By -
Jun 23, 2012
Indian Finance Minister Pranab Mukherjee said the government and central bank will announce
measures on June 25 to halt a slide in the rupee after the
currency sank to a record low two days ago.
Mukherjee’s comments were made to reporters in Kolkata yesterday and broadcast on local television news channels. Mukherjee is the ruling Congress Party’s nominee for a July 19 presidential election and he told the Press Trust of India yesterday he will resign as finance minister on June 26 after earlier telling PTI he would resign today.
Mukherjee cited Prime Minister Manmohan Singh’s visit abroad as the reason for his change of plan, without saying who his successor will be, according to PTI.
The rupee is Asia’s worst-performing currency of the past year, having tumbled 21 percent against the dollar, and reached an all-time low June 22 of 57.3275 per dollar. Fitch Ratings cut India’s sovereign credit-rating outlook to negative on June 18, joining Standard & Poor’s in signaling the country is at risk of losing its investment-grade status.
“The situation is quite worrisome,” Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd., the local unit of S&P, said in an interview. “You have to increase the supply of dollars. A lot of foreign-currency convertible bonds and other payments are due and it does create stress on those who have borrowed abroad.”
The prime minister’s chief economic adviser, Chakravarthy Rangarajan, on May 23 said the deposit plan was an option. Indian companies face a record $5.3 billion of maturing foreign- currency debt this year, data compiled by Bloomberg show.
The Reserve Bank of India on Nov. 17 increased the caps on overseas investors’ holdings of India’s local-currency government debt and corporate bonds by $5 billion each to boost inflows and arrest the currency’s decline. The central bank has asked oil refiners to obtain 50 percent of their dollar requirements from a single state-owned bank, Oil Secretary G.C. Chaturvedi told reporters in New Delhi on June 22.
India buys 80 percent of its oil from overseas and pays for supplies in dollars. Every one-rupee drop in the domestic currency against the dollar boosts annual revenue losses for the three government-owned refiners by 80 billion rupees ($1.4 billion), the oil ministry said in November.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
Mukherjee’s comments were made to reporters in Kolkata yesterday and broadcast on local television news channels. Mukherjee is the ruling Congress Party’s nominee for a July 19 presidential election and he told the Press Trust of India yesterday he will resign as finance minister on June 26 after earlier telling PTI he would resign today.
Mukherjee cited Prime Minister Manmohan Singh’s visit abroad as the reason for his change of plan, without saying who his successor will be, according to PTI.
The rupee is Asia’s worst-performing currency of the past year, having tumbled 21 percent against the dollar, and reached an all-time low June 22 of 57.3275 per dollar. Fitch Ratings cut India’s sovereign credit-rating outlook to negative on June 18, joining Standard & Poor’s in signaling the country is at risk of losing its investment-grade status.
“The situation is quite worrisome,” Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd., the local unit of S&P, said in an interview. “You have to increase the supply of dollars. A lot of foreign-currency convertible bonds and other payments are due and it does create stress on those who have borrowed abroad.”
Attract Currency
India may start a sovereign-backed deposit project to attract foreign currency from overseas residents and relax limits on foreign investment to halt the rupee’s slide, according to Joshi. The currency slumped 2.9 percent last week, its biggest loss since September.The prime minister’s chief economic adviser, Chakravarthy Rangarajan, on May 23 said the deposit plan was an option. Indian companies face a record $5.3 billion of maturing foreign- currency debt this year, data compiled by Bloomberg show.
The Reserve Bank of India on Nov. 17 increased the caps on overseas investors’ holdings of India’s local-currency government debt and corporate bonds by $5 billion each to boost inflows and arrest the currency’s decline. The central bank has asked oil refiners to obtain 50 percent of their dollar requirements from a single state-owned bank, Oil Secretary G.C. Chaturvedi told reporters in New Delhi on June 22.
India buys 80 percent of its oil from overseas and pays for supplies in dollars. Every one-rupee drop in the domestic currency against the dollar boosts annual revenue losses for the three government-owned refiners by 80 billion rupees ($1.4 billion), the oil ministry said in November.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
Posts
No comments:
Post a Comment