Demonetisation Be Damned! The Indian Rupee Is On A Tear

(THIS ARTICLE IS COURTESY OF QUARTZ INDIA)

LOOK AT IT FLY

Demonetisation be damned! The Indian rupee is on a tear

March 17, 2017 Quartz India

It’s been a great week for the Indian rupee.

On March 16, at Rs65.41 per US dollar, the currency hit a one-year high against the greenback.

Much of the strengthening has to do with the ruling Bharatiya Janata Party’s (BJP) recent electoral wins in Uttar Pradesh and Uttarakhandand solid performances in two other states. The strong showing reflects just how well the party is positioned to sweep the next general elections in 2019 and hand Narendra Modi a second term as prime minister. Some of that magic is rubbing off on the markets.

“Since the start of the week, equity markets and the Indian rupee have rallied sharply in response to the strong performance of the main ruling party in recent state elections,” DBS Bank said in a March 16 report.

So far, the Indian currency has been the third-best performing in Asia in 2017. The rupee has gained 3.4% this year against the US dollar, only trailing the South Korean won and the Taiwanese Dollar.

Meanwhile, the US Federal Reserve’s interest rate hike on March 15—only the third since the economic crisis of 2008—hit the dollar. When the US dollar falls, capital outflows from emerging markets are restricted, thus strengthening local currencies like the Indian rupee.

The rupee’s strengthening comes after a free fall triggered by Modi’s move to demonetise 86% of the currency notes (by value) in November 2016. Initially it had been estimated that the currency ban would dent the GDP and take a toll on the economy.

In January, a Reuters poll of some 30 foreign exchange strategists had estimated that the Indian currency could see a record fall this year because of the currency ban. But India’s Central Statistical Office’s estimates show that the economy grew at 7% during the October-December 2016 quarter, and the rupee is holding strong.

One reason for the rupee’s surge is also that the macro-economic factors that influence a currency—inflation and current account deficit (CAD)—are looking good for India at the moment. While inflation is being restricted in its safe zone of sub 6%, India’s CAD (the excess of imports over exports) has also been falling.

What next

A strong rupee is good news for corporate India. Many firms hold debt in foreign currencies, so a fall in the exchange rate means their interest outgo will reduce. “Many Indian entities including short-term trade finance people remain unhedged for their offshore liability. They (companies) are likely to have gained from the rupee’s sharp rise in the last few days. At least, interest liability has reduced, adding to balance sheet gains,” Jayesh Mehta, country treasurer at Bank of America told the Economic Times.

However, the Reserve Bank of India (RBI) could soon step in to stabilise the rupee’s movement. Some reports suggest that the central bank already is buying dollars through public sector banks.

“The rupee appreciation, we feel is not sustainable and would revert to the range of Rs66-66.5 range, to begin with as the fundamentals do not warrant such unbridled enthusiasm,” a report by CARE Ratings said. “The outcome of the elections has been the main driving force. A strong rupee may not be good for our exports and the RBI is cognizant of the same.”

Note ban a single strike on terrorism, drug mafia, human trafficking: PM Modi

(THIS ARTICLE IS COURTESY OF THE HINDUSTAN TIMES NEWS PAPER)

Note ban a single strike on terrorism, drug mafia, human trafficking: PM Modi

INDIA Updated: Dec 28, 2016 01:08 IST

HT Correspondent
HT Correspondent
Dehradun, Hindustan Times

Highlight Story

Prime Minister Narendra Modi addresses a rally at Parade Ground in Dehradun, on December 27, 2016. (Vinay Santosh Kumar/HT Photo)

Prime Minister Narendra Modi dismissed on Tuesday the charge that big businesses were benefitting from the demonetisation drive, and said the poor are happy but some people are upset because his move has hit the “ringleader of thieves”.A single stroke has destroyed terrorism, drug mafia, human trafficking and counterfeiting, he said at a BJP rally in Uttarakhand.“Did you give me a full mandate in 2014 only to cut ribbons and light ceremonial lamps at inauguration ceremonies? Didn’t you elect me to combat and end corruption? Shouldn’t we fight the evil with all our might?” he asked.

Read | Mayawati says cash in BSP account legal, asks BJP to come clean on deposits

He targeted the Congress for opposing his government’s decision to demonetise 500- and 1,000-rupee notes, a move that he called a campaign to rid the country of black money and corruption.

“Corruption has destroyed the country, which was known as a bird of gold. In some, corruption is in the blood. They used the backdoor to convert their money and thought Modi cannot see,” he said.

He alleged that the Harish Rawat-led Congress government has taken Uttarakhand to “a bottomless pit of corruption” and the BJP alone could bring it out if voted to power.

Read | ‘India robbed in the name of achche din’: Rahul, Mamata attack Modi’s demonetisation move

Drawing a metaphor for misappropriation of relief funds in the hill state, which was hit by a catastrophic cloud burst in 2013, he said even a scooter with tank for five litres could drink 35 litres.

“It is, in fact, so badly afflicted that one engine alone won’t suffice to take it out of that hellhole,” Modi said. “You will need to rev up another engine to rid the state of corruption.”

He urged people to vote the BJP to power so that “two engines” — the Centre and state governments — can work in tandem for the state’s development.

Modi also referred to the OROP (One-Rank-One-Pension) scheme for ex-servicemen and saluted the defence personnel for understanding the financial constraints of the Union government and for agreeing to take the arrears in four instalments.

Read | Rs 5,500 cr paid for implementing OROP; fulfilled promise: PM Modi

The Congress and BJP have been at loggerheads in Uttarakhand ever since the Centre brought the state under President’s rule on March 27 after nine MLAs of the ruling party revolted against the Rawat government and sided with the opposition. Rawat was reinstated after he won a Supreme Court-monitored trust vote on May 10.

The PM targeted the Congress while offering the Rs 12,000-crore Chardham highway project ahead of the assembly polls.

Also read | Short-term pain of demonetisation will pave way for long-term gains: PM Modi

India’s Black Money Scandal: Nepal Bans India’s New 500 And 2,000 Rupee Bank Notes

(THIS ARTICLE IS COURTESY OF THE HINDUSTAN TIMES NEWS PAPER)

Nepal bans new Indian Rs 500 and Rs 2,000 notes, waits for RBI notification

    • HT Correspondent, Hindustan Times, Kathmandu

|

  • Updated: Nov 24, 2016 20:29 IST
Indian currency is widely accepted in Nepal, where many people have been facing problems in exchanging the old Rs 500 and Rs 1,000 notes. (Karun Sharma/ HT Photo)

At a time when Nepalese citizens are facing problems in exchanging withdrawn Indian notes of Rs 500 and Rs 1,000 denomination, the country’s central bank on Thursday banned the exchange of India’s new Rs 500 and Rs 2,000 currency notes.

The Nepal Rastra Bank said the new Indian notes cannot be exchanged until the Reserve Bank of India (RBI) issues a new notification under the Foreign Exchange Management Act. Such a notification allows citizens of foreign countries to hold a certain amount in Indian currency, officials said.

Ramu Poudel, the Nepal Rastra Bank’s chief for the eastern region, told members of the business community in Biratnagar that the new Indian rupees are considered “ illegal” and cannot be exchanged until new arrangements are made by the Indian side.

“As of now, our understanding with the Reserve Bank of India is that a Nepali citizen can hold up to Indian Rs 25,000 (in the) old Rs 500 and Rs 1,000 notes. Even the fate of those old notes is uncertain, how can these new Indian notes coming into the market be considered as legal?” Poudel said.

Indian currency is widely accepted in Nepal, where many people have been facing problems in exchanging the old Rs 500 and Rs 1,000 notes. Due to the open border between the two countries, the new Indian notes too have entered areas along the border with India.

Nepal and India are yet to reach an agreement on modalities for the exchange of the withdrawn notes held by Nepalese citizens. Poudel said the two central banks are in close contacts to address this issue but no way out has been found as yet.

The Nepal Rastra Bank set up a task force to prepare guidelines for exchanging the withdrawn Indian currency notes. It handed over some guidelines to the Indian side through the Indian embassy of Kathmandu. Officials said the Nepalese side had suggested that authorities could collect the withdrawn Rs 500 and Rs 1,000 notes from Nepalese citizens and send them to the RBI for verification and exchange into Nepali currency.

Nepal’s central bank has also made it clear it will not provide over-the-counter exchange facilities to Nepalese citizens holding the withdrawn Indian currency because it lacks the expertise and technology to identify counterfeit currency.

Experts said India is cautious about providing exchange facilities to citizens of a foreign country as it fears it could be misused as “ a clearing house” to convert counterfeit currency.

The Nepali side also suggested that Nepalese citizens would have to open accounts at banks and financial institutions and deposit the demonetised Indian currency to receive the equivalent amount directly in their accounts.

Prime Minister Pushpa Kamal Dahal “Prachanda” and finance minister Krishna Bahadur Mahara have already urged their Indian counterparts to arrange exchange  facilities for Nepalese citizens.

The Nepal Rastra Bank has said the country’s financial system holds Rs 500 and Rs 1,000 notes worth Indian Rs 33.6 million. This amount includes cash in bank vaults, financial institutions and the central bank. However, the actual amount is believed to be much higher.

India: New Currency Is Causing Huge Lines At Banks

(THIS ARTICLE IS COURTESY OF TIME)

Cash-Starved Indians Are Struggling After Modi’s Surprise Currency Ban

INDIA-ECONOMY-CURRENCY
NARINDER NANU—AFP/Getty ImagesIndian people queue outside a bank as they wait to deposit and exchange 500 and 1000 rupee notes in Amritsar on November 13, 2016.

Saddled with worthless pieces of paper, ordinary Indians are finding it tough to purchase essential goods

Across India, patience is rapidly wearing thin.

Last week, the government of India’s Prime Minster Narendra Modi triggered a nationwide scramble for cash, after unexpectedly banning currency notes that account for 86% of all money in circulation. Modi said the move was targeted at tax evaders with large stockpiles of illicit cash, as well as at currency counterfeiters. But nearly a week on, public frustration is growing amid continuing delays in dispensing replacement notes at banks and ATMs.

Saddled with worthless pieces of paper, ordinary Indians are struggling to purchase essential goods. In India’s large informal economy where salaries are often paid out in cash, many are also facing delays in drawing their incomes. For others at the bottom of the economic ladder who survive on daily wages, the Modi government’s move has resulted in the loss of hours of precious work, as they spend their time waiting in long bank queues.

“I support the fight against black money [as illicit cash is known in India],” Ashok Mahto, a Delhi shopkeeper said at the weekend. But he blamed the government for not doing enough to prepare for the rush to exchange the old 500 and 1,000 Rupee notes (worth roughly $7.5 and $15 respectively) that had suddenly been declared illegal at midnight on Nov. 8. As a long queue spilled out of a nearby bank branch and snaked down the road in front of his shop, he said his business had come to a near-standstill, with his customers were left with wallets full of old, now-useless money. “It has become very hard.”

In place of the old currency, the government has introduced a redesigned 500 and a new 2000 Rupee note. Already, the government says banks have received more than $44 billion in deposits in the form of old notes since the policy was announced last week. But withdrawing new currency is proving tough. At ATMs, differences in size mean that as many as 200,000 machines nationwide need to be reconfigured before they can start dispensing the new notes, a process that only began after Modi’s surprise announcement last week. Officials justified the delay on the grounds of secrecy, saying any advance notice would have alerted hoarders of illicit currency and given them time to launder their unaccounted for wealth. The machines that are functioning are fast running out of the smaller denomination notes still in circulation.

Further complicating matters is the fact that millions of Indians live and work without formal banking, operating without accounts and credit or debit cards. Modi’s government, for its part, has tried to change this with a massive financial inclusion drive in recent years that has made it simpler for people to open no-frills bank accounts. But many still remain outside the system, with a 2015 report from the consultancy firm PriceWaterhouseCoopers putting the number of unbanked Indians at around 233 million. Another report from last year, compiled by Tufts University researchers, found that less than 10% of Indians have ever made non-cash payments.

And although India has in recent years become a booming market for new digital forms of payments, access to new cashless technologies remains an issue for many. A recent report by Google and the Boston Consulting Group, published just months before the government’s move last week, said the Indian digital payments industry could be worth as much $500 billion by 2020, contributing 15% to the country’s economic output. But India continues to suffer from a stark digital divide, with nearly a billion people still offline, according to the World Bank. To continue going about their daily lives, they have no choice but to endure long queues to get their hands on the new currency.

As people grow impatient, Modi made an emotional appeal to Indians at the weekend, promising the current problems were only temporary and would help rid India of corruption and unaccounted for wealth. “Cooperate with me and help me for 50 days and I will give you the India you desired,” he said, referring to the end-December deadline for deposits of old notes at bank branches in a speech in coastal Goa state on Sunday, in which he grew teary-eyed. “I know that (some) forces are up against me, they may not let me live, they may ruin me because their loot of 70 years is in trouble, but I am prepared.”

This blog, trouthtroubles.com is owned, written, and operated by oldpoet56. All articles, posts, and materials found here, except for those that I have pressed here from someone else’s blog for the purpose of showing off their work, are under copyright and this website must be credited if my articles are re-blogged, pressed, or shared.

—Thank You, oldpoet56, T.R.S.

Red Letters

Following Jesus, Loving life

bienvenido

El mundo es un libro y aquellos que no viajan, solo leen una página.

Syeda Maham Riaz

Art - Fashion - Beauty - Travel - Lifestyle - Books - DIY - Food

Tales from the Conspiratum

Warning: This site may contain conspiracies

MyYellowFeather

Your guide to style! 💛

tonnie6

instagram @tonnie_ke

BLEEDING THOUGHTS !!

"My words are my identity"

%d bloggers like this: