Trade 29 Aug 2013 by Tojo Jose

Why currency swaps may not save us

Why currency swaps may not save us

The government’s currency swap agreement efforts with major trading partners are implementable in the long run.  Currency swap agreements enable partners to exchange local currencies at a predetermined exchange rate. But it will take time lag for currency swap agreements to be effective as it need consultation with partners. Internationally, governments are on a risk averse mode, fearing a big crisis. Hence, credible foreign exchange holding countries may not be generous to engage in bilateral currency protection measures with India seriously. There are already a large number of currency swap agreements especially those initiated by China. Beijing was always skeptical

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India and China 29 Aug 2013 by Tojo Jose

A day of relief for Rupee as RBI provides dollars to PSU Oil Cos

A day of relief for Rupee as RBI provides dollars to PSU Oil Cos

The rupee has made a badly needed come back against the dollar as the RBI has launched dollar swap for three major public sector refiners. As a result, the Rupee appreciated against the dollar; ending severe depreciation during the previous two days. The RBI revealed that the measure will continue in the coming days as well.   A welcome feature of the RBI measure is that the swap facility will be available in the coming days also until a notice from the central bank comes. Technically the effect of the measure is RBI selling of dollars worth $300-500 million in the market daily. The foreign exchange swap window offered by the RBI to three largest refiners is estimated to be

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Foreign Investment 28 Aug 2013 by Tojo Jose

Rupee registers biggest intraday crash in 20 years as currency crisis deepens

Rupee registers biggest intraday crash in 20 years as currency crisis deepens

The Rupee has registered the biggest daily fall today after 1993, as it fell by 3.9 percent to 68.75 as currency crisis deepens. The currency has marginally edged back to 68.31 after invisible dollar selling intervention by the RBI. Foreign investors sold heavily in the debt and equity market fearing further loss due to weakening of the currency.                 With the present fall, the rupee became the worst affected among the emerging market currencies beating the Turkish Lira. In the last three months, the Indian currency has lost its value by nearly 23 per cent.       &n

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Trade 27 Aug 2013 by Tojo Jose

India as the most serious currency crisis candidate among the EMEs

India as the most serious currency crisis candidate among the EMEs

It seems that the government has lost control over the rupee. The rupee is the worst performer among the EMEs ever since May 22, when Mr.Bernanke announced the reduction of Fed’s bond purchase programme. The current programme of tapering just is the beginning of reducing the Fed’s bond purchase programme. So far, the Fed is slowing the purchase of bonds. Once it starts selling the accumulated bonds, dollar will fly back from the financial markets to the Fed’s vault. In the coming months, especially in early 2014, the Fed should start selling the purchased bonds. Here, the impact will be much more painful. There will be severe shortage of dollar and global liquidi

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Foreign Investment 25 Apr 2013 by Tojo Jose

Etihad brings first major FDI in the aviation sector

Etihad brings first major FDI in the aviation sector

Abu Dhabi based Etihad Airways becomes the first major foreign investor in India’s airlines sector as it entered a strategic partnership with Jet Airways, taking 24% stake for Rs 2058 crores. The deal holds significant for both Jet as well as the country’s aviation sector. For Jet, it can solve financial woes with Etihad alliance. For the government, the deal is a successful chase for FDI. The deal may make the Etihad- Jet a major force in the country’s aviation sector as Etihad has strong footing in the overseas segment. Jet can now better tailor its services given the scale advantage and flexibility from having a global partner. Implication is that in internati

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Trade 17 Apr 2013 by Tojo Jose

India abandons TRIPs plus to embrace the EU

India abandons TRIPs plus to embrace the EU

Surprising outcome of the Commerce Minister’s meeting with the EU Trade Commissioner Karel De Gucht in Brussels regarding the proposed FTA with the EU is that India will not go ahead with its tough intellectual property regime. In the preliminary discussions, India has offered the EU that the country will stick on to the WTO’s TRIPs regime. This will have big implication since, many TRIPs plus provisions including a strong compulsory licensing regime (Baer issue) and an anti-evergreening provision (Novartis issue) should be softened under the FTA with the EU. Government’s move to have a liberal TRIPs regime favoring Pharma MNCs of EU seems to be counter balanced

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Foreign Investment 07 Mar 2013 by Tojo Jose

Government chases FDI in aviation to make up current account deficit

Government chases FDI in aviation to make up current account deficit

In a significant development, the government through different ministries is pressing for the entry of two major FDI venture by foreign companies in the domestic aviation sector. The two foreign companies- Dubai based Etihad and Singapore based AirAsia are set to make their Indian entry through their proposed alliances with Jet Airways and Tata respectively. In the case of AirAsia- Tata alliance there is a hurdle that the set 49% FDI limit in the sector is applicable for existing domestic airlines. The AirAsia Tata proposal is a new entity, without existing operation in the country. Here, the government is going to make a clarification by extending the ceiling to new companies as

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Foreign Investment 21 Feb 2013 by Madhusoodhanan Kartha

UAE presses for BIPA before finalizing the Etihad- Jet deal

UAE presses for BIPA before finalizing the Etihad- Jet deal

The UAE is insisting on signing the Bilateral Investment Protection Agreement with India before making serious investment in the country including that of the proposed Etihad deal with Jet Airways. UAE’s demand for BIPA has informed at the meeting of the India-UAE task force on investmen at New Delhi.   Bilateral investment Treaties (BITs) are agreements between two Countries for the reciprocal promotion and protection of investments in each other's territories by individuals and companies situated in either country. The basic purpose of BIPA is to protect the investment made in other countries. So far India has signed eighty two BIPAs with different countries. The dem

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Foreign Investment 16 Feb 2013 by Alexin George

The Unchangeable Kims

The Unchangeable Kims

North Korea disturbs the world again with another nuclear bomb. This time more powerful and more strong, capable to disharmonize the world order. Like his predecessors Kim Jong Un prefer to stay in the old path of roughness. Change in regime had taken place, but not in policies.  In short, North Korea is not ready to change its course and the Korean peninsula finds itself in the baking pot. The mistake is being repeated. The policy of rogueness and brinkmanship had failed much in the past. The nuclear test of North Korea is actually going to benefit its rivals. Continuous violations of the UN resolutions are quite normal for North Korea and have driven away the world away fro

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Foreign Investment 07 Feb 2013 by Alexin George

India’s Mali Experiment – A Test Case

India’s Mali Experiment – A Test Case

A clear manifestation of changing attitudes. India’s foreign policy makers start displaying confidence with regard to India’s ability to intervene in overseas affairs. India commits to reconstruct Mali, the land locked country of West Africa, wounded by terrorists.  This is for the first time that India intervenes in the domestic affairs of a country away from its natural sphere of influence. For the last one decade Africa has been the focal point of our foreign policy prism. Several major powers have strong presence in Africa, except India. India shifted the focus very late. Better late than never. India’s participation in the’ Support and Follow Up&r

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