Forex

Forex Trading :- Euro, Sterling Correction To Gather Pace On Increased Fears

2011-10-13T21:20:00.000+05:30

Talking Points
Euro: ECB Holds Cautious Tone, Sees Risk Of Economic Contraction
British Pound: BoE Talks Up Speculation For More QE, Correction To Accelerate
U.S. Dollar: Benefits From Risk Aversion, Rebound To Gather Pace
Euro: ECB Holds Cautious Tone, Sees Risk Of Economic Contraction

The European Central Bank’s struck a cautious outlook in its monthly report and reiterated that the economic outlook remains tilted to the ‘downside’ as the region faces a slowing recovery. At the same time, ECB board member Jozef Makuch highlighted an increased risk of a double-dip recession, noting that the economy may contract over the medium-term should ‘downside risks materialize.

In addition, the EU warned that some commercial banks may need a 9 percent capital buffer to weather the ongoing turmoil within the financial markets, and we may see the ECB take additional steps to shore up the ailing economy as it aims to encourage a sustainable recovery. According to Credit Suisse overnight index swaps, market participants still see the Governing Council scaling back the benchmark interest rate from 1.50 percent over the next 12-months, and the committee may carry its easing cycle into the following year as the outlook for growth and inflation deteriorate. As the near-term rally in the EUR/USD tapers off ahead of the 61.8% Fibonacci retracement from the 2009 high to the 2010 low around 1.3880-1.3900, the pullback from 1.3832 may gather pace over the remainder of the week, and the single-currency is likely to face additional headwinds over the near-term as European policy makers struggle to restore investor confidence. In turn, the near-term forecast for the Euro remains bearish, and the euro-dollar may threaten the rebound from 1.3145 as the fundamental outlook for the region deteriorates.

British Pound: BoE Talks Up Speculation For More QE, Correction To Accelerate

The British Pound struggled to hold its ground on Thursday as the Bank of England talked up speculation for additional monetary support, and the sterling may trade heavy over the coming days as the central bank maintains a highly dovish outlook for future policy. BoE board member Charles Bean said the central bank may ‘undertake further purchases’ as the region faces an increased risk of falling back into a recession, and went onto say that the European debt crisis risks could ‘lead to a seizing up of the financial system’ according to an interview with the Guardian newspaper. As the MPC steps up its effort to shield the U.K. economy, we may see a growing argument to expand the asset purchase program beyond the GBP 275B target, and speculation for further easing is likely to weigh on the exchange rate as market participants weigh the outlook for monetary policy. In turn, the GBP/USD may trade heavy ahead of the BoE minutes on tap for the following week, but the exchange rate may give back the rebound from 1.5273 should the central bank keep the door open to expand policy further.

U.S. Dollar: Benefits From Risk Aversion, Rebound To Gather Pace

The greenback gained ground following the shift in market sentiment, and the reserve currency may continue recoup the losses from earlier this week as it benefits from safe-haven flows. As the U.S. stock market opens lower, we should see risk aversion gather pace throughout the North American trade, and risk trends are likely to heavily influence price action for the major currencies as the economic docket remains fairly light for Thursday. As global policy makers continue to cast a dour outlook for global growth, the shift away from risk-taking behavior should gather pace over the remainder of the week, and the greenback may resume the upward trend from the previous month as the fundamental outlook for the global economy deteriorates.

2011-10-13T21:15:00.002+05:30

The Reserve Bank of India (RBI) has opposed the creation of a $20 billion sovereign wealth fund, for acquisition of energy assets overseas, out of foreign exchange reserves and wants the government to create the corpus for it from the Budget.

A Group of Ministers headed by Finance Minister Pranab Mukherjee on Thursday deliberated on the possible ways of creating a fund on the lines of ones that exist in countries like China.

“Various things were discussed but no view has emerged,” Oil Minister S. Jaipal Reddy said after the 75-minute meeting.

Sources privy to the deliberations said the RBI was against using the nation’s forex reserves for setting up the fund. So, the Planning Commission has been asked to work out surplus that may be generated after accounting for all Plan and non-Plan expenditure.

“What they are talking is $1-2 billion corpus which is hardly the size...for acquisitions of oil and gas fields or coal and other mineral mines,” a source said.

“We decided we will take a look at it after the (12th Five Year) Plan approach paper is approved,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

Asked if RBI agreed for sharing a part of the over $300 billion forex reserves, he said: “Those are some of the issues. I mean one view is that it could be done through use of forex reserve. There are some operational problems there. The other view is that if you do it out of budgetary resources.”

He added, “...obviously if you use budgetary resources then you are taking from other use of plan fund. That’s what we have to look at.”

From - thehindu.com

Euro Weighed By Debt Fears, All Eyes on EFSF Vote

2011-10-11T20:49:00.000+05:30

Fears surrounding the sovereign debt crisis resurfaced on Tuesday as European Central Bank President Jean-Claude Trichet held a cautious outlook for the region, and the shift away from risk-taking behavior may gather pace throughout the North American trade as European policy makers struggle to restore investor confidence.
Talking Points
Euro: Greece To Receive Next Payment In November, All Eyes On Slovakia
British Pound: Halts Two-Day Rally, Sideways Price Action Ahead
Euro: Greece To Receive Next Payment In November, All Eyes On Slovakia
The Euro fell back from an overnight high of 1.3671 as European Central Bank President Jean-Claude Trichet talked up the risk for contagion and warned that the debt crisis has reached ‘systemic dimension.’ Moreover, Mr. Trichet encouraged the EU to act swiftly in recapitalizing the European banking system and stressed the importance of increasing the flexibility of the European Financial Stability Facility as the fundamental outlook for the euro-area turns increasingly bleak.
The EU, International Monetary Fund and the European Central Bank said Greece will receive its next bailout payment in early November after completing its fifth review of the economy, but warned that the 2011 fiscal target is no longer within reach, which will put increased pressures on the government to take additional budget-cutting measures in 2013-14. Nevertheless, all eyes are on Slovakia as lawmakers are scheduled to vote on broadening the powers of the EFSF, and the outcome is likely to sway market sentiment as European policy makers step up their efforts to address the debt crisis. However, it seems as though the EUR/USD has carved out a short-term top just below 1.3700, and the single-currency may consolidate over the near-term as market participants still see the ECB scaling back the benchmark interest rate from 1.50%. Bets for lower borrowing costs continues to dampen the outlook for the single-currency, and the euro-dollar may threaten the rebound from 1.3145 as the ongoing turmoil in Europe bears down on investor confidence.
British Pound: Halts Two-Day Rally, Sideways Price Action Ahead
The British Pound slipped to an overnight low of 1.5611 as market participants scaled back their appetite for risk, and the GBP/USD looks poised to face range-bound price action over the near-term as investors weigh the prospects for future policy. Indeed, the Bank of England stepped up its effort to shore up the ailing economy and increased its asset purchase program to GBP 275B, but the slowing recovery in the U.K. may lead the central bank to expand monetary policy further as the region faces an increased risk of a double-dip recession. With the BoE minutes on tap for the following week, it seems as though the pound-dollar will trend sideways over the coming days, and the slew of economic event risk scheduled for the rest of the week may lead the GBP/USD to give back the rebound from 1.5273 as the fundamental outlook for Britain deteriorates. In turn, the MPC may keep the door open to expand monetary policy further, and the central bank may carry its easing cycle into the following year in an effort to encourage a sustainable recovery.

GLOBAL FOREX: Euro Surges After German-French Summit

2011-10-11T20:47:00.000+05:30

The promise of a comprehensive plan to stem Europe's debt turmoil helped propel the euro to its largest one-day surge against the dollar since July 2010 Monday, as investors anticipated that the global economy might escape the fallout of a potential default or restructuring by Greece.

Over the weekend, Germany and France pledged to present a "comprehensive package" of measures designed to buttress the euro zone's banking sector and fortify the Continent's bailout mechanism, the European Financial Stability Facility, by the end of October. Although details were scant from the Franco-German meeting, markets across the world leapt on expectations that the end of the long-running debt saga might finally be at hand.

As investors piled back into stocks and higher-returning currencies, safe-haven demand for the dollar evaporated and sent the euro on a surge of more than 3.5 cents on the day. That represented a stark turnabout from last week, when the euro tumbled to an eight month low at $1.3145.

"Euro selling has been pretty relentless since last week," said David Gilmore, partner and analyst at FX Analytics. He noted that gloom about Europe had become "extreme", so the bilateral French-German summit gave investors an opportunity to reduce bets the euro would fall further.

"Price over time can shape the narrative, so it all bears watching," he added. "If [the euro] gets back above $1.40 people won't be so pessimistic."

The single currency pared some of its gains after political wrangling in Slovakia heightened the possibility that the governing party may reject the EFSF. According to established rules, all 17 nations which use the euro must ratify the bailout fund.

Late Monday, the euro was at $1.3637 from $1.3380 late Friday, according to EBS via CQG. The dollar was at Y76.70 from Y76.76, while the euro was at Y104.60 from Y102.85. The U.K. pound was at $1.5671 from $1.5561. The dollar was at CHF0.9038 from CHF0.9271.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 77.567 from about 78.726. Meanwhile, the Australian dollar breached parity with the greenback for the first time since Sept. 22.

Risks to the market's budding optimism are still vulnerable to political realities in Europe. A European Union summit was postponed from Oct. 17-18 to the 23rd, underscoring how divisions among euro zone politicians are making it difficult to find a solution to what ails the Continent.

Analysts say that the longer the uncertainty persists, the more intense the risks are to a global economy already suffering from weaker growth and a near-incalculable overhang of debt. A default by Greece could echo across Europe's banking sector and the global economy. It also carries with it the possibility of sending the borrowing costs of Italy and Spain, the euro zone's third and fourth largest economies, soaring to unsustainable levels.

"For now, the markets are rallying on the belief that there is forward moment on dealing with the European bank crisis," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago. "To me, this is an exercise in placing funding sand bags around the global banks to ensure they are not flooded by the rising river level of a Greek default."

FOREX-Euro falls on caution before Slovak EFSF vote

2011-10-11T20:45:00.001+05:30

Slovak coalition remains split on EFSF vote

* But positioning may lead to further short squeeze

- The euro dipped on Tuesday on caution over a Slovak vote on changes to the euro zone's rescue fund but held in positive territory for the week as hopes for a solution to the debt crisis triggered a squeeze of short positions in the currency.

The Slovak ruling coalition remained split over a deal to broaden the EFSF and any delay in passing the legislation could dent sentiment towards the euro.

"The general view is 'by hook or by crook the Slovaks will get this deal through', though they may have to rely on the opposition to so," said ING currency strategist Tom Levinson.

Slovakia is the last of the euro zone's 17 members still to ratify changes to the 440-billion-euro European Financial Stability Facility.

The euro was down 0.3 percent on the day at $1.3600, but it stayed well above last week's low around $1.3145. It surged 2 percent on Monday for its biggest daily percentage gain in 15 months, hitting $1.3698.

Monday's rally followed a Franco-German pledge to do what was necessary to shore up banks, settle the Greek crisis and accelerate euro zone economic coordination.

This prompted investors to take profit on hefty short euro positions that had built up, and analysts said there was still scope for further short covering to lift the euro.

"At least for the moment the case to continue selling the euro has disappeared," said Richard Falkenhall, currency strategist at SEB in Stockholm.

SEB forecasts the euro at $1.38 within a month, but Falkenhall said gains would be gradual, with any rise likely to encounter some profit-taking.

Data from the U.S. Commodity Futures Trading Commission showed currency speculators increased their net short positions in the euro to 82,697 contracts in the week ended Oct. 4, the biggest in four months.

"The euro can go higher because short positioning is still extreme. Monday's rally only partially offset that position." said Manuel Oliveri, currency strategist at UBS in Zurich.

Traders cited decent bids for the euro from $1.3570 down to $1.3550, which could help cap its falls.

However, major resistance was seen at $1.3680-90, the 38.2 percent Fibonacci retracement of the $1.4550/$1.3145 move and the Sept. 28 high. Traders reported offers around $1.3670 and more ahead of a $1.3700 option barrier.

LASTING RALLY UNLIKELY

A lasting euro rally was seen unlikely, however, with uncertainty over EU policymakers' plans to recapitalise banks, in the face of expectations that Greece could default, keeping investors wary.

Risk-reversals, a measure of the premium required to hold bets on a currency falling or rising, showed investors still hedging against a weaker euro. The one-month 25-delta risk-reversal traded around 2.55 in favour of euro puts, compared to 2.80 at the end of last week.

Among growth-linked and perceived higher risk currencies, the Australian dollar fell 0.35 percent to $0.9951 , giving back some gains after climbing 2.4 percent on Monday, its biggest one-day rally since June 2010.

The Aussie faces stiff resistance at $1.0035 -- a 38.2 percent retracement of its slide from a $1.1081 high in late July to a $0.9388 low plumbed in early October.

The U.S. dollar was down 0.7 percent against the Swiss franc to 0.9097 francs after falling more than 2 percent on Monday when the U.S. currency came under heavy selling pressure as equity markets rose and appetite for risk improved.

Against the yen, the dollar held steady at 76.63 yen , not far from a record low around 75.94 struck in August.

FOREX DROP :- FOREX-Euro drops versus dollar as debt worries persist

2011-09-17T11:56:00.000+05:30

* Geithner urges end to loose talk about euro break-up

* Bank of Portugal cites unreported debts at Madeira

* Funding strains ease after central banks move (Updates prices)

NEW YORK, Sept 16 (Reuters) - The euro dropped on Friday, hurt by a spate of negative news out of Europe ranging from the German chancellor's rejection of a euro zone bond to unexpectedly low private participation in Greece's debt program.

Analysts, however, were unsure as to where the euro is headed going into next week, seeing vulnerability in both directions.

The weak trend could persist, some said, as no new policy initiatives to deal with the euro zone debt crisis came out of the European Union Finance Ministers' meeting on Friday.

On the other hand, other analysts said, it seemed all efforts are being undertaken by individual euro zone governments to ease the region's fiscal problems. The euro, they argued, could stabilize next week and trade above the seven-month lows beneath $1.35 hit on Monday.

"The market probably senses that even though there is no comprehensive solution in the immediate offing, the risks that had been factored in at the beginning of the week have not been prevalent," said Bob Lynch, head of G10 FX strategy at HSBC in New York.

Shares in BNP Paribas (BNPP.PA) and Credit Agricole (CAGR.PA) slumped on Friday, with traders citing talk that ratings agency Moody's could downgrade Italy after the market close on Friday. BNP Paribas and Credit Agricole are the two French banks most exposed to Italy.

The euro was last down 0.7 percent at $1.37851 EUR=EBS, off a one-week peak of $1.39370 hit on Thursday but held above a seven-month trough below $1.35 plumbed on Monday. The euro has gained around 1.6 percent so far this week, its best weekly performance since the week of July 24 on trading platform EBS.

It fell to a session low of $1.37530, with traders saying it extended losses after stop-loss orders were triggered on the break of $1.37700, with more stops at $1.37500.

German Chancellor Angela Merkel's reiteration on Friday of her objection to the introduction of euro bonds, and an unexpectedly low 75 percent participation in Greece's debt initiative, below the 90 percent target, added pressure to the euro. [ID:nB4E7K901L] [ID:nWEA4691].

U.S. Treasury Secretary Timothy Geithner is taking part told EU finance ministers on Friday they should end loose talk about a euro zone break-up and work more closely with the European Central Bank to tackle the debt crisis. [ID:nL3E7KG0KC]

The euro had hit a one-week high after a coordinated move by central banks on Thursday to provide dollars. Funding strains, evident through the cross currency basis swap market, which had hit some euro zone banks, appeared to be easing.

The three-month euro/dollar cross currency basis swap EURCBS3M=ICAP, or the relative premium for swapping euro LIBOR for dollar LIBOR, tightened to minus 88 basis points on Friday, a day after the central banks acted. It narrowed from as wide as minus 115 basis points on Monday.

FED MEETING AHEAD

While investors remain wary of the euro, they are also reluctant to take long positions in the dollar ahead of a Federal Reserve meeting next week, where policymakers may flag another round of quantitative easing to boost the economy.

That move should weigh on the dollar and help riskier assets rally, although analysts said some market players thought "Operation Twist" was the more likely outcome.

In such a scenario the Fed would buy longer-dated Treasury bonds and sell shorter-dated ones to keep rates at the longer end lower without expanding the balance sheet.

The ICE Futures' dollar index was last up 0.5 percent at 76.633 .DXY. Against the yen, the dollar was up 0.2 percent at 76.870 yen JPY=EBS. The threat of Japanese intervention has helped keep dollar/yen in a tight range and above its all-time low of 75.94 yen. (Reporting by Gertrude Chavez-Dreyfuss and Wanfeng Zhou; Editing by Chizu Nomiyama )

SOURS :- reuters.com

I WORLD FOREX NEWS :- Euro Falls On Lack Of Greek Resolution

2011-09-17T11:52:00.000+05:30

The euro fell Friday, after a closely-watched European Union finance ministers meeting failed to produce an agreement on how to resolve the Continent's intensifying debt woes.

A meeting in Wroclaw, Poland, between euro zone finance officials exposed the deep divisions that have characterized efforts to prevent Greece's financial issues from reverberating across the world economy. With investors seeking resolution to the long-running saga, ministers postponed until next month a decision to release more money to the cash-strapped Hellenic republic.

Despite a surprise move Thursday by five major central banks to flood European banks with dollars, markets are still unconvinced that the financial distress battering markets will be alleviated anytime soon. In addition, all euro zone parliaments must ratify a move to increase the size of the European Financial Stability Fund, and the outcome is far from guaranteed.

"Greece has a substantial problem, perhaps an insoluble one," said David Feldman, President and co-chief investment officer at investment firm Palladiem Partners, L.P. "I don't see an easy exit for them."

The lack of a permanent solution means the probability of a disorderly default are "uncomfortably close to 50/50," he added. That would heap further pressure on the euro, which just this week sank to a near seven-month low below $1.35.

Late Friday, the euro was at $1.3802 from $1.3875 late Thursday, according to EBS via CQG. The dollar was at Y76.82 from Y76.70, while the euro was at Y105.91 from Y106.45. The U.K. pound was at $1.5788 from $1.5804. The 0.8763 from CHF0.8693.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 76.552 from about 76.277.

U.S. Treasury Secretary Timothy Geithner attended the EU meeting Friday. He called on euro zone nations to overcome damaging divisions and remove "catastrophic risk" from markets.

EU finance chiefs did agree on a compromise to increase economic governance and prevent another crisis. However, they failed to give investors any clarity on the current crisis menacing Greece and threatening Italy and Spain.

Italy--the euro zone's third largest economy--just passed a package of austerity measures designed to prevent investors from punishing its sovereign debt in the same manner of Greece, Ireland and Portugal. But analysts are nervously awaiting an imminent decision from Moody's Investors Service on whether Italy will suffer a downgrade of its sovereign credit rating.

"Italy is not Greece," said Steve Wyatt, finance chair of the Farmer School of Management at Miami University. But with its heavy debt and sluggish growth, "there's a real worry of infection into a place like Italy, which???has to get its fiscal house in order and needs breathing room."
SOURS :- http://online.wsj.com

I FOREX NEWS :- US Dollar ends week lower

2011-09-17T11:49:00.001+05:30

Greenback finished the week mostly lower in the market with moderate losses weakened by risk appetite and by the announcement of major central banks. The Aussie and the Pound were also among the worst performs.

The US Dollar started the week on a strong note, rising sharply to fresh monthly highs but it bounced sharply and turned to the downside, falling in the next days. The EUR/USD bottomed at 1.3497 on Monday, jumped to 1.3935 on Thursday and finished the week around 1.3780/90.

The GBP/USD moved all week in a small range of less than 200 pips and finished the week just 50 pips below the price it opened Monday’s Asian session. “The pair finished the week lower after the latest jobs report which braded ‘unwelcome’ by the Employment Minister Chris Grayling prompted market participants to speculate over the potential need for an additional monetary policy easing by the BoE; in addition to that, BoE's Weale said that risk of recession increased since July and that growth prospects have worsened in the last few weeks,” the Talking-Forex.com analysis team affirmed.

The USD/CHF ended slightly lower while USD/JPY failed to hold above 77.00 despite risk appetite and fell back below 77.00. The Aussie and the Kiwi posted gains versus the US Dollar and the Aussie finished with small losses.
SOURS :- FXstreet.com

FOREX TRADE NEWS :- Forex - GBP/USD up in Asian trade

2011-09-17T11:47:00.000+05:30

The British Pound was higher against the U.S. Dollar on Friday.

GBP/USD was trading at 1.5810, up 0.06% at time of writing.

The pair was likely to find support at 1.5707, Wednesday's low, and resistance at 1.5885, Monday's high.

Meanwhile, the British Pound was up against the Euro and the Japanese Yen, with EUR/GBP shedding 0.10% to hit 0.8773 and GBP/JPY rising 0.14% to hit 121.37.

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SOURS :- MONYCONTROl

FOREX NEWS :- Euro steady on move by central banks, EU meet eyed

2011-09-16T10:44:00.000+05:30

* Euro clings to gains, though vulnerable to mood swings

* EU meeting to focus on leveraging bailout fund

* Closure of Goldman fund behind recent Aussie falls -traders

By Cecile Lefort and Antoni Slodkowski

SYDNEY/TOKYO, Sept 16 (Reuters) - The euro clung to gains on Friday, boosted by coordinated action from key central banks to add liquidity to the European banking system, though the rally is unlikely to last as the Greek debt crisis remains in a critical state.

Investors were reluctant to make heavy bets ahead of a meeting of EU finance ministers in Poland which U.S. Treasury Secretary Timothy Geithner will also join. Discussions are expected to focus on leveraging the euro zone's bailout fund to make it more effective in fighting the debt crisis.

The euro last changed hands at $1.3861 , off a one-week peak of $1.3937 hit on Thursday, but also well off a seven-month trough below $1.35 plumbed on Monday. The common currency has bounced some 2 percent so far this week.

"If we again only hear some verbal reassurances about Greek problems and no concrete action, that'd surely be the end of the rally in the euro," said Sumino Kamei, senior currency analyst at Bank of Tokyo-Mitsubishi UFJ.

Technical analysts also said that despite hovering near technical indicators showing that the euro is oversold in the short-term, it is vulnerable to further falls.

"Valuation-driven retracements to resistance at 1.4014 and 1.4263 are expected to attract renewed selling interest for a test of the next support level at 1.3428. A daily close below here would then expose 1.3246, with a close above 1.4484 required to nullify our bearish view," George E. Davis, an analyst at RBC Capital Markets, wrote in a note to clients.

The rally followed an announcement that the European Central Bank will liaise with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to provide three-month dollar loans to banks to prevent the money market from freezing up.

That lifted bank stocks, metal prices and commodity currencies, while safe-haven U.S Treasuries pulled back.

Euro zone banks have faced dollar funding strains in recent months on mounting fears Greece will default on its debt, hitting institutions that have large exposure to the nation.

"Obviously it's not a long-term solution, we need to see some resolution to the sovereign debt issue to give markets confidence that we'll have stronger growth over the medium-term," said Spiros Papadopoulos, a senior market economist at National Australia Bank.

"Certainly these policy measures will help improve confidence in the short-term," he added.

For now, support for the euro is seen at $1.3704, while major resistance is at $1.3937 and a break above would target $1.3975/$1.4000.

WELCOME FILLIP

The Australian dollar , received a welcomed fillip after the central banks' move and gained more than one cent to last trade at $1.0336, off an overnight trough of $1.0183.

It has been under pressure this week following heavy liquidation by foreign funds of long positions in Asian currencies on growing fears another global credit crunch may be looming.

Asian traders linked falls in the Aussie to the liquidation by Goldman Sachs of its roughly $1.6 billion Global Alpha fund and some expected that owing to its size, it could still put more pressure on the currency. The fund will be closed in the next few weeks.

"It's perfectly believable that they have been taking profits on whatever outperforming Asian assets they held, after massive losses sustained earlier by the fund," said a trader for a Japanese bank.

Global Alpha had tumbled 13 percent by early September, delivering a far worse performance than other hedge funds that rely on computer programs.

There is speculation that the Swiss franc's sharp fall after the SNB imposed a ceiling for the franc against the euro might have triggered the massive losses.

The dollar index gained 0.15 percent to 76.36. Against the yen, the dollar remained stuck at 76.75 yen .

The markets brushed off weak U.S. data showing higher-than-expected inflation and jobless claims, reinforcing views that the Federal Reserve will offer only modest stimulus measures.

The U.S. economy barely grew in the first half of this year, making it vulnerable to an escalation in Europe's debt crisis.

sours :- reuters.com

I FOREX NEWS :- Dollar Broadly Lower After EBC Announcement, U.S. Data

2011-09-16T10:41:00.001+05:30

The U.S. dollar was broadly lower against its major counterparts on Thursday, after the European Central Bank announced that it was launching a coordinated action to offset liquidity shortages at European banks and following the release of a slew of broadly worse-than-expected U.S. data.

During U.S. morning trade, the greenback was lower against the euro, with EUR/USD advancing 0.77% to hit 1.3859.

The ECB announced that it “has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three U.S. dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year.”

The announcement eased concerns over funding shortages among European lenders, who have been finding it difficult to borrow dollars as a result of the region’s debt crisis and have had to depend more heavily on the ECB for loans.

The greenback was also lower against the pound, with GBP/USD adding 0.40% to hit 1.5832.

Earlier Thursday, official data showed that retail sales in the U.K. declined in line with expectations in August, slipping 0.2%.

Meanwhile, the greenback was higher against the yen but was down sharply against the Swiss franc, with USD/JPY easing up 0.14% to hit 76.73 and USD/CHF tumbling 0.78% to hit 0.8692.

The Swiss National Bank left its benchmark interest rate unchanged at zero for September earlier in the day and reiterated its commitment to defend the minimum exchange rate of 1.20 per euro” with utmost determination.”

The greenback was also lower against its Canadian, Australian and New Zealand cousins, with USD/CAD shedding 0.28% to hit 0.9866, AUD/USD inching up 0.04% to hit 1.0286 and NZD/USD easing up 0.08% to hit 0.8239.

Earlier in the day, the Reserve Bank of New Zealand left its benchmark interest rate unchanged at 2.5% and indicated that rates are likely remain on hold in the coming months, amid risks that the global recovery could slow “sharply.”

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.55% to hit 76.96.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits rose by 11,000 to a seasonally adjusted 428,000 last week, confounding expectations for a decline to 410,000.

Meanwhile, government data showed that U.S. core consumer price inflation rose in line with expectations August, rising 0.02%, while consumer prices including food and energy costs rose 0.4%, above expectations for a 0.2% gain.

Also Thursday, official data showed that manufacturing activity in the Philadelphia region improved less-than-expected in September, remaining in negative territory for the second consecutive month, while an index of manufacturing conditions in New York fell unexpectedly.

sours :- daily marketers

I FOREX NEWS :- RBI relaxes forex norms for individuals

2011-09-16T10:39:00.001+05:30

To further liberalise norms on foreign exchange transactions, the Reserve Bank of India (RBI) on Thursday announced a number of relaxations pertaining to individuals.

The central bank raised the limit of the value of securities to be transferred as gift to a non-resident Indian (NRI) to the rupee equivalent of $50,000 per financial year from $25,000 per calendar year earlier.The other changes include allowing individual residents in India to include a non-resident close relative as a joint holder in their resident bank accounts on the ‘former or survivor’ basis. However, such joint holders will not be eligible to operate the account during the lifetime of the Indian resident account holder, said RBI in a notification.
NRIs have also been permitted to open accounts with their resident close relative on the ‘former or survivor’ basis where the close relative will be eligible to operate the account as a Power of Attorney holder during the life time of the NRI/PIO account holder.

The above norms will be applicable in exchange earners’ foreign currency account, resident foreign currency account, non-resident (external) rupee account, foreign currency (non-resident) account (banks) and savings bank account.
sours :- bs

Dollar Loses Again Against Euro Yen and Australian

2010-06-16T21:43:00.000+05:30

(Best Syndication News) The euro has been rising from last week’s four- year lows and today it rose again (see charts below). The dollar lost against the euro, the yen and the Australian dollar.

Euro Dollar Exchange Rates

The euro was up .422 percent against the British pound and .674 percent against the Japanese yen.
The euro was trading at $ 1.2323 today, up .86 percent according to our first survey of the day (see the results of other surveys below). Stock markets around the world were higher as investors moved money into riskier assets.
The DJIA was up over 200 points today while the Nikkie 225 was up 8.04 points (.08 %) to 9,887.89. The Australian S&P ASX 200 was one of the few markets lower today losing .5 points (.01 %) to 4,505.00.
Confidence was spreading today as Spain sold their sovereign debt despite the trend to riskier investments. Reports suggested that Spain would require a bailout similar to Greece, but analysts are quick to point out differences. German officials said Spain was not likely on the next EU summit agenda.
Spain was able to raise 5.2 billion euros in 12 and 18-month T-bills at auction. They are paying a significantly higher average yield than last month, but the sale reassured investors that they will be able to meet their debt redemption at the end of July.
Rising stock markets pulled money away from the German bonds Monday. The German 10-year yields rose seven basis points to 2.64 percent and it was announced that industrial production in the EU grew 0.8 percent in April from March.

Australian Dollar

The euro gained against all other major currencies except the Australian dollar. The Aussie was up seven of the last ten days. The Australian dollar was up .9 percent against the U.S. dollar and .822 percent against the Canadian. See the cross table below for more details.
By: Steven Potter
Business Reporter

Friday	Monday	Tuesday	Survey # 1	% Change Day	% Change Wk
6/11/2010	6/14/2010	6/15/2010	Per Dollar	Pos=$US Gain	Pos=$US Gain
7.7938	7.7917	7.7906	Hong Kong Dollar - HKD	0.01	0.16
1.1803	1.1665	1.1559	Australian Dollar - AUD	0.91	4.30
1.0372	1.0343	1.0258	Canadian Dollar - CAD	0.82	1.80
1.1538	1.1423	1.1334	Swiss Franc - CHF	0.78	1.30
0.6884	0.6785	0.6756	British Pound - GBP	0.43	1.79
91.64	91.591	91.42	Japanese Yen - JPY	0.19	0.14
0.8291	0.8185	0.8115	Euro - EUR	0.86	2.74
14.9032	14.8890	14.8590	Average	0.20	0.00

6/11/2010	6/14/2010	6/15/2010	Dollar /	Pos=$US Loss	Pos=$US Loss
0.1283	0.1283	0.1284	Hong Kong Dollar - HKD	0.01	0.16
0.8472	0.8573	0.8651	Australian Dollar - AUD	0.92	4.49
0.9641	0.9668	0.9748	Canadian Dollar - CAD	0.83	1.83
0.8667	0.8754	0.8823	Swiss Franc - CHF	0.79	1.31
1.4526	1.4738	1.4802	British Pound - GBP	0.43	1.82
0.0109	0.0109	0.0109	Japanese Yen - JPY	0.19	0.14
1.2061	1.2217	1.2323	Euro - EUR	0.86	2.82
8:30 AM	2:40 PM	2:30 PM	Time Collected (Pacific)



Fri	Monday	Tuesday	Survey # 2	% Change Day	% Change Wk
6/11/2010	6/14/2010	6/15/2010	Per Dollar	Pos=$US Gain	Pos=$US Gain
91.74312	91.74312	91.74312	JPY ¥ Yen	0.00	0.92
0.82919	0.81880	0.81129	EUR € Euro	0.92	2.79
1.03724	1.03125	1.02564	CAD $ Canadian	0.54	1.64
0.68842	0.67870	0.67558	GBP £ British	0.46	1.82
1.18064	1.16604	1.15513	AUD $ Australia	0.94	4.41
1.15300	1.14286	1.13366	CHF Swiss Franc	0.80	1.28
16.10527	16.09679	16.09074	Average	0.04	0.74

6/11/2010			Dollar /	Pos=$US Loss	Pos=$US Loss
0.0109	0.0109	0.0109	JPY ¥ Yen	0.00	0.91
1.206	1.2213	1.2326	EUR € Euro	0.93	2.87
0.9641	0.9697	0.975	CAD $ Canadian	0.55	1.67
1.4526	1.4734	1.4802	GBP £ British	0.46	1.85
0.847	0.8576	0.8657	AUD $ Australia	0.94	4.62
0.8673	0.875	0.8821	CHF Swiss Franc	0.81	1.30
8:30 AM	3:00 PM	2:50 PM	Time Collected (Pacific)


Friday	Monday	Tuesday	Survey # 3
6/11/2010	6/14/2010	6/15/2010	Per Dollar	% Change Day	% Change Wk
			Americas	Pos=$US Gain	Pos=$US Gain
3.9165	3.9205	3.9175	Argentinean Peso	0.08	0.05
1.8063	1.8001	1.7995	Brazilian Real	0.03	3.56
1.036	1.0312	1.0263	Canadian Dollar	0.48	2.31
537.65	534.65	534.65	Chilean Peso	0.00	1.91
36.875	36.875	36.85	Dominican Peso	0.07	1.52
12.678	12.6369	12.6369	Mexican Peso	0.00	1.85

			Europe
0.6871	0.6786	0.6755	British Pound	0.46	2.50
21.2735	20.898	20.828	Czech Koruna	0.33	4.34
6.1409	6.0884	6.0376	Danish Krone	0.83	3.04
0.8255	0.8187	0.8116	European Euro	0.87	3.05
232	227.5	226.805	Hungarian Forint	0.31	4.52
6.4735	6.4413	6.3776	Norwegian Krone	0.99	4.30
3.3888	3.3296	3.2983	Polish Zloty	0.94	4.59
31.599	31.6605	31.66	Russian Ruble	0.00	0.44
7.9125	7.8865	7.7669	Swedish Krona	1.52	3.80
1.1495	1.1427	1.131	Swiss Franc	1.02	1.93

			Asia / Pacific Region
1.1759	1.1657	1.1578	Australian Dollar	0.68	6.16
6.8355	6.83	6.837	Chinese Yuan Renminbi	0.10	0.05
7.7905	7.7909	7.7913	Hong Kong Dollar	0.01	0.15
46.825	46.54	46.355	Indian Rupee	0.40	1.82
9,250.00	9,180.00	9,167.50	Indonesian Rupiah	0.14	1.82
91.655	91.635	91.475	Japanese Yen	0.17	0.14
3.285	3.2525	3.259	Malaysian Ringgit	0.20	2.21
1.4481	1.4398	1.4351	New Zealand Dollar	0.33	5.39
85.3	85.3	85.45	Pakistani Rupee	0.18	0.35
1.4028	1.3968	1.3937	Singapore Dollar	0.22	1.69
1,250.60	1,250.60	1,222.25	South Korean Won	2.27	0.31
32.315	32.25	32.29	Taiwanese Dollar	0.11	0.60
32.54	32.375	32.41	Thai Baht	0.11	0.70

			Africa / Middle East
5.6765	5.677	5.677	Egyptian Pound	0.00	0.11
3.848	3.819	3.822	Israeli Shekel	0.08	1.65
7.6818	7.6787	7.5931	South African Rand	1.11	2.18
1.5788	1.5697	1.5697	Turkish New Turkish Lira	0.00	2.17
3.673	3.6729	3.6729	UAE Dirham	0.00	0.00

Averages:

Average	Average	Average	From Survey 1 - 3	% Change Day	% Change Wk
6/11/2010	6/14/2010	6/15/2010	Currency / $US	Pos=$US Gain	Pos=$US Gain
1.1789	1.1661	1.1563	Average Against Aussie	0.84	5.20
0.8279	0.8187	0.8115	Average Against Euro	0.88	3.05
91.6794	91.6564	91.5460	Average Against Yen	0.12	0.09

Cross Chart:

Pos Means Top Currency Gained				One Day Change		June 15th 2010 2:30 PM
Survey # 1	HKD	AUD	CAD	CHF	GBP	JPY	EUR	USD
HKD		0.903%	0.812%	0.768%	0.424%	0.118%	0.850%	-0.014%
AUD $	-0.868%		-0.089%	-0.127%	-0.471%	-0.787%	-0.056%	-0.909%
CAD	-0.754%	0.090%		-0.044%	-0.387%	-0.885%	0.040%	-0.822%
CHF	-0.750%	0.133%	0.045%		-0.339%	-0.800%	0.079%	-0.779%
GBP £	-0.459%	0.481%	0.381%	0.337%		0.000%	0.422%	-0.427%
JPY ¥	-0.174%	0.727%	0.637%	0.594%	0.250%		0.674%	-0.187%
EUR €	-0.762%	0.043%	-0.038%	-0.084%	-0.415%	0.000%		-0.855%
USD	0.078%	0.921%	0.827%	0.788%	0.434%	0.000%	0.868%

Learn Forex Currency Trading Online

2010-06-16T21:42:00.000+05:30

Forex currency trading is now the world’s largest financial market. It trades on average close to 2 trillion dollars every day. Trading is based on the ever fluctuating currencies of other countries and how they interact with each other. Forex currency trading is one of the best ways to invest from the privacy of your own home as a small investor. Currency trading is a little different from most markets, because most people don’t just sell or buy; they usually trade one currency for another.

Forex currency trading is the investment technique that millions of financial organizations are using to generate massive amounts of revenue every day. This method of currency trading is unique to any market in the world, as trading is available 24-hours a day, and is greatly affected by market news or events that take place in the world. Forex Currency Trading is one of the most powerful internet business opportunities available online today.

Currency

Currency Traders pay thousands of dollars to attend Forex trading courses, but there are many tools online that enable you to ‘virtually trade’ and try your hand before ever parting with a dime. When you’re confident in your skill level flip to the real Forex currency trading and enjoy that adrenaline rush when you reap those big profits.

Currencies are traded in dollar amounts called *lots*. One lot is equal to $1,000, which controls $100,000 in currency. You can control $100,000 worth of currency for only 1,000 dollars. You always need to compare one currency with another currency to make a trade possible. Buying or selling a currency PAIR means buying or selling the base currency, and doing the opposite with the counter currency. In currency trading you can make money both, when the currencies go up or down. The FOREX currency trading is a great way to work from home in your free time.

Market

When you are trading in the Forex markets online there’s no need to concern yourself with any of the usual broker fees and there’s no NFA or SEC fees. It has been proven highly effect to take money from the Forex currency trading market everyday. ” The Forex market is a non-stop cash market where the currencies of nations are bought and sold, typically via brokers. Because you access the market directly through electronic online forex trading you pay zero commissions or exchange fees. The huge number and diversity of forex investors involved make it difficult even for governments to control the direction of the forex market and therefore influence it.

Online

Online forex trading platform has margin-management capabilities that allows you to get up to 200:1 leverage. Online access and a computer means a world-wide investment opportunity for small traders. Online Forex Trading is Quickly Becoming a Booming Business and is more popular now that most everyone has access to a computer and internet.

Account

You’ll never lose more than you have in your FOREX account.

Learning

The first step is to learn all the basics of Forex Trading and limit the loss in the learning curve. There are 2 aspects, firstly, learning to use the trading software and the jargon, and the second, understanding the movements of the market and strategies for making money. In addition, beginners should be deeply involved in learning the economy of top countries before joining FOREX currency trading. Learning how to invest in this market is not all that difficult, you just have to choose the educational format that works best for you.

Forex currency trading is one of the ways people use to make money or as a wealth generation tool and is now one of the hottest trading markets in the world today!

forex brokers :- 5 Types of FOREX Brokers

2010-06-16T21:41:00.000+05:30

here are many types of forex brokers in the market. Knowing them is very important, especially if you are new to foreign currency trading. This will help you weed out fraudulent or illegitimate brokers from the professionals. Also, different brokers have different styles of doing business in this type of market. It is important to choose the right kind of broker that will help you feel comfortable with your trading decisions. Foreign currency brokers are largely classified by their trading styles and market access.
Book makers are forex brokers whose profits are dependent on the spread or the difference between the sell and buy prices. This type of broker does not have access to the actual foreign currency market and it is considered illegal in many countries, including the United States. Book makers are also known as spread betting companies or spread bettors. Neophyte traders should be cautious when dealing with this type of broker.

2. Bucket Shops

Like book makers, bucket shops do not have any connection or access to the actual currency market. These dealers make money through currency options and futures. In essence, they will book or trade against the position made by retail traders. Although there are many bucket shops available online, the legality of such shops is uncertain so it would be better for first-time traders to avoid them.

3. Retail Market Makers

A huge percentage of online forex brokers are classified as retail market makers. Small business brokers usually do not have direct access to the forex market and they make use of intermediaries in order to make a trade. However, big retail market makers have direct access to the market. If you are a greenhorn trader, you should consider getting the services of retail market makers because they require smaller amounts of money for you to start trading and they are also legitimate in most countries, including the United States.

4. Institutional Market Makers

The only difference between a retail market maker and an institutional market maker is the amount of money that they require before one can begin trading foreign currencies. If you have big money to invest, then you should consider using institutional brokers because they have close connections in the forex market.

5. Market Operators

Market operators, also known as institutional forex brokers, are not only directly involved in the forex market but they also represent about 50% of all foreign currency trading. It is worth noting that this type of broker is not appropriate for beginner or individual traders because market operators only cater to banks. In fact, a group of about 200 large banks control the forex market. If someone tells you that he has direct link to the interbank currency market, then that person is either lying to you or committing fraud because only banks are involved in interbank forex.

Since there are countless trading companies and online forex traders, it is very important for new traders to understand completely what type of broker they are dealing with. Having this knowledge will give you an idea on how profit is attained in a legitimate forex trading system.

forex tips :- Top 3 Forex Trading Tips

2010-06-16T21:39:00.002+05:30

One of the most important things for you to do is choose a broker that will provide you with an opportunity to be successful. You need to work with a broker that has low spreads and good order execution and that is regulated.

2. Education

When you are planning on trading the forex market, you need to put an emphasis on education. You need to learn as much as you can about the market. Successful traders generally spend a lot of time learning strategies and information about the market.

3. Manage Your Risk

It is very easy to become over-leveraged in your forex trading account. You need to implement sound money management principles in every trade that you make. You should make sure that you are trading with a lot size that is not too big for your account balance. You also need to implement the use of a stop loss on every single order that you place.

Euro selling resumes after Greece downgrade

2010-06-16T21:38:00.003+05:30

une 15 (Reuters) - The euro retreated on Tuesday as as downgrade of Greece's debt to junk status by ratings agency Moody's renewed concerns about euro zone debt, dampening sentiment and cutting short a rally in the currency.

Moody's slashed Greece's rating by four notches, citing "macroeconomic and implementation risks" in the country's draconian austerity programme and renewing persistent doubts about Greece's ability to repay its debt.

Worries about Spain also increased as Spanish Treasury Secretary Carlos Ocana acknowledged on Monday that some Spanish banks faced a liquidity freeze in the interbank market.

This put a stop to the euro's impressive run over the past few sessions when a rally in equity markets prompted investors to take profits on hefty short positions, leading the single currency to stall just shy of resistance at around $1.23.

"Yesterday we had concerns about Spain and on top of that the Greece downgrade and that is weighing on the euro now," said Johan Javeus, currency strategist at SEB in Stockholm.

"The Greece downgrade highlighted that these problems are quite severe and it is difficult to see the liquidity problems in Spain improving and I think the euro will struggle going forward".

SEB technical analysts said, however, that $1.2045 should provide solid support for the euro. That level is close to lows hit on Friday before the currency's solid rally on Monday when it rose close to $1.23.

The euro on Monday closed above its 14 day moving average for the first time since mid-April.

At 0717 GMT, the euro was down 0.3 percent against the dollar at $1.2182.

The Australian dollar fell 0.7 percent to $0.8522, pulling back from Monday's one-month high as greater risk aversion caused investors to cut exposure to higher-yielding currencies.

Minutes of an Australian central bank meeting that said interest rates could be left on hold in the near term also hit the Aussie. Policymakers expressed concerns about the debt problems in the euro zone.

STALLING RALLY

Yield spreads between peripheral euro zone government bonds and core German Bunds widened on Tuesday after the Greece downgraded and traders said the market looked vulnerable to euro negative news.

"Whether the bounce in the euro from $1.19 to $1.22 is more than a brief relief bounce remains open for debate but the sharp reaction to the rating downgrade overnight suggests that sentiment is still extremely fragile," Matthew Strauss, senior currency strategist at RBC Capital wrote in a note.

Traders said any revival in risk appetite may check losses in the near term, however.

Resistance is still around a Fibonacci retracement level at $1.2301, which is 23.6 percent of the euro's move from an April 14 high to its June 7 low.

The euro fell 0.7 percent on the yen to 111.01 yen. The U.S. dollar lost 0.4 percent to 91.16 yen.

In the options market, the recent rebound in euro/yen and Aussie/yen was reducing the attraction of yen calls and prompting investors to dump options since euro/yen failed to break below a barrier at 108 yen last week, traders said.

Dollar Weakens As Nerves Subside

2010-06-16T21:38:00.000+05:30

Dollar Weakens As Nerves Subside

LONDON (Dow Jones)--The dollar sank in European trading hours Monday as generally brighter investor sentiment trimmed demand for what's seen as a safe currency to hold in times of stress.

The euro shot higher, breaking above points of technical resistance against the U.S. currency, as somewhat improved sentiment alongside the lack of any fresh negative news on euro-area banks and finances prompted some traders to scale back negative bets.

Data showing a record 9.5% rise in annual euro-zone industrial output during April also helped the move, with the single currency shooting to over $1.2230--a 1% rise from the lowest point of the day.

"April's sharp rise in euro-zone industrial output indicates that the recovery in the export-sensitive industrial sector has been little affected so far by the region's fiscal woes," said ING economist Martin van Vliet.

Broadly upbeat sentiment in global financial markets also supported the rise in the 16-country currency, which was echoed by modest weakness in so-called safe haven currencies, among them the yen and the Swiss franc, which tend to perform best when investors are nervous.

"No news is good news for the euro," said currency analysts at Commerzbank in Frankfurt. "[As long as] the issue of peripheral country bonds goes well, and as long as the European Central Bank does not commit any massive communication errors, the euro has potential for recovery," they said, adding that this trend is also likely to continue pushing the yen lower.

See the euro's performance against the dollar here:

http://www.dowjoneswebservices.com/chart/view/4128

Sterling also moved higher, as nerves stabilized and a new independent government department cut the country's borrowing forecasts. The Office for Budget Responsibility said that the U.K. will need to borrow GBP106 billion in 2012 to 2013, from GBP110 billion seen earlier.

In addition, a weekend newspaper article by Bank of England monetary policy committee member, Andrew Sentance, hinted that higher interest rates may be needed sooner than expected to fight persistent inflation. That provided the pound with fuel for a modest rise against both the dollar and the euro.

With no clear positive catalyst, rises in riskier currencies and weakness in the yen may not last long, analysts said. However, it may continue as a robust short-term trend, particularly as measures of speculative bets also point to some dollar weakness from current levels.

Data Friday from the Commodity Futures Trading Commission showed that negative bets on the euro had again approached a record high in the week up to June 8, while positive bets on the dollar had hit an all-time high.

Such extremes in positioning raise risks, analysts warned. "The fact that the data revealed net aggregate long dollar positions reached an all-time high last week, highlights the potential for profit-taking this week," said Mitul Kotecha, chief currency analyst at Credit Agricole in Hong Kong in a note to clients.

Overnight in Asia, the Korean won showed little reaction to the widely-expected capital controls that were introduced in the country over the weekend.

In European emerging markets, there were small gains for the Hungarian forint and the Polish zloty, in a move attributed to improving general sentiment. The euro dropped from almost HUF282 to around HUF280 over London trading hours.

At 0922 GMT, the euro was trading at $1.2235, up from $1.2077 late in New York Friday, according to trading system EBS. The dollar was a shade higher at Y91.91 against the yen, from Y91.62, while the euro was up at Y112.45 from Y110.65. The U.K. pound was higher at $1.4731 from $1.4516.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was down at 86.566 from 87.508.

Forex kitty shrinks by $1.4 bn on global currency volatility

2010-06-15T19:30:00.000+05:30

The volatility in the global currency markets on account of the sharp dip in the euro vis-à-vis the dollar has led to the value of India’s foreign exchange reserves eroding by $1.4 billion last week. In addition, foreign portfolio investors also pulled out dollars from the local markets.

The country’s forex reserves dipped $ 1.4 billion in the week ended May 28, largely due to revaluation of non-dollar assets and some sell-off by foreign investors. The reserves are at almost $272 billion. Foreign currency assets comprising dollars, British pounds and euro, among others, dipped $1.374 billion during the week.

The special drawing rights, or SDRs — the reserve currency with the International Monetary Fund — and the reserve capital with IMF fell $16 million and $ 4 million, respectively.

The concerns relating to sovereign debt, which were confined initially to Greece, is slowly spreading to the entire euro area. The value of euro vis-à-vis the dollar has dipped to multi-year lows, resulting in a sharp revaluation of foreign exchange reserves, said a treasury official at a public sector bank.

In the banking sector, banks still have a high exposure to mutual funds in the absence of lending opportunities during this time of the year. They parked an additional Rs 57,755 crore on an incremental basis so far (May 21) this year to take their total mutual fund (MF) exposure to Rs 1,10,175 crore.

The total stock of money comprising cash, currencies and deposits rose Rs 8,808 crore during the fortnight ended May 21 to touch Rs 56,72,224 crore as on May 21. At current levels, the annual YoY growth works out to 14.7 % against 20.9% in the year-ago period.

The government’s borrowing for the week from RBI dipped by Rs 14,124 crore during the week because of improved revenue position. Its total borrowing to meet its daily revenue mismatches amounted to Rs 7,531 crore while state governments repaid Rs 258 crore. These short-term borrowings are known as Ways and Means Advances, or WMA — a facility under which governments borrow from the central bank to meet their daily revenue mismatches. While borrowings within the limit is at the prevailing repo rate, anything above the limit is at 2 percentage points higher than the repo rate. It is common for governments to resort to such borrowings at the beginning of a fiscal until revenue flows gain momentum.

Banks cut proprietary trades in forex as volatility mounts

2010-06-15T19:29:00.001+05:30

Banks have reduced proprietary trades in foreign exchange in view of the extreme volatility in recent days. Several treasury heads said they are squaring off their forex position by the end of the day to avoid any risk on their books. Over the past few days, the rupee has witnessed wide swings of 50 to 80 paise in a single day against dollar.

The wild swings in the exchange rate are largely because of the precipitous fall of the euro vis-à-vis the dollar. The flight of investment into the dollar has resulted in most currencies weakening against the greenback. These include even Asian currencies whose economies are outperforming those in the West.

Typically, whenever there is volatility of this scale in the rupee-dollar exchange rate, RBI begins to unload millions of dollars that it holds in its reserves. In fact, the intervention to stamp out volatility is a stated policy of the central bank. This time around, however, RBI’s intervention has been very subdued. Forex dealers said since globally the dollar is strengthening, the central bank has chosen not to intervene to support the rupee.

Overall, the local currency has depreciated from 44.92 since the beginning of this fiscal to 46.98 against dollar, a 4.5% fall against the greenback. Between its high of 44.44 on April 15 and low of 47.70 on May 25, the rupee fell 7.3%. This, dealers say, is a wide swing in the shortest span so far. On Wednesday, the rupee touched the intra-day high of 47.29 but recovered to close at 46.98. “We have been advising exporters and importers to stay away from speculation and book dollars to avoid risk in volatile period,” said the treasury head of a large commercial bank.

However, despite this, exporters who had already booked dollars in the forward contract in the April and early May are now seen cancelling these contracts and booking profits as the rupee has weakened. Importers, mainly the oil companies, had not expected such a huge drop in rupee. Traditionally, most government-owned oil companies have preferred to keep open position in the forex market. Which means that they do not enter into forward contract to buy dollars.

Most dealers feel the rupee would move in the band of 46.50 to 47.50 because of uncertainty in the overseas currency market. Also, volatility in the domestic equities market impacts the rupee movement against dollar. The rupee drops when there is a sharp fall in the equities market as foreign institutional investors sell equities and buy dollars to remit in their home country.

Rupee gains 34 paise against dollar at Rs 46.49/50

2010-06-15T19:27:00.002+05:30

The Indian rupee shot up by 34 paise to 46.49/50 against the US dollar to extend gains for the third day on signs of capital inflows, amid the stock markets rising for the fourth day in succession.

The Indian rupee resumed higher at 46.70/71 per dollar against last weekend's level of 46.83/84 per dollar and shot up further to 46.41 per dollar before concluding at 46.49/50 per dollar.

The rupee has gained 52 paise, or 1.11 per cent, in three trading sessions against the dollar.

Dealers in forex said there was hectic demand for the rupee, with capital inflows surging. The Bombay Stock Exchange benchmark Sensex has been on a four-day gaining streak, adding 721.07 points (4.33 per cent). Today, the 30-share barometer rose 273.2 points, or 1.6 per cent, to finish at 17,338.17

Rupee at 1-week high as stocks gain

2010-06-15T19:25:00.002+05:30

MUMBAI: The Indian rupee rose to its strongest level in more than a week on Monday boosted by sharp losses in the dollar against major units and tracking gains in the domestic stock market.

By 10:10 am the partially convertible rupee was at 46.58/59 per dollar, after hitting 46.56, its highest since June 3 and 0.55 per cent stronger than Friday's close of 46.84/85.

"Looks like a quiet day today as well. The market is still watching the euro zone for clarity but rupee could trade in a range of 46.50-46.75 today," said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank in Mumbai.

Dealers said the inflation data due around noon would be key for providing cues on whether the central bank would be prompted to hike rates ahead of its July 27 monetary policy.

A Reuters poll showed the wholesale price index probably rose 9.56 per cent in May from a year earlier.

The performance of the stock market would also be crucial for direction as foreign fund flows influence the rupee's fortunes.

Indian shares rose more than 1 per cent with Reliance Industries leading the rise, taking cues from strong Asian markets.

Foreign funds have been net buyers of around $166 million of equities this month, after withdrawing nearly $2 billion in May as the euro zone's debt jitters hit risk appetite, pulling down the main index by 3.5 per cent and the rupee by 4.3 per cent.

Traders were also watching the dollar's moves versus majors for direction.

The index of the dollar against six major currencies was 0.6 per cent lower. Most regional currencies were stronger compared to the dollar.

The euro's short-covering rally took it briefly above $1.22 to its strongest in a week on Monday, although traders were wary about driving it too far, while the Australian dollar climbed to its highest point in four weeks.

One-month offshore non-deliverable forward contracts were quoted at 46.71, weaker than the onshore spot rate. In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at 46.6850 and 46.6825 respectively, with the total traded volume on the two exchanges at about $980 million.

Stock Broker - Your Financial Advise

2009-04-24T15:46:00.003+05:30

You have surplus funds with you and you want to park your money in some good investment vehicle. You think that you can take a risk to see your money growing. You don′t want to invest your money in a new business and would rather buy some shares of a profit-making company. Then investing in the stock market is a good decision but investing without proper knowledge of share trends may prove hazardous. This is where a stock broker comes into picture.
Any individual trading in stocks cannot directly go to the stock exchange and quote a price for a stock from the seller. He/she has to do it through a “middleman” known as the stock broker. These brokers may work individually, form a small firm, or become associated with bigger brokerage companies. The stock brokers operating in any particular stock exchange have to get themselves registered with that stock exchange.
Making profits from your investment depends more than 80% on the choice of a good stock broker with a strong acumen of the market. There are many brokers or brokerage firms that only carry out stock transactions for their clients without providing financial advice; they charge discounted rates from the clients. However, this is not the case for most. Stock brokers rather act as financial and investment advisors for individuals. They have a good understanding of the fluctuations in the market and are the most learned and professional people to make speculations about the market. For example, a good broker can speculate the price of tomorrow’s stocks by studying today’s market trends of countries that are at a different time zone. This is the most powerful trait of a stock broker. Before choosing any broker you should consider investigating his/her track record. His/her qualification also plays an important role. A broker advising you to short-sell your shares may not be the right option for you. He/she should be able to segregate your investment into low-, medium-, and high-risk stocks so that when the market tumbles your low- and medium-risk stocks don’t get affected much.
It is sometimes difficult to find a broker who understands the financial needs of an individual. Only profit-making attitude does not take a broker too far in career; he/she should love the financial market. Some individuals take decisions and carry out trading on their own. However, it is always advisable to engage the services of a stock broker for a new investor. With a broker in service, your financial tensions may well be of someone else!!
The remuneration of a broker is the salary paid by the brokerage firm and the commission paid by the stock transaction made by the clients. Thus, a broker makes money not out of the volume or number of transactions made by a client, but the profit arising from that trading. The stock brokers spend their days in a very competitive environment trying to learn as much as possible about the market and its trends, building up a huge clientele of successful investors, and trading stocks. Some brokers also provide online trade options, where individuals can trade 24 hours a day, but mostly without personal interaction with their agents. Most, however like to have a real stock broker providing them financial advice, teaching them why and how to invest in specific shares of specific companies, and acting as an advisor on when to carry out stock transactions to gain maximum profit out of each investment.

Stock Broker - Your Financial Advise

2009-04-24T15:46:00.001+05:30

Stock Option Markets and Contracts

2009-04-24T15:44:00.000+05:30

Stock Options provide the holder the right to buy or sell particular shares at a fixed pre-determined price within a fixed period of time. A new investor needs to understand the process of exercising the rights of such options, before embarking on this form of trade. Like any other branch of trade and commerce, Stock Market too has a terminology of its own. For an investor it is necessary to familiarize and know about their applications and implications. Let me begin with the conditions and mood of the market, which is the main concern of the brokers and investors.
A bearish view of the market is when one expects the share price to fall; not of a particular share, but share market as a whole.
A bullish view is exactly the opposite of the above condition. One expects the share market as a whole to rise and show aggressive tendency.
A neutral view is when the share market is neither bullish nor bearish. The movement is very restricted and hence strategies for trading will have to be appropriately modified as per the demand of a particular share. The situational aspects matter much and each decision is on its merits.
The terms that relate to the mechanics and operations are:
Call Options is when all procedures and steps are predetermined as for the right of the holder to buy the underlying share. They refer to the price and the time.
Put Options give the holder the right to sell the underlying stock at a fixed pre-determined price within a certain, fixed period of time.
Strike price is the fixed, pre determined price at which you can trade (both buy and sell) the shares. This cannot be changed throughout the duration of the option contract.
Expiry is the date at which the option contract stands terminated. This cannot be changed throughout the life of the option, and thereafter the contract is null and void.
Most of the shares are never traded at par. You pay premium for the shares doing well in the market and that are assessed to have assured prospects of growth. Premium is the amount that you are willing to pay for the options contract. Each share has set prices for trading. The amount you pay for the share depends on the level of strike price to the current share price. That amount is the premium. Premium is inclusive of both the options time value and the intrinsic value.
Stock option contact’s value or premium is decided by various factors. Five such factors are important and are material the contract. They are, the price of the share, the strike price, the date of expiry, the cumulative cost required to hold a position in the stock (inclusive of interest plus dividend) and the estimate of the expected volatility of the share price. The strike price refers to the price at which an underlying share can be sold or purchased. A stock price must go above (for calls) or go below (for puts) the strike price, before a position can be exercised for a profit.
Stock Option contracts can be done for most individual shares that are traded in the Exchanges. The US SEC (Securities and Exchange Commission), however, has implemented restrictions that prevent US traders from trading non US stock options, so US traders can only trade US stock options. The contract must contain the information relating to Symbol, Currency, Exchange, Multiplier, Expiration Date, Last trading Date, Strike Price, Type, Exercise Style, Maximum Size and Tick Size.
Long Term Stock Options (LEAPS)
Most of the options are short term the expiry date being up to 3 months. LEAPS expire anywhere from 9 to 30 months. These are good for long term trades, to seek protection for profit from an existing trade. All other trading procedures are similar.
Forward stock market and contracts are meant for the experienced players in shares. A new investor should desist from exercising these options.