India Posts on Forex Blog
FX News Under the Radar
Jun 21, 2008
Some FX news you might have missed Friday.
1. IMF upgrades US growth to 2% for 2009.
The International Monetary Fund (IMF) increased forecasts for US 2009 GDP growth to 2%. According to the IMF, The US downturn has been mitigated by well-timed fiscal stimulus, strong export growth, and healthy corporate balance sheets. However, the IMF warned of downside risks from "strains on household and bank finances, and now also by higher commodity prices."
Read the full release at the IMF
2. California Unemployment Hits 6.8%
California, hard hit by the housing crisis, hit a 2008 low in unemployment. Joblessness rose 0.6% month-over-month and was a full 1.5% higher than May 2007. The total number of unemployed came in at 1.26 million, up 300k year over year.
With the state facing a $15.2 billion deficit, things are bound to get worse. Among other proposals for a deficit fix has been an increase in already high state income taxes. Califonria's rate of 9.3% comes in 2nd only to Vermont. Higher state taxes could impose a major drag on a key component of the US economy.
3. India inflation hits 11%
India's wholesale inflation rose to 11% Year over Year. This is far higher than last week's reading of 8.75%. Unlike many other countries, India tracks inflation by tracking the wholesale price of 435 goods.
India is facing a very difficult period, as they have had to cut fuel subsidies by 10% and and just last week the central bank increased short-term borrowing rates from 7.75% to 8%.
The Sensex exchange is down 30% this year since peaking at 21,206.80 in January. The index closed at 14,571.29 Friday.
IMF, India, inflation, GDP, jobs report
Having Screwed Up the Futures Markets, Indian Government Turns to the Forex Markets
May 19, 2008
Indian is quickly turning into one of the worst places for speculative traders AND hedgers. Last year, they banned futuers trading in wheat, rice, tur, and urad. This year they added a ban on trading futures in the Soya complex. (It should be noted they were gracious enough to avoid a ban on sugar trading - so far).
And last Friday, it became the forex market's turn, as the government enacted a 0.25% tax on all buys AND sells. Most brokers have already passed the cost of the full tax onto retail customers. However, the wholesale industry, which makes up about 60% of the forex market in India, is unsure about the tax. On Friday, wholesale currency traders bought a mere 5% of their norm - yikes! One Mumbai dealer commented that with &#quot;wafer-thin" margins of 0.35% - 0.75%, a 0.25% would leave nothing for the wholesalers.
Read more at India Times
Rupee, India
Indian Rupee at 13 Month Low, Housing Hit Hard Q1
May 15, 2008
The Rupee was down 0.7% Thursday, hitting 42.75/76 against the dollar. This is the lowest level since mid April 2007. High oil prices plus weak housing data in the first quarter have steadily lead currency traders out of the Rupee.
Housing has suffered in India's major markets this year. Markets in Bangalore, Mumbai, Chennai, and Pune are reporting a 15-20% decline in prices. Other major locales such Delhi, Maharani Bagh, and Hauz Khas have seen 5-10% declines.
Oil is India's biggest import, as such the meteroic price increase has hit them especially hard. India' oil import bill was up more than 33% for their economic year of 07-08.
Read more at the India Times on Rupee and India Times on Housing
Rupee, India, housing
India Inflation at 3 Year High
May 2, 2008
India's wholesale index, which measures inflation at the "factory gate" came in at 7.57%. This is the highest since Novemeber 2004. The government has been battling inflation through price controls, raising bank requirements, and limiting food exports.
Read more at the BBC
India, inflation
Indian Exports up 23% for the Year, Fall Short of Projections
May 1, 2008
India's exports for fiscal year end March 31 2008 came in at $155.5 billion, up 23% year over year. However, they fell short of the target $160 billion. Exports for 08-09 are unlikely to meet the target of $200 billion. The Indian government has banned some food exports, and is now competing with a weaker US Dollar.
Overall, India's trade deficit widened 45% to $80.4 billion for the year.
Read more at the Times of India and Bloomberg
India, trade balance
