By Kartik Goyal - Aug 12, 2011
India’s industrial production grew at the quickest pace in three months in June, weathering the fastest interest-rate increases among Asia’s major economies.
Output at factories, utilities and mines rose 8.8 percent from a year earlier, following a revised 5.9 percent gain in May, the Central Statistical Office said in a statement in New Delhi today. The median of 23 estimates in a Bloomberg News survey was for a 5.5 percent advance.
Reserve Bank of India Governor Duvvuri Subbarao, whose term was extended by two years on Aug. 9, has to weigh the risks to expansion posed by Europe’s debt crisis and a faltering U.S. recovery after tightening monetary policy to slow inflation. Asian central banks from South Korea to Indonesia kept borrowing costs unchanged this week as they assess the global economy.
“The Indian central bank’s job has become even more challenging at this juncture,” Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai, said before the report. “The RBI has to control inflation at a time when the global economic turmoil poses risks to growth.”
The Bombay Stock Exchange Sensitive Index was little changed at 17,052.10 at 11:12 a.m. in Mumbai. The rupee gained 0.1 percent to 45.34 per dollar, and the yield on the 7.80 percent bond due April 2021 held at 8.26 percent.
Inflation Forecast
India’s benchmark wholesale-price inflation in July will probably be 9.2 percent, according to the median estimate in a Bloomberg News survey, staying above 9 percent for eight straight months. The commerce ministry will release the data on Aug. 16.
The Reserve Bank has increased borrowing costs 11 times since mid-March 2010. Its repurchase rate is 8 percent.
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
Steel and cement production, and an expansion in bank loans in India, show demand pressures are growing, stoking prices.
Steel output by companies including Tata Steel Ltd. rose 12.5 percent in June from a year earlier, compared with a 6.1 percent gain in May, according to the commerce ministry. Cement production rose 0.8 percent after a 2.3 percent decline in May, the ministry said.
Bank Loans
Commercial loans given by lenders such as ICICI Bank Ltd. (ICICIBC), the nation’s biggest private lender, jumped 19.33 percent in the 12 months to July 15, exceeding the central bank’s 18 percent projection, according to Reserve Bank data.
Concerns that the global economy will slow wiped more than $8 trillion of stocks worldwide between July 22 and Aug. 8, according to data compiled by Bloomberg.
Finance ministers and central bankers from the Group of Seven nations, which include the U.S., U.K. and Germany, said in a statement on Aug. 8 that they will “take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence.”
India’s central bank said Aug. 8 that while “downside risks” to India’s expansion may have increased amid weakness in the global economy, “they are likely to have limited impact.”
Finance Minister Pranab Mukherjee said Aug. 6 that India’s challenge is to tame inflation.
The Reserve Bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Thursday, August 11, 2011
Wednesday, August 10, 2011
Cookies, Potato Chips Sales Seen Driving India Palm Oil Imports to Record
By Swansy Afonso - Aug 11, 2011
Palm oil imports by India, the largest buyer, may climb to a record this year as rising incomes stoke demand for cookies and potato chips, potentially stemming a decline in prices from a more than nine-month low.
Purchases may jump as much as 10 percent to about 7 million metric tons in the year ending Oct. 31 from 6.38 million tons a year earlier, according to five processors and analysts in a Bloomberg News survey. The highest-ever palm oil imports previously were 6.43 million tons in 2008-09 season, data from the Solvent Extractors’ Association of India showed.
Rising Indian imports may help palm oil futures limit losses after slumping 26 percent from a 35-month high of 3,967 ringgit ($1,320) a ton reached on Feb. 10 as output expands in Indonesia and Malaysia, the biggest producers. A rebound in prices may also boost earnings at producers including Sime Darby Bhd. (SIME) and Indonesia’s PT Astra Agro Lestari and raise costs for users including Nestle SA and Unilever.
“India’s buying will support prices,” Prasoon Mathur, senior agriculture analyst at Religare Commodities Ltd., said in a phone interview yesterday. “News on the U.S. debt and weakness in crude oil prices will be other major factors” influencing prices, he said.
Mathur expects palm oil to trade between 2,800 ringgit a ton and 3,100 ringgit for the rest of the year.
Palm oil plunged to a nine-month low on Aug. 9 on concern that demand for commodities may drop as the U.S. economic recovery stalls. Standard & Poor’s on Aug. 5 cut the rating of the U.S.’s long-term debt. The Federal Reserve on Aug. 9 pledged to keep its benchmark interest rate at a record low for another two years to bolster the economy.
‘Huge Discount’
Indian importers are being lured by the “huge discount” that palm oil offers compared with its rival soybean oil, Murali Krishna P.V., chief executive officer of TransGraph Consulting Pvt., said from the southern city of Hyderabad.
Soybean oil’s premium over palm oil widened to $213.22 a ton today from the 12-month average of $119.43 a ton, according to data compiled by Bloomberg. The premium climbed to $271.68 a ton on July 13, the highest since December 2008.
Palm oil for October delivery gained as much as 0.8 percent to 2,959 ringgit per ton on the Malaysia Derivatives Exchange in Kuala Lumpur today. December-delivery soybean oil climbed as much as 0.8 percent to 54.03 cents per pound.
“Soybean oil is expected to become more expensive in the next three months, which also coincide with India’s festival season,” said Raj Kumar Shah, deputy managing director of Kuala Lumpur-based Josovina Commodities Sdn. Bhd.
Peak Season
The peak season for India’s edible oils demand starts with the Muslim fasting month of Ramadan this month and ends with the Hindu festival of Diwali in late October. Imports may climb to about 720,000 tons a month in the three months through October, compared with an average 659,000 tons bought during the same period last year, according to the Bloomberg survey.
“Palm oil imports will be higher for rest of the season as the local production is almost over now and festivals are early this year,” Ashok Sethia, senior vice president of the Central Organisation for Oil Industry & Trade, said in a telephone interview from Kolkata.
Prices of palm oil are lower in India compared with rapeseed, cotton seed and soybean oils and the gap may widen further as output in Malaysia and Indonesia rises, said Vijay Data, vice president of the Solvent Extractors’ Association.
India’s edible oil consumption may expand around 3 percent this year as population and percapita income grow, TransGraph’s Krishna said. India consumes 1.2 million tons to 1.5 million tons of edible oil each month, he said.
Brazil, Argentina
Soybean oil purchases may fall to 1 million tons in the year ending Oct. 31, from 1.67 million tons a year earlier, Sandeep Bajoria, chief executive officer of Sunvin Group said on July 5. India meets more than half its edible oil demand through imports. The nation buys palm oil from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.
Vegetable oil imports by India fell 8 percent to 5.1 million tons in the eight months through June because of higher domestic oilseed production, according to the extractors’ association. Palm oil imports in the November-June period were almost unchanged at 3.9 million tons from a year earlier, while purchases of soybean and sunflower oils slumped 24 percent to 986,213 tons, the group said.
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Palm oil imports by India, the largest buyer, may climb to a record this year as rising incomes stoke demand for cookies and potato chips, potentially stemming a decline in prices from a more than nine-month low.
Purchases may jump as much as 10 percent to about 7 million metric tons in the year ending Oct. 31 from 6.38 million tons a year earlier, according to five processors and analysts in a Bloomberg News survey. The highest-ever palm oil imports previously were 6.43 million tons in 2008-09 season, data from the Solvent Extractors’ Association of India showed.
Rising Indian imports may help palm oil futures limit losses after slumping 26 percent from a 35-month high of 3,967 ringgit ($1,320) a ton reached on Feb. 10 as output expands in Indonesia and Malaysia, the biggest producers. A rebound in prices may also boost earnings at producers including Sime Darby Bhd. (SIME) and Indonesia’s PT Astra Agro Lestari and raise costs for users including Nestle SA and Unilever.
“India’s buying will support prices,” Prasoon Mathur, senior agriculture analyst at Religare Commodities Ltd., said in a phone interview yesterday. “News on the U.S. debt and weakness in crude oil prices will be other major factors” influencing prices, he said.
Mathur expects palm oil to trade between 2,800 ringgit a ton and 3,100 ringgit for the rest of the year.
Palm oil plunged to a nine-month low on Aug. 9 on concern that demand for commodities may drop as the U.S. economic recovery stalls. Standard & Poor’s on Aug. 5 cut the rating of the U.S.’s long-term debt. The Federal Reserve on Aug. 9 pledged to keep its benchmark interest rate at a record low for another two years to bolster the economy.
‘Huge Discount’
Indian importers are being lured by the “huge discount” that palm oil offers compared with its rival soybean oil, Murali Krishna P.V., chief executive officer of TransGraph Consulting Pvt., said from the southern city of Hyderabad.
Soybean oil’s premium over palm oil widened to $213.22 a ton today from the 12-month average of $119.43 a ton, according to data compiled by Bloomberg. The premium climbed to $271.68 a ton on July 13, the highest since December 2008.
Palm oil for October delivery gained as much as 0.8 percent to 2,959 ringgit per ton on the Malaysia Derivatives Exchange in Kuala Lumpur today. December-delivery soybean oil climbed as much as 0.8 percent to 54.03 cents per pound.
“Soybean oil is expected to become more expensive in the next three months, which also coincide with India’s festival season,” said Raj Kumar Shah, deputy managing director of Kuala Lumpur-based Josovina Commodities Sdn. Bhd.
Peak Season
The peak season for India’s edible oils demand starts with the Muslim fasting month of Ramadan this month and ends with the Hindu festival of Diwali in late October. Imports may climb to about 720,000 tons a month in the three months through October, compared with an average 659,000 tons bought during the same period last year, according to the Bloomberg survey.
“Palm oil imports will be higher for rest of the season as the local production is almost over now and festivals are early this year,” Ashok Sethia, senior vice president of the Central Organisation for Oil Industry & Trade, said in a telephone interview from Kolkata.
Prices of palm oil are lower in India compared with rapeseed, cotton seed and soybean oils and the gap may widen further as output in Malaysia and Indonesia rises, said Vijay Data, vice president of the Solvent Extractors’ Association.
India’s edible oil consumption may expand around 3 percent this year as population and percapita income grow, TransGraph’s Krishna said. India consumes 1.2 million tons to 1.5 million tons of edible oil each month, he said.
Brazil, Argentina
Soybean oil purchases may fall to 1 million tons in the year ending Oct. 31, from 1.67 million tons a year earlier, Sandeep Bajoria, chief executive officer of Sunvin Group said on July 5. India meets more than half its edible oil demand through imports. The nation buys palm oil from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.
Vegetable oil imports by India fell 8 percent to 5.1 million tons in the eight months through June because of higher domestic oilseed production, according to the extractors’ association. Palm oil imports in the November-June period were almost unchanged at 3.9 million tons from a year earlier, while purchases of soybean and sunflower oils slumped 24 percent to 986,213 tons, the group said.
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Tuesday, August 9, 2011
Asian Stocks Gain on U.S. Fed Low-Rate Pledge
By Shiyin Chen - Aug 10, 2011
Asian stocks climbed for the first time in seven days, and commodities rallied, with oil rebounding from a 10-month low, after the Federal Reserve pledged to keep interest rates near zero through mid-2013. Treasuries dropped.
The MSCI Asia Pacific Index added 2.3 percent as of 3:05 p.m. in Tokyo as global equities rebounded from a nine-day, $7.8 trillion rout. Euro Stoxx 50 futures jumped 1.4 percent, while Standard & Poor’s 500 Index futures slid 0.1 percent. Treasury 10-year notes increased four basis points. The cost of insuring Asian debt from default sank the most since May 2010. The Swiss franc weakened against all 16 major peers. Crude rose 3 percent in New York and copper gained for the first time in six days.
Fed Chairman Ben S. Bernanke and his colleagues vowed to keep borrowing costs at an all-time low and discussed a range of policy tools to bolster the economy, saying they are prepared to use them “as appropriate.” Analysts surveyed by Bloomberg say China and Australia may leave rates unchanged for the rest of this year, adding to signs policy makers will take steps to spur growth and restore confidence amid the global market turmoil.
“Stocks became oversold on the back of global growth worries” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $100 billion under management, said in a Bloomberg Television interview. “We’re due for a bounce and Bernanke has provided that.”
Stocks Rebound
More than three shares rose for every one that retreated on MSCI’s Asia index, helping the gauge halt a six-day, 13 percent slump. The MSCI All-Country World Index fell 15 percent in the nine days ended Aug. 8 before rebounding 2.1 percent yesterday. Global equity markets recovered about $923 billion in values.
Japan’s Nikkei 225 Stock Average rose 1.1 percent and Australia’s S&P/ASX 200 Index jumped 2.8 percent. South Korea’s Kospi Index advanced 0.3 percent after the government yesterday banned short selling for three months and the two biggest state- run pension funds said they may boost equity investments.
Tokyo Electric Power Co. rallied 15 percent after the utility said there was no chance of insolvency even after a 572 billion yen ($7.4 billion) quarterly loss. Zijin Mining Group Co. climbed 7.2 percent in Hong Kong after China’s largest gold producer by market value reported first-half profit that beat analyst estimates.
The S&P 500 jumped 4.7 percent yesterday, the most since March 2009. The U.S. gauge rebounded from a 6.7 percent sell-off on Aug. 8 that was spurred by S&P’s unprecedented downgrade of the U.S. government’s credit rating to AAA to AA+. The reduction left America’s rating above countries such Japan and China and wasn’t matched by Fitch Ratings and Moody’s Investors Service, which affirmed the U.S. at the top grade.
Demand for Treasuries
Yields on 10-year Treasuries increased to 2.29 percent today. They briefly fell to record low of 2.03 percent yesterday following the Fed statement before closing at 2.25 percent. The Treasury is scheduled to sell $24 billion of 10-year notes today and $16 billion of 30-year debt tomorrow. Yesterday’s sale of $32 billion in three-year notes drew stronger-than-average demand, with a bid-to-cover ratio of 3.29. That compares with an average of 3.15 for the past 10 sales.
The rate decision represents the biggest effort since November to spark the U.S. economy and revive confidence. The Fed stopped stopping short of initiating further large-scale asset purchases, following the completion of the second round of so-called quantitative easing in June, in which it bought $600 billion of government bonds.
The central bank offered a dimmer view of the economy than it did in the last statement in late June, saying that it expects a “somewhat slower pace of recovery over coming quarters.”
‘Vote of Confidence’
“We’re starting the process of finding a bottom after the panic,” James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, said on Bloomberg TV. “I like what the Fed did. They took a calmer approach and said, we’re going to pay attention to the economy, and the market, you’re on your own. That was a vote of confidence.”
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreased 13.5 basis points to 135.5 basis points, according to Credit Agricole CIB prices. That would be its biggest one-day decline since May 27, 2010, according to data provider CMA.
The Markit iTraxx Australia index fell 11.5 basis points to 137.5, Credit Agricole prices show. The gauge snapped six days of increases and is on course for the steepest daily decline since June 21, 2010, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Franc Slides
Switzerland’s franc weakened after having gained 23 percent this year against a basket of nine developed-market peers, according to Bloomberg Correlation-Weighted Currency Indexes. The Swiss currency slid to 72.93 centimes per dollar after yesterday surging to a record high of 70.71 centimes.
South Korea’s won climbed 0.7 percent to 1,080.20 per dollar after earlier gaining to 1,073.35, while Malaysia’s ringgit strengthened 0.6 percent to 3.0090 per dollar, rebounding from near its weakest level since June.
“The market interpreted the Fed statement as a possible sign of quantitative easing,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “More quantitative easing would lead to investors diversifying into other currencies, and that would support Asian currencies.”
Asia’s Rates
Australia’s dollar slid 0.1 percent to $1.0348. The currency, which fell yesterday below parity with the U.S. dollar since March, erased earlier gains of as much as 0.6 percent after a Westpac Banking Corp. and Melbourne Institute survey showed consumer confidence slumped this month to its lowest in more than two years.
The Reserve Bank of Australia will maintain borrowing costs at 4.75 percent until the first quarter of next year, according to the median of 22 estimates in a Bloomberg News survey. A poll six days ago showed the consensus was for a quarter percentage point increase on Nov. 1. Interbank cash-rate futures indicate the RBS’s key rate may fall to 3.49 percent by December from 4.75 percent.
Central banks elsewhere in Asia may also delay interest- rate increases. The People’s Bank of China will leave borrowing costs unchanged for the rest of this year, according to eight of 10 analysts surveyed yesterday. Economists’ median forecast is for South Korea to extend a pause for a second month tomorrow, while Indonesia stayed on hold yesterday.
Crude for September delivery rose to $81.69 a barrel on the New York Mercantile Exchange, recovering from a two-day, 8.7 percent slump. U.S. crude inventories declined the most since June, according to the industry-funded American Petroleum Institute. Gasoline inventories also fell.
Metals gained on the London Metal Exchange, with three- month delivery copper climbing as much as 3.1 percent to $9,005 a ton. The contract sank to an eight-month low yesterday. Nickel and zinc both increased more than 3 percent to $21,899 a ton and $2,176.75 a ton, respectively.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Asian stocks climbed for the first time in seven days, and commodities rallied, with oil rebounding from a 10-month low, after the Federal Reserve pledged to keep interest rates near zero through mid-2013. Treasuries dropped.
The MSCI Asia Pacific Index added 2.3 percent as of 3:05 p.m. in Tokyo as global equities rebounded from a nine-day, $7.8 trillion rout. Euro Stoxx 50 futures jumped 1.4 percent, while Standard & Poor’s 500 Index futures slid 0.1 percent. Treasury 10-year notes increased four basis points. The cost of insuring Asian debt from default sank the most since May 2010. The Swiss franc weakened against all 16 major peers. Crude rose 3 percent in New York and copper gained for the first time in six days.
Fed Chairman Ben S. Bernanke and his colleagues vowed to keep borrowing costs at an all-time low and discussed a range of policy tools to bolster the economy, saying they are prepared to use them “as appropriate.” Analysts surveyed by Bloomberg say China and Australia may leave rates unchanged for the rest of this year, adding to signs policy makers will take steps to spur growth and restore confidence amid the global market turmoil.
“Stocks became oversold on the back of global growth worries” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $100 billion under management, said in a Bloomberg Television interview. “We’re due for a bounce and Bernanke has provided that.”
Stocks Rebound
More than three shares rose for every one that retreated on MSCI’s Asia index, helping the gauge halt a six-day, 13 percent slump. The MSCI All-Country World Index fell 15 percent in the nine days ended Aug. 8 before rebounding 2.1 percent yesterday. Global equity markets recovered about $923 billion in values.
Japan’s Nikkei 225 Stock Average rose 1.1 percent and Australia’s S&P/ASX 200 Index jumped 2.8 percent. South Korea’s Kospi Index advanced 0.3 percent after the government yesterday banned short selling for three months and the two biggest state- run pension funds said they may boost equity investments.
Tokyo Electric Power Co. rallied 15 percent after the utility said there was no chance of insolvency even after a 572 billion yen ($7.4 billion) quarterly loss. Zijin Mining Group Co. climbed 7.2 percent in Hong Kong after China’s largest gold producer by market value reported first-half profit that beat analyst estimates.
The S&P 500 jumped 4.7 percent yesterday, the most since March 2009. The U.S. gauge rebounded from a 6.7 percent sell-off on Aug. 8 that was spurred by S&P’s unprecedented downgrade of the U.S. government’s credit rating to AAA to AA+. The reduction left America’s rating above countries such Japan and China and wasn’t matched by Fitch Ratings and Moody’s Investors Service, which affirmed the U.S. at the top grade.
Demand for Treasuries
Yields on 10-year Treasuries increased to 2.29 percent today. They briefly fell to record low of 2.03 percent yesterday following the Fed statement before closing at 2.25 percent. The Treasury is scheduled to sell $24 billion of 10-year notes today and $16 billion of 30-year debt tomorrow. Yesterday’s sale of $32 billion in three-year notes drew stronger-than-average demand, with a bid-to-cover ratio of 3.29. That compares with an average of 3.15 for the past 10 sales.
The rate decision represents the biggest effort since November to spark the U.S. economy and revive confidence. The Fed stopped stopping short of initiating further large-scale asset purchases, following the completion of the second round of so-called quantitative easing in June, in which it bought $600 billion of government bonds.
The central bank offered a dimmer view of the economy than it did in the last statement in late June, saying that it expects a “somewhat slower pace of recovery over coming quarters.”
‘Vote of Confidence’
“We’re starting the process of finding a bottom after the panic,” James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, said on Bloomberg TV. “I like what the Fed did. They took a calmer approach and said, we’re going to pay attention to the economy, and the market, you’re on your own. That was a vote of confidence.”
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreased 13.5 basis points to 135.5 basis points, according to Credit Agricole CIB prices. That would be its biggest one-day decline since May 27, 2010, according to data provider CMA.
The Markit iTraxx Australia index fell 11.5 basis points to 137.5, Credit Agricole prices show. The gauge snapped six days of increases and is on course for the steepest daily decline since June 21, 2010, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Franc Slides
Switzerland’s franc weakened after having gained 23 percent this year against a basket of nine developed-market peers, according to Bloomberg Correlation-Weighted Currency Indexes. The Swiss currency slid to 72.93 centimes per dollar after yesterday surging to a record high of 70.71 centimes.
South Korea’s won climbed 0.7 percent to 1,080.20 per dollar after earlier gaining to 1,073.35, while Malaysia’s ringgit strengthened 0.6 percent to 3.0090 per dollar, rebounding from near its weakest level since June.
“The market interpreted the Fed statement as a possible sign of quantitative easing,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “More quantitative easing would lead to investors diversifying into other currencies, and that would support Asian currencies.”
Asia’s Rates
Australia’s dollar slid 0.1 percent to $1.0348. The currency, which fell yesterday below parity with the U.S. dollar since March, erased earlier gains of as much as 0.6 percent after a Westpac Banking Corp. and Melbourne Institute survey showed consumer confidence slumped this month to its lowest in more than two years.
The Reserve Bank of Australia will maintain borrowing costs at 4.75 percent until the first quarter of next year, according to the median of 22 estimates in a Bloomberg News survey. A poll six days ago showed the consensus was for a quarter percentage point increase on Nov. 1. Interbank cash-rate futures indicate the RBS’s key rate may fall to 3.49 percent by December from 4.75 percent.
Central banks elsewhere in Asia may also delay interest- rate increases. The People’s Bank of China will leave borrowing costs unchanged for the rest of this year, according to eight of 10 analysts surveyed yesterday. Economists’ median forecast is for South Korea to extend a pause for a second month tomorrow, while Indonesia stayed on hold yesterday.
Crude for September delivery rose to $81.69 a barrel on the New York Mercantile Exchange, recovering from a two-day, 8.7 percent slump. U.S. crude inventories declined the most since June, according to the industry-funded American Petroleum Institute. Gasoline inventories also fell.
Metals gained on the London Metal Exchange, with three- month delivery copper climbing as much as 3.1 percent to $9,005 a ton. The contract sank to an eight-month low yesterday. Nickel and zinc both increased more than 3 percent to $21,899 a ton and $2,176.75 a ton, respectively.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
India’s Subbarao Said to Be Offered Two-Year Extension as RBI’s Governor
By Kartik Goyal - Aug 9, 2011
India’s government extended the term of central bank Governor Duvvuri Subbarao by two years, opting for continuity as the nation grapples with inflation amid risks to economic growth.
Subbarao’s tenure at the Reserve Bank of India will now last until September 2013, according to a statement on the website of the Prime Minister’s Office today. The 61-year-old former finance secretary was appointed as the central bank chief on Sept. 5, 2008 for a period of three years.
Subbarao has raised interest rates 11 times since mid-March 2010 to tame price gains, reversing the monetary easing he presided over in 2008 and 2009 during the global financial crisis. More than $9 trillion has been wiped off stocks worldwide since the beginning of May on concern Europe’s debt crisis and a faltering U.S. recovery will imperil global growth.
“These are difficult times and it’s good to maintain status quo in key policy-making positions,” said Shubhada Rao, chief economist at Mumbai-based Yes Bank Ltd. “The RBI has a tough task ahead, balancing inflation and the threat of another global downturn.”
The Bombay Stock Exchange Sensitive Index, or Sensex, fell 0.7 percent as of 1:40 p.m. in Mumbai. The rupee weakened 0.5 percent to 45.18, declining for a sixth day, the longest losing streak since March 2009. Yields on the 10-year bonds dropped five basis points, or 0.05 percentage point, to 8.21 percent.
Singh’s Adviser
Subbarao, who was an economic adviser to Prime Minister Manmohan Singh before he became the top bureaucrat in the finance ministry, is a physics graduate from the Indian Institute of Technology. He joined the civil service and was later sent to the World Bank, where he was the lead economist between 1999 and 2004 on public finance in Africa and East Asia.
Subbarao has a masters in Economics from Ohio State University and was a Humphrey Fellow at the Massachusetts Institute of Technology. He holds a doctorate from India’s Andhra University.
India’s Finance Minister Pranab Mukherjee said today that the extension of Subbarao’s tenure will provide “stability.”
In the past 1 1/2 years, Subbarao directed monetary policy at taming inflation, which accelerated to 9.44 percent in June.
At the central bank’s July 26 policy meeting, he increased the repurchase rate by 50 basis points to 8 percent and raised the inflation forecast by 1 percentage point to 7 percent.
Global Risk
Since then, the risk of another global downturn has intensified.
Standard & Poor’s downgraded the U.S.’s AAA rating for the first time on Aug. 5. Group of Seven nations yesterday vowed to take “all necessary measures to support financial stability and growth,” and said that its members will inject liquidity and act against disorderly currency moves as needed.
European Central Bank President Jean-Claude Trichet signaled he’s ready to start buying Italian and Spanish bonds in his riskiest attempt yet to tame the sovereign debt crisis in the region.
India’s central bank yesterday pledged to respond “quickly and appropriately” to provide “adequate rupee and forex liquidity” to curb “excess volatility” in interest and exchange rates.
The Reserve Bank also said that while “downside risks” to India’s expansion may have increased amid weakness in the global economy, “they are likely to have limited impact.”
Mukherjee yesterday said a global slowdown may help drive down international commodity prices, especially fuel, easing inflationary pressures.
The Reserve Bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
India’s government extended the term of central bank Governor Duvvuri Subbarao by two years, opting for continuity as the nation grapples with inflation amid risks to economic growth.
Subbarao’s tenure at the Reserve Bank of India will now last until September 2013, according to a statement on the website of the Prime Minister’s Office today. The 61-year-old former finance secretary was appointed as the central bank chief on Sept. 5, 2008 for a period of three years.
Subbarao has raised interest rates 11 times since mid-March 2010 to tame price gains, reversing the monetary easing he presided over in 2008 and 2009 during the global financial crisis. More than $9 trillion has been wiped off stocks worldwide since the beginning of May on concern Europe’s debt crisis and a faltering U.S. recovery will imperil global growth.
“These are difficult times and it’s good to maintain status quo in key policy-making positions,” said Shubhada Rao, chief economist at Mumbai-based Yes Bank Ltd. “The RBI has a tough task ahead, balancing inflation and the threat of another global downturn.”
The Bombay Stock Exchange Sensitive Index, or Sensex, fell 0.7 percent as of 1:40 p.m. in Mumbai. The rupee weakened 0.5 percent to 45.18, declining for a sixth day, the longest losing streak since March 2009. Yields on the 10-year bonds dropped five basis points, or 0.05 percentage point, to 8.21 percent.
Singh’s Adviser
Subbarao, who was an economic adviser to Prime Minister Manmohan Singh before he became the top bureaucrat in the finance ministry, is a physics graduate from the Indian Institute of Technology. He joined the civil service and was later sent to the World Bank, where he was the lead economist between 1999 and 2004 on public finance in Africa and East Asia.
Subbarao has a masters in Economics from Ohio State University and was a Humphrey Fellow at the Massachusetts Institute of Technology. He holds a doctorate from India’s Andhra University.
India’s Finance Minister Pranab Mukherjee said today that the extension of Subbarao’s tenure will provide “stability.”
In the past 1 1/2 years, Subbarao directed monetary policy at taming inflation, which accelerated to 9.44 percent in June.
At the central bank’s July 26 policy meeting, he increased the repurchase rate by 50 basis points to 8 percent and raised the inflation forecast by 1 percentage point to 7 percent.
Global Risk
Since then, the risk of another global downturn has intensified.
Standard & Poor’s downgraded the U.S.’s AAA rating for the first time on Aug. 5. Group of Seven nations yesterday vowed to take “all necessary measures to support financial stability and growth,” and said that its members will inject liquidity and act against disorderly currency moves as needed.
European Central Bank President Jean-Claude Trichet signaled he’s ready to start buying Italian and Spanish bonds in his riskiest attempt yet to tame the sovereign debt crisis in the region.
India’s central bank yesterday pledged to respond “quickly and appropriately” to provide “adequate rupee and forex liquidity” to curb “excess volatility” in interest and exchange rates.
The Reserve Bank also said that while “downside risks” to India’s expansion may have increased amid weakness in the global economy, “they are likely to have limited impact.”
Mukherjee yesterday said a global slowdown may help drive down international commodity prices, especially fuel, easing inflationary pressures.
The Reserve Bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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