Rupee was trading massively at 63.4175/4250 vs Monday's end of 63.24/25. Month-end dollar demand from oil companies fueled profit gains. Dollar raised on expectations of a rate increased by US Fed maybe next year. Pair was sight in 63.25 to 63.45 range during the day. There has been some backup because of the US Federal Reserve statements. continual to believe that the global environment remains very weak. All the other major economies are showing signs of weakness.
In the domestic sector, the manufacturing date and the IIP data distinctly suggest that things are the same. The massive ECBs increased by the corporate sector. As per the RBI data, as of end June, they had increased about $153 billion. This is about an $18 billion raised over June of last year. If you see that even after June, RBI has given approval from about July to October of about another $10 billion of ECB increasing by the corporate sector. About a month and a half back, the RBI made an statement that only 15 per cent of these exposures are enclosed. The issue here is that most of these companies unfold by the RBI, which have got the approval to increase ECBs do not have a natural hedge. They are not exporters. With the rupee devalue, and the current international situation being very weak to the extent that any incident can spark off a run on emerging market currencies, corporate sector is running a very large risk. The RBI has sadly allowed them to again increase funds at will.
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