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 589.36 crore, according to the exchange data.

gold price today | Commodity strategies: Gold, silver, crude, base metals

By Tapan Patel

Commodity prices traded mixed on Wednesday, continuing the trend from the previous session. On Tuesday, bullion prices ended lower on a stronger dollar while crude oil and base metals rebounded from day’s losses to end in green. The dollar index ended 0.14 per cent up for the day. Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion
Bullion prices traded steady on Wednesday as spot gold price at COMEX was trading near $1895 per ounce while spot silver price at COMEX was trading marginally up at $27.64 per ounce in the morning trade. Precious metals are trading in a narrow range as traders and investors are waiting for fresh triggers from US inflation data. The lack of key economic data and comments from the US treasury secretary on inflation has kept the bullion prices in range during the week so far. We expect bullion prices to trade sideways to down for the day.

Trading Strategy:
MCX Gold August resistance for the day lies at Rs. 49500 per 10 grams with support at Rs. 48800 per 10 grams.
MCX Silver July support lies at Rs. 70200 per KG, resistance at Rs. 72400 per KG.

Outlook: Crude Oil
Crude oil prices traded higher on Wednesday as benchmark NYMEX WTI crude oil price was trading over half a percent up at $70.39 per barrel in the morning trade. Crude oil prices rose above $70 to their highest since October 2018, on a strong demand outlook. The API report showed that weekly US crude oil stockpiles fell by 2.1 Mb in last week. Ease in lockdown measures along with large-scale vaccination programs has boosted the demand outlook for oil. We expect crude oil prices to trade higher for the day.

Trading Strategy:
MCX Crude Oil June support lies at Rs. 5060 per barrel with resistance at Rs. 5170 per barrel.

Outlook: Base Metals

Base metals prices traded mixed on Wednesday as most of the metals kept to a narrow trading range. Base metals traded under pressure on weak demand outlook from China, mixed inflation data, and lower imports. China’s refined copper output fell to 850.1kt in May, down 3.1 per cent from April, amid maintenance. Aluminum output at 3.315m tons, was down 1.3 per cent on daily basis from April, amid disruptions in Yunnan, Inner Mongolia due to power rationing, emission controls. Base metals are expected to trade sideways to up for the day.

Trading Strategy:
MCX Copper June support lies at Rs. 735 and resistance at Rs. 748.
MCX Zinc June support lies at Rs. 234, resistance at Rs. 242.
MCX Nickel June support lies at Rs. 1290 with resistance at Rs. 1350.

(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)

Gold prices | Gold prices hover near $1,900/oz on subdued US dollar, yields

Gold prices hovered near the key level of $1,900 an ounce on Tuesday, supported by a weaker dollar and lower bond yields, while investors awaited US data later this week to gauge inflationary pressure.

FUNDAMENTALS

* Spot gold was steady at $1,899.94 per ounce, as of 0053 GMT.

* U.S. gold futures edged 0.2% higher to $1,902.80 per ounce.

* The dollar index, which measures the greenback against a basket of major currencies, was flat at 90.003, well below a three-week high of 90.627 hit last week. [USD/]

* The benchmark 10-year yield was pinned near more than one-week low, reducing the opportunity cost of holding non-interest bearing gold. [US/]

* Market participants’ focus this week will be on the U.S. consumer price index report that is expected to shed more light on the Federal Reserve’s near-term policy decision.

* Some investors view gold as a hedge against higher inflation that could follow stimulus measures.

* Japan’s economy shrank at a slower-than-initially reported pace in the first quarter, on smaller cuts to plant and equipment spending, but the pandemic still dealt a huge blow to overall demand.

* British retailers reported a big boost in sales in May, after lockdown measures ended the month before and a relaxation of restrictions on hospitality drew more shoppers into town centres, industry data showed on Tuesday.

* A gauge of global equity markets closed at a record high on Monday. [MKTS/GLOB]

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.6% to 1,037.33 tonnes on Monday from 1,043.16 tonnes on Friday. [GOL/ETF]

* Silver rose 0.1% to $27.89 per ounce, palladium gained 0.1% to $2,837.76, while platinum edged 0.1% higher to $1,174.02.

DATA/EVENTS (GMT)

0600 Germany Industrial Output MM April

0900 EU GDP Revised QQ, YY Q1

1230 US International Trade April