Tag: Brexit

Forex reserves fall for second straight week

24/10/2016 13:41

The country’s foreign exchange reserves fell for a second straight week amid a decline in foreign currency assets, data from the Reserve Bank of India (RBI) showed.

Foreign exchange reserves dropped by USD 1.506 billion to USD 366.139 billion in the week to October 14, 2016.

In the week ended October 7, 2016, forex reserves had fallen by a whopping USD 4.343 billion to USD 367.646 billion.

Foreign currency assets, which are expressed in dollar terms and include the effect of appreciation or depreciation of non US currencies such as euro, pound and yen held in reserves, fell by USD 1.486 billion to USD 340.908 billion in the week ended October 14, 2016, from the previous week, the RBI added.

Foreign currency assets are the biggest component of the overall forex reserves.

India’s gold reserves stood unchanged at USD 21.406 billion in the week ended October 14, 2016 from the previous week, data showed.

The Foreign Currency Non-Resident (FCNR) Bank redemptions worth USD 26 billion are probably putting pressure on the country’s foreign exchange reserves kitty.

Robust forex reserves may help support the local currency in the wake of heightened global uncertainties amid US interest rate hike fears, US Presidential elections and Brexit jitters.

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Forex reserves slump by $3bn in Brexit aftermath

Forex reserves slump by $3bn in Brexit aftermath

04/07/2016 14:49

The country’s foreign exchange reserves tumbled from a record high in the last week of June 2016 as the Reserve Bank of India (RBI)sold dollars to ensure calm in the financial market and prevent a plunge in the rupee as sentiment across the globe weakened as Britain shocked investors after voting to exit the European Union.

India’s forex reserves fell by USD 3 billion to USD 360.7 billion in the week ended June 24, 2016, data from the country’s central bank showed on Friday.

In the week ended June 17, 2016, the country’s forex reserves had risen to the highest level on record driven by a jump in foreign currency assets, up by USD 592.1 million to USD 363.8 billion from the prior week.

The country’s gold reserves remained unchanged at USD 20.329 billion while its special drawing rights (SDR) fell by USD 13.4 million to USD 1.49 billion in the week ended June 24, 2016, from the prior week.

A robust forex reserves kitty will help the Indian economy overcome any possible volatility in foreign capital flows on account of continued global economic uncertainty amid lingering worries over a China slowdown, tentative US recovery and the messy UK-EU divorce.

Brexit effect: Central banks to focus on DebtFX markets

Brexit effect: Central banks to focus on DebtFX markets

27/06/2016 14:15

The formal exit of the UK from the European Union is likely to create more uncertainties rather than alleviating them in the coming months and will bring central banks back in focus, says India Ratings and Research (Ind-Ra), a global rating agency.

According to Ind-Ra report, Indian markets are unlikely to be completely insulated from the impact of this global contagion, despite the relatively resilient domestic macroeconomic conditions.

Domestically, the ensuing global volatility could put the both currency and debt markets on tenterhooks, but the markets will await clarity from global central banks as they tackle this unprecedented event.

The markets are likely to be gripped with two major concerns hereon: the instability that euro area will face as other nations contemplate their membership in the European Union and the response of global central banks especially the US Federal Reserve’s stance on policy rates.

The UK referendum decision is a harbinger for more volatility in the short to medium term while the modalities, process and timeline of the exit are being ironed out. Ind-Ra believes that Brexit will have a destabilising impact on the UK and euro region with increasing scope for other nations to rethink their position in the euro region.

Ind-Ra believes the Reserve Bank of India’s initial line of action will be to address temporary shocks in systemic liquidity through liquidity channels rather than policy rates.

For the bond market, an interplay of three factors will be critical the period of low global yields and benefit from near-term softening of commodity prices may augur well for the domestic market, keeping the head room open for the Reserve Bank of India to ease rates later in the year.

Why India is poised to withstand Brexit

Why India is poised to withstand Brexit

24/06/2016 14:35

Even as a quick glance at the state of financial markets on Friday may suggest doom and gloom for global stocks, currencies and commodities amidst Britain’s shocking verdict to leave the EU, Asia’s third biggest economy is poised to overcome this initial knee-jerk reaction, analysts opined.

Taking cues from its global counterparts, investors at Dalal Street seemed panic-stricken as the Sensex plunged by over 1,000 points but pared some losses in noon trade. Similarly, the rupee which sank to a four-month low of below 68 per dollar, cut losses to trade at 67.84 per dollar amid reports of RBI selling dollars to rein in the volatility.

Central banks across the globe have warned that Brexit may result in slower global growth, which could cut demand for commodities such as oil, benefiting India, a net crude importer. Crude oil was down over 5 per cent in the international market on Friday to USD 47 per barrel mark. It’s worth noting that every USD 1 dollar drop in crude oil prices leads to roughly savings of USD 1 billion in India’s oil import bill, helping narrow trade and current account deficits, and keep a lid on inflation, offering more room for monetary accommodation.

While the rupee may suffer some short-term volatility, the local currency is seen to be more stable than its emerging market peers. Further, India’s hefty forex reserves kitty of a record more than USD 360 billion will ensure that India has plenty of ammunition to overcome any swings in foreign capital flows.

Thanks to its strong macroeconomic fundamentals including a robust consumer-driven growth model, India, today, is ranked as one of the most attractive foreign investment destinations. In 2015, India received the highest FDI flows globally, surpassing the likes of China and the US, as the Modi government moved to ease FDI policy in several sectors.

The above factors will continue to ensure that strong fund inflows from abroad will keep coming to India and Brexit may not be all that bad news for India.

Gold Bulls shine as Britain opts to leave EU

Gold Bulls shine as Britain opts to leave EU

24/06/2016 12:51

Gold traders cheered Britain’s historic decision to leave the European Union as the precious metal benefited by massive safe haven appeal amidst heightened political and economic uncertainty on Brexit.

In the domestic market, gold futures soared by over 5.5 per cent on Friday while the yellow metal rose the most since the global financial market meltdown of 2008 overseas after 51.9 per cent of Brits voted for ‘leave’, overpowering the 48.1 per cent that were campaigning for Britain to stay in the EU.

Brexit roiled global stocks, commodities and currencies, prompting investors to seek shelter in the safety of the bullion as fears rose over the impact of Brexit on the global economy with central banks warning of heightened volatility rocking financial markets.

At the MCX, Gold futures for August 2016 contract were trading at Rs 31,585, per 10 gram, up by 5.59 per cent after opening at Rs 30,020, against the previous closing price of Rs 29,914. It touched the intra-day high of Rs 31,925. (At 12:45 PM).

Brexit a reality as UK choses to leave EU

Brexit a reality as UK choses to leave EU

24/06/2016 11:13

Britain has made a historic decision to part ways with the European Union, ending its over four decade long marriage with the 28-member block as Brits rejected the continent’s postwar political and economic order, putting the future of the entire European project in limbo, raising doubts over Prime Minister David Cameron’s credibility, and throwing global financial markets in a tizzy.

BBC projection showed a comfortable 52 per cent support for the “Leave” campaign which was led by Boris Johnson, the former mayor of London, who is set to succeed David Cameron as the UK’s next prime minister, with the latter now having his credibility seriously tarnished after a loss for the “remain” camp that was backed by him and could garner only 48 per cent support.

Even as majority of the United Kingdom voted to leave the EU, voters in Scotland showed their firm support for the UK remaining in the EU, significantly raising the chances of Scotland calling for another independence referendum.

Moreover, Brexit comes as a major shock for European politics, probably the biggest since the fall of the Berlin wall, political analysts opined.

The bitter divorce between Britain and the EU could set a dangerous precedence for other countries in Europe, meaning that the whole European project may start to soon fall apart.

For the British economy, Brexit could mean another UK recession, a massive hit on investment and jobs, fears reflected by pound traders with the sterling tumbling by a record.

Brexit crushed global financial markets on Friday with the euro plunging the most since its introduction in 1999, Asian stocks nosedived with Japan’s Nikkei shedding 8 per cent as global investors braced themselves for a period of heightened political and economic uncertainty.

Gold futures fall as EU referendum outcome eyed

Gold futures fall as EU referendum outcome eyed

24/06/2016 08:47

Gold futures fell nearly0.65 per cent in the domestic market on Thursday as investors and speculators braced for the outcome of the EU referendum who’s poll was already completed. The results to be unveiled today will show whether Brits have opted to keep their country in the trade block or exit the European Union.

While opinion polls remained split over the outcome of the Brexit vote with three of the four polls last night showing two percentage points or less separating the two camps, odds published by bookmakers indicate a ‘remain’ win with nearly one-in-four chance of Britain leaving the EU. A win for ‘remain’ may curb safe haven appeal for gold.

At the MCX, Gold futures for August 2016 contract closed at Rs 29,927, per 10 gram, down by 0.65 per cent after opening at Rs 30,077, against the previous closing price of Rs 30,122. It touched the intra-day low of Rs 29,852.

Tata Steel faces Brexit heat; scrip falls 11%

Tata Steel faces Brexit heat; scrip falls 11%

24/06/2016 10:32

Shares of Tata Steel tumbled nearly 11 per cent amid rising concerns that its UK assets sell face the uncertainty as Britain votes to exit the European Union. As per BBC report, Britain voted to leave the European Union.

Reacting to the news, shares of steel maker declined as much as 10.89 per cent in intra-day trade to trade at Rs 297.40 a piece on Bombay Stock Exchange.

In a similar fashion, stocks of the company fell 9.51 per cent to Rs 302.20 apiece on National Stock Exchange.

Meanwhile, the broader benchmark BSE Sensex was trading at 26,016.05, down 986.17 points, or 3.67 per cent, at 10:25 hours.

Brexit jitters may take toll on D-Street

24/06/2016 08:45

Indian equity benchmarks are likely to witness a significant gap down opening on Friday with investors across the globe nervous about the outcome of Thursday’s EU referendum in the UK. Early results from the Brexit referendum indicated a tight race with a slim lead for the “leave” camp at 51.4% of the votes casted so far, sending the pound to its biggest ever drop and pushing Asian markets deep in the red. The CNX Nifty Index Futures for June delivery plunged by 2.32 per cent or by 188.5 points to 8,111.5 at 11:00 AM Singapore time, signaling that Dalal Street may open on a bearish note today. Domestic bourses are likely to see a volatile day of trading as Britain’s future in the European Union is decided. Economists, central bankers and analysts have warned that a ‘Leave’ win may have severe long-term repercussions on Britain’s economy and may cause a knee-jerk reaction on global financial markets, adversely affecting capital flows to emerging markets. However, the Indian government has allayed fears over the potential impact of Brexit on the country’s economy, given its strong forex reserves kitty and its position as a leading global investment destination. The 30-share Sensex on Thursday rallied by 236.57 points or by 0.88 per cent to end at 27,002.22 as traders awaited the outcome of the Brexit referendum to decide whether Britain stays in the EU or parts ways.

Asian stocks tumbled as early results indicated better than expected support for Britain leaving the EU, hurting risk taking appetite. China’s Shanghai Composite fell, Hang Seng tumbled over 3 per cent and Japan’s Nikkei 225 also sank 3 per cent as the yen’s rise took severe toll. It could be a very nervy day for markets across Asia as Brexit results trickle in and the country’s future is decided. Overnight, Wall Street surged, with the Dow Jones Industrial Average posting its biggest gain since March, as investors shrugged off Brexit fears.

Top traded Volumes on NSE Nifty – State Bank of India 20666649.00, Ambuja Cements Ltd. 10068647.00, Tata Motors Ltd. 9628216.00, Hindalco Industries Ltd. 8243327.00 and Bharti Infratel Ltd. 8151254.00.

On BSE, total number of shares traded was 43.97 Crore and total turnover stood at Rs. 4182.92 Crore.

On NSE Future and Options, total number of contracts traded in index futures was 281444 with a total turnover of Rs. 16499.32 Crore. Along with this total number of contracts traded in stock futures were 537379 with a total turnover of Rs. 28498.14 Crore. Total numbers of contracts for index options were 4822532 with a total turnover of Rs. 277392.60 Crore and total numbers of contracts for stock options were 368633 with a total turnover of Rs. 20271.09 Crore.

The FIIs on 23/06/2016 stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs. 2854.76 Crore and gross debt purchased stood at Rs. 628.88 Crore, while the gross equity sold stood at Rs. 2886.62 Crore and gross debt sold stood at Rs. 516.74 Crore. Therefore, the net investment of equity and debt reported were Rs. -31.86 Crore and Rs. 112.14 Crore.

India prepared to handle Brexit verdict; govt assures

India prepared to handle Brexit verdict; govt assures

23/06/2016 10:07

According to media reports, the Modi government has calmed investor fears surrounding the potential impact of the Brexit referendum on Asia’s third biggest economy.

As Britain on Thursday votes whether to remain or part ways with the European Union after being a member for 43 years, economists, central bankers and analysts have warned that a ‘Leave’ win may unnerve global financial markets and adversely hit capital flows to emerging markets.

However, India, with a hefty forex reserves kitty of over USD 350 billion and being one of the world’s leading foreign investment destinations, is unlikely to be significantly impacted by the outcome of the Brexit vote, the Indian government assured late Wednesday.

Economic Affairs Secretary Shaktikanta Das stressed that India is “prepared to deal with all eventualities”, amidst possible currency volatility in case of Brexit. India has strong trade ties with both the UK and the EU.

While the odds of Brexit have fallen significantly since the murder of pro-European lawmaker Jo Cox a week ago, most opinion polls published on Wednesday signaled that the historic vote is too close to call, keeping investors jittery.

“Current indications are that perhaps Brexit wont happen. In the event of Brexit happening, let me say very categorically that we are prepared to deal with all”, Das said, the PTI reported.