Rupee Trades Lower At 66.40 Against Us Dollar

The Indian rupee on Thursday weakened against the US dollar.

At 2pm, the home currency was trading at 66.40 per dollar, down 0.13% from its previous close of 66.37. The rupee opened at 66.47 per dollar and touched a high and a low of 66.39 and 66.49, respectively.

India’s benchmark Sensex index rose 0.24% or 68 points to 28,994.36. So far this year, it has gained 11%.

Bond yield fell in 10 out of 12 trading sessions. The 10-year bond yield was trading at 7.055% from its Wednesday’s close of 7.056%.

Yield on 6.97% 2026 bond, which is the new 10-year debt, was trading at 6.829% from its previous close of 6.824%. Bond yields and prices move in opposite directions.

The government will issue consumer price index (CPI) inflation data for August and Index of Industrial production (IIP) data for July on 12 September. Wholesale price index (WPI) inflation data for August is due on 14 September.

According to a Religare Securities report, retail inflation is set to ease to 5.5% in August from 6.1% in July as food inflation is likely to decline 150 basis points on disinflation in vegetables and pulses. WPI inflation is expected to touch a two-year high of 4.3% in August. There is limited scope for further rate cuts as of now; however, the Reserve Bank of India (RBI) will continue to “ease by stealth” via open market operations.

The rupee is down 0.4% till date this year, while foreign institutional investors (FIIs) have bought $6.30 billion in equity and sold $997.2 million in debt markets.

Asian currencies were trading mixed. Malaysian ringgit was up 0.46%, Japanese yen 0.17% and Indonesian rupiah 0.12%. However, Philippines peso was down 0.47%, South Korean won 0.24%, Thai baht 0.12% and Taiwan dollar 0.11%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.853, down 0.10% from its previous close of 94.956.

 

Sources:.livemint.com

India Enhances Its Repute In Auto Exports

MUMBAI: India is emerging as an export base for mid-size cars, SUVs and engines as it builds on the image as a key supplier of small cars. India-made Vento sedan is one of Volkswagen's top selling models in Mexico. According to people in the know, Hyundai Motor, the biggest auto exporter from India, is considering exporting its new generation mid-size Verna, codenamed HCI, from next year. Creta SUV from Hyundai's Chennai factory has also got acceptance abroad.

Premium brands like Chrysler and Land Rover, too, are considering exporting vehicles made in India to right-hand-drive markets, said people with knowledge of plans. Ford Motor will start exports of EcoSport SUV to North America from here next year, while the SuzukiBSE 2.71 % Baleno hatchback is supplied to Japan by the company's Indian unit, Maruti SuzukiBSE 2.71 %.

With Indians increasingly opting for bigger cars and local quality standards similar to those abroad, it has become easier for manufacturers to pick models for exports from India, said Gaurav Vangaal, senior analyst for forecasting at IHS Automotive. Exports allow them to post "better operational performance domestically due to combined volumes of domestic (sales) and exports," he said.

India is already a key exporter of the likes of Hyundai's Grand i10, Ford Ka and Chevy Beat. For some global automakers, such as General Motors and Nissan Motor, exports have helped offset weak demand in the Indian market. Hyundai is looking to ship about 11,000 units of the next gen Verna from India in 2017 and take it to 70,000 by 2019-2020, said three component suppliers to the local unit of the South Korean carmaker. Indian manufacturing will ease production load on its Korean operations, allowing it to use the factories there to increase the production of Elantra and Sonata which are in demand in its home market.

"We are planning to make a new version of the Verna next year in the second half. India is one of the countries which will see increase exports of Verna," Hyundai Motor India managing director YK Koo told ET. "Volume for Verna exports is yet to be finalised, but it will be significant," he added.

The Hyundai Creta has a one- to two-month waiting period in overseas markets, Koo said. "We are exporting 5,000-6,000 units a month,the numbers of mid-size cars will go up with new model."

Apart from fully built cars, vehicle makers plan to source engines from India. Ford India is set to begin exports of 2- and 2.2-litre Panther engines from its factory at Sanand in Gujrat from 2017-18. Its plan is to produce 2 lakh engines at Sanand and export to all over the world. Panther engines will be supplementing a new range of smaller petrol engines, internally named Dragon, which will power the next gen Figo and Aspire cars. A Ford India spokesperson said as a policy, the company does not comment on speculations on products or manufacturing plans.

Exports of cars longer than 4 metres accounted for 20% of total exports of 6.5 lakh vehicles in fiscal 2016 — the share has more than doubled in three to four years. If vehicles like Toyota Etios and EcoSport are included — these are slightly smaller — mid-size segment will account for almost 30% of India's total car exports.

Experts say though the domestic market share for many MNCs has remained modest, it is the export strategy which has help them justify big capital investments and break even in India with economies of scale.

 

Sources :economictimes.indiatimes.com

Steel Sector Shines In August; Import Falls, Export And Demand Rise

NEW DELHI: August turned out to be a bright month for the over USD 100 billion Indian steel industry, with imports of the metal declining, while exports and consumption registering an upward trend.

After declining for 2 consecutive months, country's steel consumption rose, though marginally, to 6.97 million tonnes (MT) last month compared to July 2016.

Consumption in the world's third largest steel producer rose 2.7 per cent in August this year, against July, while on year-on-year basis the growth was one per cent, latest data by Steel Ministry's Joint Plant Committee (JPC) showed.

India's consumption of total finished steel saw a growth of 1.3 per cent in April-August this fiscal to 33.74 MT over the same period of last year, it added.

The demand had declined for the second-straight month in July 2016, falling over 7 per cent to 6.3 MT compared to June, whereas in June 2016, it fell 8 per cent to 6.8 MT over May.

However, on the brighter side, steel imports fell 34.5 per cent to 3.012 MT in April-August 2016-17 compared to the year-ago period, JPC data showed.

"Imports in August 2016 (0.619 MT) was down 36 per cent over August 2015 and by 2.2 per cent over July 2016. India remained a net importer of total finished steel during this period," it said.

Another silver lining for the sector was an increase in exports of the metal.

Exports of total finished steel was up 23.6 per cent in the first five months of this fiscal to 2.38 MT against the April-August period in 2015-16.

Outbound shipments in August 2016 stood at 0.68 MT, a healthy growth of 87 per cent over August 2015 and 26 per cent over July 2016.

During April-August 2016-17, crude steel production grew 7 per cent to 39.98 MT over same period of 2015-16.

Steel output in August 2016 stood at 8.18 MT, up 9.8 per cent over August 2015 and by 1.2 per cent over July 2016.

 

Sources :economictimes.indiatimes.com

Silver Imports Fell By Half In 2016 As Traders Offloaded Old Stock

After over 20,000 tonnes of imports in the last three years, silver imports nosedived in 2016 in line with gold. From January to July this year, imports fell over half and only 2,111 tonnes of silver was imported in India against 4,362 tonnes last year, lowest after 2012. Demand was low and huge import of silver by traders in past years was coming in the market as raiders and stockists were booking profit. That has also resulted in prices quoting at $1 per ounce discount in July. Now, however, discount has shrunk to 30 cents per ounce.

Chirag Thakkar, director, Amrapali Group, said that imports are quite low because “all the importers are sitting on heavy stock since past many months. Prices went up sharply this year. As a result, every importer has been struggling to clear the stocks and that is the reason even silver market is in disparity of around 30 cents per try oz”. He said that demand is still not picking up because current price levels are high, “but if prices stay at the same level, within a month we can see demand in silver”.

Silver has been a high beta commodity with prices rising and falling fast compared to gold.

Further, there's no fresh demand in the market at current price levels.

Sudheesh Nambiath, lead analyst (precious metals demand), South Asia & UAE, GFMS Thomson Reuters, explains that Indian silver imports have slumped this year largely due to a supply overhang in the domestic market, attributed to unsold inventories across the value chain and the high level of above the ground stocks at secured vaults and in private hands. He believes that the trend will continue. “We expect full-year total imports to be close to 3,500 tonnes in 2016 (which will be lowest after 2012), a drop over 44 per cent on 2015 levels. This follows a first half total of just 2,027 tonnes. In our view, we would need to see the price back below $18 an ounce for the pent-up demand to be unleashed.”

Interestingly, according to the GFMS data, in the last three decades, India has imported approximately 87,000 tonnes of silver. And the three decade average price of silver was Rs 16,447 per kg, which is two-third of the current price level. Thus, “it shouldn’t surprise when investors and consumers liquidate silver holdings at current prices or indeed exchange it against new jewellery”.

In such a scenario, only industrial demand can support the market and such demand is still quite low in India.

Globally, over half of silver is used for industrial purposes, while in India only 20 per cent is estimated to be going for industrial use.

 

Sources :business-standard.com

India Since Liberalization: A Look At Share Of Commodities In Exports

New Delhi: Twenty-five years since India’s liberalization, here’s a look at how the share of commodities in the overall exports basket has changed.

India’s trade profile has seen a significant change since the first foreign trade policy was unveiled between July 1991 and March 1992 in a series of steps by then commerce minister P. Chidambaram.

These measures gradually dismantled the quantitative restrictions on imports in the form of import licences on most products and abolished the office of the chief controller of imports and exports, replacing it with the Directorate General of Foreign Trade.

India’s peak import duties which were among the highest in the world at over 200% in 1991 were gradually brought down to 45% by 1997-98. Now the peak customs duty stands at only 10%.

The share of manufacturing in the Indian exports basket saw a nominal rise from 78% in 92-93 to 84% in 2015-16.

But there has been a marked change in the composition of India’s export basket—the share of leather, textiles and ready-made garments has fallen sharply reducing while items like engineering goods and chemical products have seen a strong rise during the same period.

Madan Sabnavis, chief economist at Care Ratings said the change in composition from traditional goods to sophisticated goods is encouraging.

“Demand for engineering and chemical products is elastic. Developed countries are importing chemical-based products like pesticides as these commodities create environmental problems during production in their own countries,” he said.

K. J Joseph, ministry of commerce chair professor at the Centre of Development Studies, Trivandrum, said India’s manufacturing exports have lagged behind due to a lack of innovation culture. “Sadly in case of India, there are reasons to believe that we are yet to evolve a vibrant innovation system at the national level. This is not to underplay the existence of certain extent of vibrancy at the level of certain sectors which also present better export performance,” he added.

The share of petroleum and crude products has also increased from 3% in 1992-93 to 12% in 2015-16 after the discovery of oil and gas reserves, especially in the Krishna-Godavari basin.

Alongside the rise in manufacturing products and petroleum products, the share of agriculture and allied product has fallen from 17% to 14% and that of ores and minerals from 4% to less than 1% during the same period.

However, the domestic value addition to the overall merchandise exports has been falling, which has caused concern. According to the Economic Survey 2014-15, the domestic value addition for overall merchandise exports fell from 85% in the 1998-99 to 71% in 2007-08, implying more import content in India’s export basket.

Rashmi Banga, economist at the United Nations Conference on Trade and Development, pointed out in an article published in the Economic and Political Weekly in October 2014 that even if manufacturing output grows and exports rise, unless domestic value addition rises, there will be no commensurate production-linked gains like employment generation, technology upgradation and skill development.

“Declining value-added growth can lead to a stage where the industries will need to increase their imports of inputs but will not be able to add much value to their exports and will thus slowly hollow-out,” she wrote.

India’s share in global merchandise exports hasn’t increased much. While in 2004-05, India’s merchandise exports had a share of 0.9%, it increased to 1.6% by 2014-15.

 

Sources:.livemint.com