Mumbai: India's foreign exchange reserves plunged by $2.40 billion to $285.85 billion for the week ended June 1, apparently due to the central bank selling dollars to defend the rupee, Reserve Bank of India data showed on Friday.This is the fifth weekly drop in the forex reserves kitty. The reserves had declined by $1.74 billion and $1.80 billion respectively in the previous two weeks.
The Reserve Bank of India is believed to have sold dollars during these weeks to curb the slide in the rupee's value.
The partially convertible rupee slumped to a record low of 56.52 against a US dollar on May 31. It has weakened sharply in the last two months due to increased demands from oil importers and outflow of money by the foreign institutional investors as poor GDP growth data dampened sentiments in the Indian markets.
Foreign currency assets, the biggest component of the forex reserves kitty, dropped by $1.31 billion to $253.09 billion during the week ended June 1, according to the Reserve Bank of India's weekly statistical supplement.
The RBI did not provide any reasons for the change in foreign currency assets.
It said the assets expressed in US dollar terms included the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve.
However, market experts said the RBI had sold dollars from the reserves to curb the slide in the value of rupee.
The value of gold reserves declined by $1.03 billion to $25.58 billion during the week under review.
All components of the foreign exchange reserve registered a drop during the week. The value of special drawing rights (SDRs) dropped by $34.2 million to $4.34 billion and India's reserves with the International Monetary Fund (IMF) fell by $22.3 million to $2.83 billion.
Forex: USD/JPY set for consolidation – TD - FXStreet.com
Finance official: Detroit may run out of cash if lawsuit challenging consent deal endures - Washington Post
Mayor Dave Bing, who wants the lawsuit withdrawn, told reporters Friday that the agreement with the state could be violated if the city runs out of money.
“It’s an emergency,” Bing said. “It is a crisis and we’ve been in a crisis for a long time. This just ups the ante more than anything else. And I think, from a leadership standpoint, it’s incumbent upon us as leaders to deal with this expeditiously, which means ASAP.”
Bing planned to meet Friday morning with City Council to discuss the situation, but that meeting was pushed back to Monday.
Detroit Corporation Counsel Krystal Crittendon last week filed a lawsuit with the Court of Claims in Lansing asking that the consent agreement be overturned. The suit claims the state already owes Detroit $224 million in past revenue sharing and that Michigan law prevents the city and state cannot from entering into a consent agreement if one of them owes the other money.
Snyder has said the state doesn’t owe Detroit any money. The state wants Bing to compel Crittendon to drop the lawsuit.
Bing said in a statement Friday that he has urged Crittendon to withdraw the lawsuit but that the city charter gives her “the independent right to take whatever action she deems reasonable,” including judicial action, if she thinks the charter has been violated.
Martin said at least $35 million of the $80 million has been withdrawn from the city’s escrow account. A bond sale was approved earlier this year by the City Council with just over $80 million in interim financing backed by state revenue sharing due Detroit.
The bond sale is not part of the consent agreement, Treasury spokesman Caleb Buhs said Thursday, but the city’s failure to meet its obligations to the sale could lead to it losing revenue sharing. Without the millions of dollars from the state, Detroit would find it difficult to meet payroll and other bills. Any further slippage in the city’s already poor financial standing could lead the state to reconsider the effectiveness of the consent agreement.
Bing, the City Council and Gov. Rick Snyder approved the agreement in April that would allow the state’s involvement in correcting an accumulated budget deficit of more than $200 million and billions of dollars in structural debt. In return, Snyder agreed not to hand the city’s finances over to an emergency manager.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Forex focus: even the major expat currencies are suffering - Daily Telegraph
The yuan has softened as a result, with last month's fall being the worst performance it has seen for five years.
Australia has been helped by surprisingly good growth figures posted this month.
"The Aussie dollar is more tied to China than anybody else's currency," says Jeremy Cook of World First, "and will remain so as long as China maintains its position as the manufacturing powerhouse it has become.
"However all these currencies are influenced by China. As China's factories slow, so does their appetite for raw material imports and this hurts the Australian economy and all the rest. Without growth these currencies will remain unloved."
These Antipodean currencies, along with Canada, are seen as commodity currencies as most of their output comes from mining of various resources including gold, minerals and oil along with soft commodities such as wheat and wool.
They've been booming since the turn of the century but this year has been rough on them, offering some desperately needed respite to expats relying on an income in sterling. It's not just China which is cooling down, India too has seen the brakes put on its booming expansion. And, of course, Europe is still one of their main trading partners.
Unlike the UK and much of Europe, they have plenty of options to ease the situation. One possible solution, if the politicians are anxious to boost their exchange rate and attract investors, is to increase the interest rate.
Josh Ferry Woodard of TorFX believes that both Canada and South Africa could hike their rates this year which will strengthen their currency. Meanwhile, Canada's poor domestic output for the first three months of the year dealt a severe blow to optimism surrounding the Loonie.
He says: "With 18-month highs in sight, the pound has been performing better against the Canadian dollar, in relative terms, than any of the other major currencies.
"There is a possibility that the damage done to the South African economy as a result of the euro crisis could in fact lead to an interest rate increase later on in the year to combat domestic inflation which could actually prove to be the catalyst towards a stronger rand."
One of the biggest winners in the currency wars at the moment is the US dollar. Unless they're earning in dollars, expats living in the States will be suffering as the pound has fallen back to within touching distance of 2010's two-year low.
Forex focus is sponsored by
FOREX-Euro falls vs dollar as Spain concerns mount - Reuters
* Euro retreats after Spanish rating downgrade
* Lacklustre Italian, German economic data adds to gloom
* Lack of policy action from Fed hits riskier currencies
By Nia Williams
LONDON, June 8 (Reuters) - The euro fell against the dollar and yen on Friday after a Spanish credit rating downgrade added to investor reluctance to take on risk and ratcheted up concern the European debt crisis was intensifying.
European Union and German sources told Reuters Spain was expected to make a request over the weekend for an aid package to prop up its troubled banks, highlighting the vulnerability of the country's financial sector.
Perceived riskier currencies were also under pressure after U.S. Federal Reserve Chairman Ben Bernanke offered no hints of imminent monetary stimulus in his testimony to Congress on Thursday, wrongfooting some market players who had positioned for a dovish statement.
The euro fell 0.75 percent to $1.2461, retreating from a two-week high of $1.2625 hit on Thursday after a surprise interest rate cut by the Chinese central bank.
Technical charts showed the euro was vulnerable to a test of the 23-month low of $1.2288 hit on June 1, after failing to break support-turned-resistance at $1.2626, the January low.
"With the negative news on Spain's rating cut it's back to reality for the market. The recovery we saw in the last few days was not a sustainable one," said Lutz Karpowitz, currency strategist at Commerzbank, who forecast the euro would be around $1.20 by the end of June.
Rating agency Fitch slashed Spain's credit rating by three notches on Thursday, signalling further downgrades could come as the country tries to restructure its troubled banking system.
The euro also took a knock after Italian industrial production fell far more than expected in April and German imports tumbled at their fastest rate in two years in April, adding to concerns of the euro zone slipping into recession.
FED HOLDS FIRE
Riskier currencies pared gains against the dollar made earlier in the week when investors sold safe-haven currencies on speculation central banks could signal further monetary easing to support growth.
Bernanke told Congress the Fed was closely monitoring "significant risks" to the U.S. recovery from Europe's debt crisis, disappointing those looking for him to lay out the groundwork for a third round of large-scale Fed bond buying.
The dollar index rose 0.9 percent to 82.771, recovering from a 10-day low of 81.911 hit on Thursday. The Australian dollar slipped 0.7 percent against the U.S. currency to US$0.9828.
Traders also cited talk that Chinese economic data due at the weekend could be weak and that Beijing's easing might have been aimed at pre-empting the grim news.
"Some people had high expectations of Bernanke, which he didn't match. The shock would have been much larger if it had not been for the Chinese rate cut," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The euro fell 1.2 percent against the yen to 98.80 yen. The safe-haven Japanese currency gained broadly as market sentiment soured, with the dollar falling 0.5 percent to 79.22 yen.
Many analysts said the euro could come under further pressure next week as attention refocuses on political turmoil in Greece before an election on June 17. A victory for anti-bailout parties would raise the possibility of Greece leaving the currency union.
Memphis finance director McElrath moving to MLGW - Memphis Commercial Appeal
Roland McElrath
Roland McElrath is leaving his post as the city's finance director to become controller at Memphis Light, Gas and Water Division.
The MLGW board approved McElrath's appointment Thursday on its consent agenda. The City Council also will have to approve his appointment.
McElrath, 51, is expected to start his new position in about 45 days. As MLGW's controller, McElrath will be responsible for developing the publicly owned utility's budget and helping to set rates for customers.
"I've had an admiration for the organization for a long time," McElrath said. "I know a lot of the people at MLGW and have interacted with them over the years, and I've enjoyed that relationship, and that's a part of it."
As director of the city's Finance Division, where he developed budget and fiscal policies, McElrath earned $118,879 annually. At MLGW he'll make $133,016 a year. He'll also be able immediately to begin drawing his annual city pension of $61,213 while earning his MLGW salary.
This is the second time McElrath has left his city post for another government job where he is eligible to receive a salary and a pension.
In January 2001, the council changed the city's pension system to allow elected and appointed officials to collect retirement benefits after 12 years of service. Previously, it took 15 years to become vested in the pension plan.
Shortly after that, in March 2001, McElrath, who began working for city government in 1988, retired from the city to become superintendent of business operations for Memphis City Schools. When he left city government in 2001 he was able to begin drawing what was then a $32,000 annual pension while working for MCS. The council has since ended the 12-year policy.
McElrath has held various posts within city government, including stints as deputy finance director, treasurer and finance director. Before starting work with the city, McElrath was an accountant with Coopers & Lybrand, a private firm that handled audits of school system finances.
MLGW president Jerry Collins said McElrath was chosen over "60 or 70" other applicants who responded to the controller job posting.
"He knows the business of finance, he knows the business of pensions and he's been involved in every aspect of the financial part of government," said Collins.
McElrath guided the city through financial troubles on multiple occasions, city officials said.
In 2005, former mayor Willie Herenton brought McElrath back to City Hall as finance director when the division, under then-Finance Director Joseph Lee III, faced unexpected deficits that resulted in service reductions and layoffs.
In 2008, the council cut its annual contribution to Memphis City Schools by $57 million, reducing the property-tax rate by 18 cents while increasing city spending by more than $40 million.
Each year since then the city has faced annual budget shortfalls that forced McElrath and his team to make large-scale adjustments to fund city schools and produce a balanced budget.
Mayor A C Wharton praised McElrath for his integrity and calmness under pressure.
"Number One, the first thing I look for in someone doing numbers is integrity," said Wharton. "I rate him highly when it comes to that. He's a very calm, steady-at-the-wheel person who has the ability to withstand scorching questioning and criticism, which you'll always get in a position like that."
Wharton declined to say if he had identified McElrath's replacement.
"We have been talking with folks, I will say that," he said.
McElrath's tenure has not been without controversy.
In December, Wharton proposed and the council approved end-of-year bonuses for most city workers. McElrath said the money for the bonuses came from a surplus created by cost-saving measures enacted the prior fiscal year.
However, in March, under questioning from council member Jim Strickland, McElrath acknowledged that city officials knew in October that the city was facing a deficit of at least $6 million for the current fiscal year, a shortfall which eventually grew to $17 million.
The council ultimately decided to dip into the city's reserves and use cuts to cover the deficit.
-- Amos Maki: (901) 529-2351
Finance tightens rules for LGU borrowings - Manila Times
APPLYING for authority to borrow money from banks and other financial institutions will no longer be easy for local government units (LGUs) with the stricter rules issue by the Bureau of Local Government Finances.
Based on the Local Finance Circular 1-2012, the BLGF laid out new documentary requirements, which local governments need to submit to them before they can be granted Certificates of Borrowing and Debt Service Capacities to be able to borrow funds.
The circular, signed in April this year by Finance Secretary Cesar Purisima, whose department oversees BLGF, superseded Local Finance Circular 1-2000 issued on January 19, 2000.
“We need to make sure that LGUs do not abuse their right to borrow to the detriment of their constituents,” Purisima said.
Original requirements under the earlier circular are the following: statement of actual income and expenditures and certification of internal revenue allotment (IRA) received for the past three years; certification of taxable assessed value for the past three years and dates of the last general revision of real property assessments; certification of existing loans, if any; and annual audit report from the Commission on Audit for the past three years.
Under the new circular, the BLGF is requiring a letter request from the local chief executive indicating the lending institution and the purpose and terms of the loan; certification of absence or existing and approved loans, when applicable; certification by local accountant that the local government has not incurred default in payment of amortization of an existing loan; certification from the secretary of the Sanggunian (provincial board) or the local legislative body that the proposed project to be financed by the loan is included in the Approved Annual Investment Plan for the current year; authenticated copy of the resolution authorizing the local chief executive to negotiate and contract a loan in behalf of the local government; certification issued by the lending institution stating that it shall not require local government deposits as compensating balance for the loan if the lender is a private entity; Seal of Good Housekeeping from the Department of Interior and Local Government; and proof of compliance with the full disclosure policy of the DILG.
Purisima said that fiscal discipline should also be exercised by local governments and not only by the national government.
“We have made significant reforms, one of them the directive to revised assessed real property values, in order to allow LGUs to raise more revenues. The idea is that you spend only as much as you earn. But should you need to borrow, as the national government does, we want to make sure that these units have healthy balance sheets enough not only to cover their loans, but more importantly to continue their service to the people in the long run,” the Finance chief added.
FOREX-Euro slides as euro zone risks escalate - Reuters UK
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.
FOREX-Euro down on mounting euro zone risks - Reuters
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.
No comments:
Post a Comment