Daily News - Tuesday, 6 August 2024
Rise of yen offers a mixed bag for India (Financial Express)
The recent appreciation of the yen is likely to have mixed effects on the Indian economy, with India's exports to Japan potentially becoming more competitive, which could help reduce its trade deficit. However, yen-denominated external debt and infrastructure projects, particularly in the power sector, could see marginally increased costs, although much of this debt is hedged, limiting the overall economic impact. Additionally, while the yen's rise may disrupt the "carry trade" strategy and elevate costs for India's non-banking finance companies (NBFCs), its effect on public sector lenders like PFC and REC is expected to be minimal due to existing hedging arrangements.
Bangla Crisis: Exporters Explore Bringing Production Back Home (The Economic Times)
Amid the political turmoil in Bangladesh, Indian exporters with facilities in both countries are shifting their operations to India to prevent disruptions, which could cause delays in fulfilling overseas orders, particularly in the peak season. The unrest, marked by Prime Minister Sheikh Hasina's resignation and widespread protests, threatens to halt exports from Bangladesh, affecting India’s trade, especially in agricultural exports and goods transported through land routes like Benapole and Petrapole. With Bangladesh being a significant trading partner, the situation could impact India’s $1.8 billion agri-export basket and disrupt commodity exports, though some exporters are cautiously optimistic about managing the crisis in the coming weeks.
Rice export ban could be lifted: Niti Aayog's Chand (mint)
The Indian government is considering lifting the year-old ban on non-basmati white rice exports due to increased paddy cultivation, comfortable buffer stocks, and a positive outlook for this year’s rice harvest, alleviating concerns about domestic shortages. The ban, initially imposed to manage local supplies and curb food inflation, maybe reassessed given that rice prices have stabilized both domestically and globally, and lifting the ban could significantly impact the global rice trade. While some experts believe this could be a short-term solution, they suggest that revising procurement policies to allow more private sector involvement might be a more sustainable approach to controlling food inflation and preventing future export restrictions.
Bill tabled to promote ease of biz in oil and gas E&P sector (mint)
Union Minister Hardeep Singh Puri introduced the Oilfields (Regulation and Development) Amendment Bill, 2024, aimed at enhancing the ease of doing business in India's oil and gas sector while supporting the country's energy transition. The bill seeks to decriminalize certain provisions of the 1948 law by implementing penalties and adjudication mechanisms, and it broadens the definition of mineral oils to include various hydrocarbons, thereby promoting investment and technological advancements in the sector. Additionally, the bill facilitates the development of integrated energy projects, including renewable energy like wind and solar, aligning with India's goal to achieve 500 GW of non-fossil power generation by 2030.
Rupee falls to all-time low of 84.09 against dollar; FPIs pull out $1.2 bn (The Indian Express)
The Indian rupee hit an all-time low of 84.09 against the US dollar, driven by a sell-off in global markets amid rising geopolitical tensions in the Middle East, recession fears in the US, and the impact of a stronger Japanese yen. The rupee's decline was exacerbated by foreign portfolio investors (FPIs) withdrawing ₹10,073 crore ($1.20 billion) from Indian markets, alongside a sharp downturn in equity markets. Despite a drop in the dollar index and crude oil prices, global economic concerns, including weak US jobs data and disappointing corporate earnings, have triggered widespread panic, leading to significant sell-offs in global stock markets and contributing to the rupee's weakness.
