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Tuesday, September 29, 2009
The landscape of lenders willing to work with small business owners has changed dramatically
0 comments Posted by shuseel at 12:23 AMThe landscape of lenders willing to work with small business owners has changed dramatically in the last year, but one bank -- Wells Fargo -- has emerged stronger than ever.
While other financiers that were historically major players took a knee, Wells Fargo (WFC, Fortune 500) increased its lending, emerging as the new number-one lender through the Small Business Administration's loan programs.
CIT Group (CIT, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Banco Popular of North America and others that once held top spots have cut their SBA lending by more than 70% this year. Meanwhile, Wells Fargo upped its loan volume 4%, from $583.4 million in 2008 to $605 million this year.
Some of that gain may be fueled by Wells Fargo's late-2008 acquisition of Wachovia, another bank that traditionally made many SBA-backed small business loans. The acquisition closed three months into the 2009 fiscal year (which the SBA began Oct. 1), leading Wachovia and Wells Fargo to report their loans separately through part of the year.
Taken together, the two banks lent $742.3 million this year -- down 24% from what they collectively lent as independent banks last year, but still far more than any other bank put into the small business market. The next runner-up, U.S. Bank (USB, Fortune 500), made $249.5 million in loans through the SBA's flagship lending program.
Given the retraction of a number of key lenders, Wells Fargo's leap to the top is not a major surprise. "I don't see anything shocking with Wells Fargo being number one," says Bob Coleman, editor of the Coleman Report, which monitors small business lending trends.
Stocks surged Monday, recharging their recent advance after a one-week break
0 comments Posted by shuseel at 12:17 AMStocks surged Monday, recharging their recent advance after a one-week break, as a pair of multi-billion dollar merger announcements gave investors a reason to get back into equities.
The Dow Jones industrial average (INDU) gained 124 points, or 1.3%. The S&P 500 (SPX) index rallied 19 points, or 1.8%. The Nasdaq composite (COMP) rose 40 points, or 1.9%.
Last week, the S&P 500 fell more than 2%, in its biggest one-week selloff in nearly 3 months. The declines occurred as investors mulled weaker-than-expected housing reports and an as-expected Federal Reserve decision to hold interest rates steady.
But over the last 7 months, investors have mostly used the dips as an opportunity to get back into stocks at lower levels, something that happened Monday, too.
"The two big mergers really hammer home the point that the credit market is improving," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
He said merger news and the recent series of initial public offerings that have come to market go a long way to counter worries that the stock advance is out of pace with the still-sluggish economy.
Thursday, September 24, 2009
Close to yesterday’s low, both majors remain under pressure early Asia, pointing from more selling in the next hours. Local shares likely to follow Wall Street fall, and trigger more risk aversion across the board, impelling greenbacks recovery. Good to notice, 2 days to the upside don’t made a trend. Dollar tone remains bearish across the board, and till know movements could only be consider corrective in most pairs, except maybe against GBP.
EUR/USD quotes at 1.4640, close to key 1.4600/20 support area. Confirmations under that level could accelerate the fall yet 1.4550 also strong support zone, should keep the downside capped. Meanwhile GBP/USD already quoting under yesterday’s low of 1.6020, has next key support at 1.5970 strong area, ahead of 1.5920 level.
EUR/USD quotes at 1.4640, close to key 1.4600/20 support area. Confirmations under that level could accelerate the fall yet 1.4550 also strong support zone, should keep the downside capped. Meanwhile GBP/USD already quoting under yesterday’s low of 1.6020, has next key support at 1.5970 strong area, ahead of 1.5920 level.
Tuesday, September 22, 2009
Oil eased in Asian trade Wednesday on profit-taking but stayed above $71 a barrel ahead of this week's Group of 20 summit and a US central bank meeting, analysts said.
New York's main contract, light sweet crude for November delivery, was down 44 cents to $71.32 a barrel in morning trade. The October contract expired on Tuesday.
Brent North Sea crude for November dipped 59 cents to $69.94.
Investors are closely monitoring the results of a US Federal Reserve policy meeting that could indicate the pace of economic recovery of the United States, the biggest energy consumer. The meeting ends Wednesday.
Leaders from the Group of 20 developed and developing nations are also expected to discuss the state of the global economy when they meet later this week in the US city of Pittsburgh.
Energy demand plunged after the global economy slipped into its worst recession since the 1930s late last year.
This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December.
Prices have since clawed back to around $70, but investors remain concerned over the pace of the global economic recovery.
Analysts expect the US central bank to keep key interest rates at existing levels of virtually zero percent in a bid to stimulate domestic demand and sustain the recovery.
"Concerns over the sustainability of the (US) recovery mean that the Fed will not tighten policy anytime soon," said research house Capital Economics.
"The only changes we expect at the (Fed) meeting are a slightly more upbeat tone in the statement."
Analysts said the weakness in the US dollar is also helping keep oil prices buoyant.
Oil is traded in the US currency, which makes oil cheaper for holders of stronger units, stimulating demand and pushing prices higher.
"The weak US dollar was a plus for the oil price in US dollar terms," the Commonwealth Bank of Australia said in a market commentary.
The dollar slid to a 13-month low against a basket of currencies
0 comments Posted by shuseel at 10:39 PMHONG KONG (Reuters) - The dollar slid to a 13-month low against a basket of currencies as market players seized on surprisingly strong New Zealand economic growth data as a reason to push the kiwi dollar higher and dump the U.S. currency.
Even as commodity prices dipped, the dollar's woes have boosted oil and metals and given a lift resource-related shares around the region. Resource-heavy Australian stocks .AXJO outperformed other markets in the region.
"It's a mixture of optimism about global growth and stronger commodity prices, which is particularly good for Australia," said Tom Elliott, a fund manager with MM&E Capital, which oversees about A$50 million in Australian shares.
Activity was limited, with markets in Japan closed for a third straight day before reopening on Thursday.
Many investors were also awaiting the Federal Reserve's policy decision later in the day, looking for tweaks in its post-meeting statement that would acknowledge the economy's improvement and may suggest more steps towards winding down its emergency measures to support financial markets.
The Fed has already been meeting with primary bond dealers on Wall Street to discuss different methods for absorbing the massive reserves injected into the banking system to stave off the worst financial crisis since the Great Depression.
The MSCI benchmark of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.4 percent, while the Thomson Reuters index of regional stocks .TRXFLDAXPU edged up 0.1 percent.
Australia's S&P/ASX 200 .AXJO was up 1.3 percent on the back of a rise in commodity-linked shares. BHP Billiton (BHP.AX), the world's biggest miner, rose 1 percent.
Thursday, September 17, 2009
Money Supply of people's Bank of China Continues Rapid Growth
0 comments Posted by shuseel at 8:19 PMMoney supply continues to accelerate. At end-July 2009, broad money (M2) stood at RMB57.3 trillion, increasing 28.42% year on year, up 10.6 percentage points from the end of last year but down 0.03 percentage points from the end of last month. Narrow money (M1) registered RMB19.59 trillion, rising 26.37% year on year, up 1.6 percentage points from the end of last month. Cash in circulation (M0) grew 11.59% year on year to RMB3.42 trillion. Net cash injection from January to July totaled RMB2.5 billion, down RMB54.1 billion year on year.
Outstanding loans continue to rise. At end-July, outstanding RMB loans reached RMB38.1 trillion, up 33.9% year on year, 15.17 percentage points higher than the end of last year but 0.54 percentage points lower than the end of last month. From January to July, RMB loans surged by RMB7.73 trillion, accelerating by RMB4.89 trillion year on year. In July, RMB loans increased by RMB355.9 billion. By sector, loans to households rose by RMB236.5 billion, with short-term loans and long and medium-term loans increasing by RMB47.8 billion and 188.7 billion respectively. Loans to non-financial companies and other sectors grew by RMB119.3 billion. In breakdown, short-term loans were down RMB58.1 billion, long and medium-term loans up RMB350.9 billion and bill financing down RMB198.2 billion. At end-July, outstanding foreign currency loans of financial institutions totaled USD306.4 billion, up 12.33% year on year. Foreign currency loans increased by USD11 billion in the month.
At end-July, outstanding RMB and foreign currency loans of financial institutions added up to RMB40.19 trillion, rising 32.58% year on year. In the January-July period, RMB and foreign currency loans increased by RMB8.15 trillion, accelerating by RMB5.05 trillion year on year. In July, RMB and foreign currency loans saw a RMB431.2 billion rise.
RMB deposits continue to increase. At end-July, outstanding RMB deposits of financial institutions increased 28.54% year on year to RMB57.03 trillion, up 8.81 percentage points year on year but down 0.47 percentage points month on month. From January to July, RMB deposits grew by RMB10.38 trillion, up RMB4.95 trillion from the same period last year. RMB deposits registered an increase of RMB399.3 billion in the month. By sector, household deposits declined by RMB19.2 billion; deposits of non-financial companies and fiscal deposits increased by RMB24.3 billion and 373.6 billion respectively. In deposits of non-financial companies, those of enterprises saw a RMB45 billion slide. At end-July, outstanding foreign currency deposits of financial institutions rose 12.21% year on year to USD207.5 billion. Foreign currency deposits sank by USD700 million in the month.
Outstanding RMB and foreign currency deposits of financial institutions totaled RMB58.45 trillion with a year-on-year growth of 28.08%. In the January-July period, RMB and foreign currency deposits rose by RMB10.48 trillion, accelerating by RMB4.96 trillion. RMB and foreign currency deposits increased by RMB394.8 billion in the month.
RMB transactions in the inter-bank lending market are brisk and market rates go up. In July 2009, RMB transactions in the inter-bank lending market amounted to RMB13.02 trillion. The average daily turnover reached RMB566.1 billion, increasing by 40.4%, or RMB162.9 billion, year on year.
In July, the monthly weighted interest rate for inter-bank lending averaged 1.32%, up 0.41 percentage points from last month but down 1.37 percentage points from the same period last year. The monthly weighted interest rate for bond pledged repo averaged 1.35%, up 0.44 percentage points month on month but down 1.41 percentage points year on year.
The Results of Locational International Banking Statistics and Consolidated International Banking Statistics in Japan
0 comments Posted by shuseel at 8:09 PM- Net external claims reported by banks in Japan were 1.4752 trillion U.S. dollars at the end of June 2009. They increased slightly from the previous quarter-end, after having decreased for three consecutive quarters. Although both gross external assets and liabilities increased, the growth of gross external assets was somewhat higher than that of gross external liabilities.
Locational International Banking Statistics in Japan
Consolidated International Banking Statistics of Japanese Reporting Banks
- Consolidated international claims on an ultimate basis stood at 2.1981 trillion U.S. dollars at the end of June 2009, marking the first increase in five quarters.
The Federal Reserve Board on Monday announced the designation of the chairs and deputy chairs of the twelve Federal Reserve Banks for 2010
0 comments Posted by shuseel at 7:57 PM
The Federal Reserve Board on Monday announced the designation of the chairs and deputy chairs of the twelve Federal Reserve Banks for 2010.
Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chair and a second as deputy chair.
Following are the names of the chairs and deputy chairs designated by the Board for 2010:
Boston
Henri A. Termeer, Chairman, President and Chief Executive Officer, Genzyme Corporation, Cambridge, Massachusetts, named Chair.
Henri A. Termeer, Chairman, President and Chief Executive Officer, Genzyme Corporation, Cambridge, Massachusetts, named Chair.
Kirk A. Sykes, President, Urban Strategy America Fund, L.P., Boston, Massachusetts, named Deputy Chair.
New York
Denis M. Hughes, President, New York State AFL-CIO, New York, New York, renamed Chair.
Denis M. Hughes, President, New York State AFL-CIO, New York, New York, renamed Chair.
Lee C. Bollinger, President, Columbia University, New York, New York, renamed Deputy Chair.
Philadelphia
Charles P. Pizzi, President and Chief Executive Officer, Tasty Baking Company, Philadelphia, Pennsylvania, named Chair.
Charles P. Pizzi, President and Chief Executive Officer, Tasty Baking Company, Philadelphia, Pennsylvania, named Chair.
Jeremy Nowak, President and Chief Executive Officer, The Reinvestment Fund, Philadelphia, Pennsylvania, named Deputy Chair.
Cleveland
Alfred M. Rankin, Jr., Chairman, President and Chief Executive Officer, NACCO Industries, Inc., Cleveland, Ohio, named Chair.
Alfred M. Rankin, Jr., Chairman, President and Chief Executive Officer, NACCO Industries, Inc., Cleveland, Ohio, named Chair.
Richard K. Smucker, Executive Chairman and Co-Chief Executive Officer, The J.M. Smucker Company, Orrville, Ohio, named Deputy Chair.
Richmond
Lemuel E. Lewis, President, LocalWeather.com, Suffolk, Virginia, renamed Chair.
Lemuel E. Lewis, President, LocalWeather.com, Suffolk, Virginia, renamed Chair.
Margaret E. McDermid, Senior Vice President and Chief Information Officer, Dominion Resources, Inc., Richmond, Virginia, renamed Deputy Chair.
Atlanta
Carol B. Tomé, Chief Financial Officer and Executive Vice President, The Home Depot, Atlanta, Georgia, named Chair.
Carol B. Tomé, Chief Financial Officer and Executive Vice President, The Home Depot, Atlanta, Georgia, named Chair.
Thomas I. Barkin, Director, McKinsey & Company, Atlanta, Georgia, named Deputy Chair.
Chicago
William C. Foote, Chairman and Chief Executive Officer, USG Corporation, Chicago, Illinois, named Chair.
William C. Foote, Chairman and Chief Executive Officer, USG Corporation, Chicago, Illinois, named Chair.
Thomas J. Wilson, Chairman, President and Chief Executive Officer, The Allstate Corporation, Northbrook, Illinois, named Deputy Chair.
St. Louis
Steven H. Lipstein, President and Chief Executive Officer, BJC HealthCare, St. Louis, Missouri, renamed Chair.
Steven H. Lipstein, President and Chief Executive Officer, BJC HealthCare, St. Louis, Missouri, renamed Chair.
Ward M. Klein, Chief Executive Officer, Energizer Holdings, Inc., Town & Country, Missouri, renamed Deputy Chair.
Minneapolis
John W. Marvin, Chairman and Chief Executive Officer, Marvin Windows and Doors, Warroad, Minnesota, named Chair.
John W. Marvin, Chairman and Chief Executive Officer, Marvin Windows and Doors, Warroad, Minnesota, named Chair.
Mary K. Brainerd, President and Chief Executive Officer, HealthPartners, Minneapolis, Minnesota, named Deputy Chair.
Kansas City
Lu M. Cordova, Chief Executive Officer, Corlund Industries, LLC and President & General Manager, Almacen Storage Group, Boulder, Colorado, renamed Chair.
Lu M. Cordova, Chief Executive Officer, Corlund Industries, LLC and President & General Manager, Almacen Storage Group, Boulder, Colorado, renamed Chair.
Paul DeBruce, Chief Executive Officer and Chairman/Founder, DeBruce Grain, Inc., Kansas City, Missouri, renamed Deputy Chair.
Dallas
James T. Hackett, Chairman, President and Chief Executive Officer, Anadarko Petroleum Corporation, Houston, Texas, renamed Chair.
James T. Hackett, Chairman, President and Chief Executive Officer, Anadarko Petroleum Corporation, Houston, Texas, renamed Chair.
Herb Kelleher, Founder and Chairman Emeritus, Southwest Airlines, Dallas, Texas, renamed Deputy Chair.
San Francisco
T. Gary Rogers, Chairman of the Board, Levi Strauss & Co., San Francisco, California, renamed Chair.
T. Gary Rogers, Chairman of the Board, Levi Strauss & Co., San Francisco, California, renamed Chair.
Douglas W. Shorenstein, Chairman and Chief Executive Officer, Shorenstein Properties LLC, San Francisco, California, renamed Deputy Chair.
The Bank of England maintain the official Bank Rate paid on commercial bank reserves at 0.5%
0 comments Posted by shuseel at 7:50 PM
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.
The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.
The minutes of the meeting will be published at 9.30am on Wednesday 23 September.
Tuesday, September 15, 2009
Wednesday during early deals, the Indian rupee plunged to a 15-day low against the dollar as overseas investors trimmed holdings of riskier emerging-market assets on concerns over global economic recovery.The Indian market is trading sharply lower amid weak global cues on worries a world economic recovery would take longer than expected. Net FII selling and concerns about a rising fiscal deficit are also weighing on investor sentiment.
The BSE Sensex opened lower at 14,040 and fell further in early trading. The index is now trading near the day's low at 13,746, down 425 points or 3% and the S&P CNX Nifty is trading at 4,071, down 3.12%.
The rupee fell to a 15-day low of 48.9350 against the dollar today and this may be compared to yesterday's New York session close of 48.4650. If the Indian currency weakens further, it may likely target the 49.5 level.
The Indian currency has been showing weakness against the dollar after it reached a 15-day high of 47.5650 on July 02. Since then, the rupee has lost 3% against the dollar.
Monday, September 14, 2009
The USD was able to pick up some lost ground today, as risk aversion in equity markets lent the greenback some support. There was an article in the NY times, which reported that China is moving forward with levying tariffs on US automotive products and chicken meat, in response to President Obama's recent decision to levy tariffs on Chinese tire exports. The renewal of protectionism concerns between the US and China led to the overnight sell-off in risk correlated trades. The Nikkei was down -2.3% and S&P futures are pointing to a lower open. Gold and silver fell to $994.00 and $16.30, respectively. The USDJPY fell to 90.20 before rallying back to 90.70. Interestingly, the correlation between the JPY and equity markets continues to fall, while USD/JPY and DXY correlation has significantly increased. We expect that the recent JPY strength will force investors to consider the spillover effect to Japanese exporters’ earnings witnessed in today's Nikkei sell off. In the days to come, we believe Japanese policy markets will become increasingly vocal with their dissatisfaction. In this regard, traders will be specifically focused on Tuesday’s BoJ monetary policy meeting and the central bank’s accompanying statement. In addition, this will be the first BoJ meeting after the historic elections and the marginally independent CB might provide some direction for the young government. The other central bank meeting that traders will be watching, considering the recent currency strength, will be the SNB. Along with the JPY, the CHF has been one of the biggest gainers in recent weeks. We expect the SNB on Thursday to hold rates, but to once again affirm that CHF strength is unacceptable and halting further appreciation is at the top of their agenda. Today's Producer and Import prices came in at -5.5% vs. -5.4% y/y exp. If nothing else, they confirm Switzerland’s subdued inflationary trend and support the SNB fear that deflation remains a strong risk. The USD strength has been very apparent in the GBP, as markets speculate that the sterling is due for a correction. The Cable is now trading below its 5day MA at 1.6540. This should be an eventful week for the UK and sterling, as along the normal economic releases, Governor King and other MPC members are expected to testify to lawmakers on Tuesday and will be asked some very direct question of the future plans of QE. For the rest of the day, markets will be watching Capacity Utilization from Canada (USDCAD has found buyers briefly penetrating the 1.0990 psychological resistance), equity markets and a US Fed speakers.
Sunday, September 13, 2009
U.S. Dollar Continues to Lose Ground - Euro, British Pound Climbs to Fresh Weekly High
0 comments Posted by shuseel at 9:22 PM
The euro rallied against the greenback for the sixth day to reach a fresh yearly high of 1.4630 during the overnight session however, the EUR/USD may hold a narrow range going into the weekend as the pair remains overbought.
Talking Points
· Japanese Yen: USD/JPY Breaks Below 91.00
· Pound: Producer Prices Advance for Sixth Month
· US Dollar: U. of Michigan Confidence Survey on Tap
The euro rallied against the greenback for the sixth day to reach a fresh yearly high of 1.4630 during the overnight session however, the EUR/USD may hold a narrow range going into the weekend as the pair remains overbought. Meanwhile, the economic docket showed wholesale prices in Germany rose 0.7% in August, while the annualized rate fell at a slower pace from the previous month, and the extraordinary efforts taken on by the European Central Bank should help to stem the downside risks for growth and inflation as policy makers anticipate economic activity to improve going into the following year.
Meanwhile, ECB board member Lorenzo Bini Smaghi held a hawkish tone during a speech in Rome and said that the Governing Council will have to hike the benchmark interest rate before inflation begins to materialize as the central bank maintains its one and only mandate to ensure price stability. Mr. Smaghi said that the current policy is only “temporary” and expects borrowing costs to rise as the output gap narrows, but went onto say that now is not the time to implement an exit strategy. Moreover, the board member stated that the exit strategy is likely to have a substantial impact on the yield curve once it’s implemented, and said that the non-standard measures have achieved its objectives. At the same time, ECB’s Jose Manuel Gonzalez-Paramo said that the exit strategy will be dependent on the outlook for inflation and financial stability, and expects to see a modest recovery going forward as he anticipates economic activity in some countries to expand throughout the first half of 2010. As the central bank holds an improved economic outlook and expects the euro-region to recover going into the following year, long-term expectations for higher interest rates may continue to drive the euro higher as investors speculate the ECB to tighten policy over the next 12 months.
The British pound continued to retrace the sell-off from the previous month and advanced against the U.S. dollar for the fourth day to reach a fresh weekly high of 1.6744, and the improved outlook for inflation may drive the GBP/USD higher going into the North American trade as investors anticipate the Bank of England to raise the benchmark interest rate next year. Producer prices in the U.K. rose 0.2% in August, with the annualized rate falling 0.4% from the previous year amid forecasts for a 0.5% decline, while input prices surged 2.2% from July to top expectations for a 1.0% rise. At the same time, core prices rose 0.2% during the month, which was in-line with expectations, while the annual rate grew 0.7% from last year after rising 0.1% in the previous month. As the extraordinary efforts taken on by the government helps to stem the downside risks for growth and inflation, the central bank is likely to hold an improved outlook for the economy, and the British pound may continue to trend higher over the near-term as growth prospects improve.
U.S. dollar price action was mixed across the board, with the greenback tumbling lower against the Japanese yen for the fourth consecutive day to trade below 91.00, and the reserve currency may face increased volatility going into the U.S. session as the economic docket is expected to show a rebound in consumer confidence. The U. of Michigan confidence survey is anticipated to improve for the first time in three months, with economists forecasting the index to rise to 67.5 in September from 65.7 in the previous month, and the data is likely to encourage an enhanced outlook for private sector spending as household sentiment improve. At the same time, import price are expected to rise 1.0% in August, with wholesales inventories projected to fall for the eleventh month in July, while the public deficit is anticipated to widen to $139.5B in August from $111.9B in the previous month, and the slew of data is likely to move the markets as the markets thin ahead of the weekend.
UCOBANK has international presence for over 50 years now. UCO presently has four overseas branches in two important international financial centres in Singapore and Hong Kong and representative office at Kuala Lumpur, Malaysia and Guangzhou, China.
The international linkage from India is supported by a large Indian network through Integrated Treasury Branch and Authorised Forex Branches. Our other branches in India also provide international banking facilities through the Authorised Branches of our bank.This international network is further augmented by correspondent arrangements with leading Banks at all important world centres in various countries.Thus UCO has a true global presence and can offer a variety of international banking products, services and financial solutions to all cross-section of clients, tailor-made to their banking requirements through one of the best international banking relationship networks both in terms of strength and spread.
1. PRODUCTS & SERVICES
The international banking services in India is provided for the benefit of Indian customers, corporates, NRIs, Overseas Corporate Bodies, Foreign Companies/ Individuals as well as Foreign Banks etc. by our International Banking Branches, Authorised Forex Branches and Integrated Treasury Branch. Our other branches in India also provide international banking facilities through the aforesaid network of our branches.
All the facilities are subject to the prevalent rules & guidelines of the Bank and RBI. Brief details of services provided are as under:-
1. NRI Banking (Please visit NRI Corner)
2. Foreign Currency Loans
3. Finance/Services to Exporters
4. Finance/Services to Importers
5. Remittances
6. Forex & Treasury Services
7. Resident Foreign Currency (Domestic) Deposits
8. Correspondent Banking Services
9. All General Banking Services (Please visit Domestic Banking Sections)
2. FOREIGN CURRENCY LOANS
a) In India (FCNR 'B' Loans):
The foreign currency denominated loans in India are granted out of the pool of foreign currency funds of the Bank in FCNR(B) Deposit etc. accounts as permitted by Reserve Bank of India. These loans are commonly known as FCNR(B) Loans.
UCO has a broad base of NRI customers/depositors. Therefore, with the resource base of FCNR(B) deposits etc. UCO is in a position to offer the Foreign Currency Loans in India to our customers as an alternative to loans in Rupees.
These loans are denominated in foreign currency such as US Dollars and are offered as short term loans. The interest is fixed with a reasonable spread over LIBOR
UCO also allows loans in foreign currency to NRIs against their FCNR(B) Deposits at the Indian Branches. The details are available in NRI Banking section.
b) From Outside India:
With presence at two major financial centers of the world, UCO has foreign currency resources to arrange /grant Foreign Currency Loans to Indian as well as multinational corporates at the competitive rates.
The foreign currency denominated loans are granted by our overseas branches to Indian Corporates as per External Commercial Borrowing (ECB) Policy of Govt. of India/RBI.
3. FINANCE/SERVICES TO EXPORTERS
UCOGOLD CARD FOR EXPORTERS
UCO launches Goldcard for creditworthy exporters - Simplified access to export credit on very good terms:
Better terms of credit including rates of interest than those extended to other exporters by the Bank.
Processing of applications for credit faster than for other exporters.Simpler norms, subject to specific requirements in each case, if any. 'In-principle' limits for a period of 3 years with a provision for automatic renewal, subject to fulfillment of the terms and conditions of sanction. Preference for grant of packing credit in foreign currency (PCFC), subject to availability of foreign currency funds. Lower charges schedule and fee-structure than those provided to other exporters.
Relaxations in the norms in respect of security and collaterals, wherever feasible. Other facility/benefit to the exporters, subject to the fulfillment of extant rules and regulations applicable to export finance.
Types of Facilities for Exports
a) Rupee Export Credit (pre-shipment and post-shipment):
UCO provides both pre and post shipment credit to the Indian exporters through Rupee Denominated Loans as well as foreign currency loans in India. Credit facilities are sanctioned to exporters who satisfy credit exposure norms of UCO. Exporters having firm export orders or confirmed L/C from a bank are eligible to avail the export credit facilities.
Rupee Export Credit is available generally for a period of 180 days from the date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI. The corporates may also book forward contracts with UCO in respect of future export credit drawls, if required, as per the guidelines/directives provided by RBI.
UCO provides both pre and post shipment credit to the Indian exporters through Rupee Denominated Loans as well as foreign currency loans in India. Credit facilities are sanctioned to exporters who satisfy credit exposure norms of UCO. Exporters having firm export orders or confirmed L/C from a bank are eligible to avail the export credit facilities.
Rupee Export Credit is available generally for a period of 180 days from the date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI. The corporates may also book forward contracts with UCO in respect of future export credit drawls, if required, as per the guidelines/directives provided by RBI.
b) Pre-shipment Credit in Foreign Currency (PCFC):
UCO offers PCFC in the foreign currency to the exporters enabling them to fund their procurement, manufacturing/processing and packing requirements. These loans are available at very competitive international interest rates covering the cost of both domestic as well as import content of the exports.
The corporates/exporters with a good track record can avail a running account facility with UCO for PCFC. PCFC is generally available for a period of 180 days from date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI.
The corporates/exporters with a good track record can avail a running account facility with UCO for PCFC. PCFC is generally available for a period of 180 days from date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI.
Features:
(The forward covers can be booked in respect of future PCFC drawls.)
In the PCFC drawls permitted in a foreign currency other than the currency of export, exporter bears the risk in currency fluctuations. The foreign currency drawls are restricted to major currencies at present. In case, the export order is in a non-designated currency, PCFC is given in US$. For orders in Euro, Pound Sterling and JPY, PCFC can be availed in the respective currencies or US$ at the choice of exporter.
In the PCFC drawls permitted in a foreign currency other than the currency of export, exporter bears the risk in currency fluctuations. The foreign currency drawls are restricted to major currencies at present. In case, the export order is in a non-designated currency, PCFC is given in US$. For orders in Euro, Pound Sterling and JPY, PCFC can be availed in the respective currencies or US$ at the choice of exporter.
Multi-currency drawls against the same order, are not permitted at present due to operational inconvenience.
Repayment:
PCFC is to be repaid with the proceeds of the export bill submitted after shipment.In case of cancellation of export order, the PCFC can be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation.
The PCFC in foreign currency are granted at our various branches through our Integrated Treasury Branch in Mumbai.
The PCFC in foreign currency are granted at our various branches through our Integrated Treasury Branch in Mumbai.
c) Negotiation of Bills under L/C
UCO's Authorised Forex Branches are active in negotiation/discounting of sight/usance international export bills under L/Cs opened by foreign banks as well as branches of Indian banks abroad. UCO offers the most competitive rates. These transactions are undertaken by our branches within the Bank/Country Exposure ceilings prescribed by UCO.
d) Export Bill Rediscounting:
UCO provides financing of export by way of discounting of export bills, as a post shipment finance to the exporters at competitive international rate of interest. This facility is available in four currencies i.e. US$, Pound Sterling, Euro and JPY.
The export bills (both Sight and Usance) drawn in compliance of FEMA can be purchased/ discounted.
Exporters can avail this facility from UCO to cover the bills drawn under L/C as well as other export bills.
The export bills (both Sight and Usance) drawn in compliance of FEMA can be purchased/ discounted.
Exporters can avail this facility from UCO to cover the bills drawn under L/C as well as other export bills.
e) Bank Guarantees:
UCO, on behalf of exporter constituents, issues guarantees in favour of beneficiaries abroad. The guarantees may be Performance and Financial. For Indian exporters, guarantees are issued in compliance to RBI guidelines.
4. FINANCE/SERVICES TO IMPORTERS
4. FINANCE/SERVICES TO IMPORTERS
a) Collection of Import Bills:
UCO has correspondent relationship with reputed International Banks throughout the world and can thus provide valuable services to importers who may be importing from any part of the Globe. The import bills are collected by our Authorised Forex Branches at very competitive rates. The import bills drawn on customers of other branches are also collected through these branches.
b) Letter of Credit:
On account of UCO's presence in international market for decades, UCO has established itself as a well known international bank. L/Cs of UCO are well accepted in the International market. For any special requirement UCO can get the L/C confirmed by the top international banks.
Thus UCO's L/C facility for the purchase of goods/services etc. fulfills the requirements of all importers to arrange a reliable supply. UCO offers this facility to importers in India within the ambit of FEMA and Exim policy of Govt. of India. UCO uses state of the art SWIFT network to transmit L/Cs and with a worldwide network of correspondents and our overseas branches facilitates prompt & efficient services to the importers.
L/C facility is granted to the importers on satisfying credit exposure norms of the Bank.
L/C facility is granted to the importers on satisfying credit exposure norms of the Bank.
c) Financing of import
Usance L/C facility
Usance L/C facility
UCO's Usance L/C facility provides the importer an opportunity to avail credit from their supplier/supplier's bank.
Deferred Payment Guarantee/Standby LC
UCO's Deferred Payment Guarantee/Standby LC facility also provides the importer an opportunity to avail credit from their supplier/supplier's bank.
Rupee finance
UCO also offers to Indian importers Rupee finance for payment of goods and services imported from abroad under its various Rupee credit facilities on satisfying credit exposure norms of the Bank.
Foreign Currency Loans
Short term External Commercial Borrowings or Trade Credits for less than three years as permitted by RBI for imports into India is allowed by our overseas branches to Indian importers at very competitive rates. These are generally backed by L/Cs opened by importer's bank. Indian importers can also avail this facility from our overseas branches as roll-over credit on their bank agreeing to extend the L/C in favour of our overseas branches.
d) Bank Guarantees:
UCO, on behalf of importer constituents or other customers, issues guarantees in favour of beneficiaries abroad. The guarantees may be both Performance and Financial.
5. REMITTANCES
UCO, through its worldwide network of correspondents, Indian branches and overseas branches, offers prompt inward and outward foreign remittance facilities at very competitive rates. The use of SWIFT network adds to reliability and efficient handling.
The remittances are handled by our Authorised Forex Branches. The outward remittances of customers of other branches are also remitted through these branches. Through our well-spread network of branches in India, inward remittances reach every nook & corner in India. UCO has tie-up arrangements with Western Union Money Transfer.
The remittances are handled by our Authorised Forex Branches. The outward remittances of customers of other branches are also remitted through these branches. Through our well-spread network of branches in India, inward remittances reach every nook & corner in India. UCO has tie-up arrangements with Western Union Money Transfer.
6. FOREX & TREASURY SERVICES
UCO operates in the Forex Market in India as well as abroad. In India the inter-bank forex operations is centralized at our Integrated Treasury Branch in Mumbai, country's undisputed financial hub. UCO's Authorised Forex Branches undertake customer transactions. The forex requirements of customers of other branches are also routed through these branches. Overseas branches undertake the forex treasury operations in Singapore and Hong Kong centre.
All the forex treasuries are equipped with state of art technology and professionally skilled staff to handle forex treasury operations efficiently.
UCO deals in all the important international currencies. Our Forex Treasuries generally undertake the following treasury related activities:-
Forex Inter Bank Placements/Borrowings
Sale & Purchase of currency on behalf of customers
Forward Cover Bookings
Cross Currency Swaps
Interest Rate Swaps (IRS)
Forward Rate Arrangements (FRAs)
Forex Money Market Operations
Forex Inter Bank Placements/Borrowings
Sale & Purchase of currency on behalf of customers
Forward Cover Bookings
Cross Currency Swaps
Interest Rate Swaps (IRS)
Forward Rate Arrangements (FRAs)
Forex Money Market Operations
Forex Services For Corporates
To improve the standard of service to the valued clientele, UCO has integrated its Forex and Domestic Treasury Operations under one roof in Mumbai. UCO's Forex Inter-bank desk at Treasury Branch is an active market player. UCO's Integrated operations at one place in Mumbai enables it to participate in inter-bank transactions on a large scale. Forex Dealing Rooms in Singapore and Hong Kong and a worldwide network of correspondents add to UCO's strength in providing the best forex corporate services.
Authorised Forex Branches spread across the country cater to needs of all customer in foreign exchange. Corporate Forex Services include Foreign Currency Sale & Purchase, Forward Booking, Cross Currency Forward etc. Other products like Collection & Negotiation of Export & Import Bills under LC, LC Issuance, Advising & Confirmation Services, Arrangement of Trader Credits, the guarantees on behalf of Indian Corporate/Projects, EEFC Accounts, Remittance etc. are all available to corporate customers from UCO.
UCO is establishing a Derivative Desk in India to offer various Derivative Products, such as IRS, FRA, Cross-currency Options, Currency Swaps with Cross-currency Interest Rate Swap etc. With this UCO will also offer structured products suitable for Corporates who have large receivables or payment obligation in foreign currencies. Derivative Desk will deal in hedging products to hedge the market risks i.e. interest rate risk and foreign exchange risk in Bank's balance sheet.
7. RESIDENT FOREIGN CURRENCY (DOMESTIC) A/Cs
Authorised Forex Branches spread across the country cater to needs of all customer in foreign exchange. Corporate Forex Services include Foreign Currency Sale & Purchase, Forward Booking, Cross Currency Forward etc. Other products like Collection & Negotiation of Export & Import Bills under LC, LC Issuance, Advising & Confirmation Services, Arrangement of Trader Credits, the guarantees on behalf of Indian Corporate/Projects, EEFC Accounts, Remittance etc. are all available to corporate customers from UCO.
UCO is establishing a Derivative Desk in India to offer various Derivative Products, such as IRS, FRA, Cross-currency Options, Currency Swaps with Cross-currency Interest Rate Swap etc. With this UCO will also offer structured products suitable for Corporates who have large receivables or payment obligation in foreign currencies. Derivative Desk will deal in hedging products to hedge the market risks i.e. interest rate risk and foreign exchange risk in Bank's balance sheet.
7. RESIDENT FOREIGN CURRENCY (DOMESTIC) A/Cs
UCO also offers Resident individuals in India, the facility to open non-interest bearing current account in foreign currency at the selected Indian branches as permitted by RBI. Joint accounts with a resident eligible to open RFC (D) account is permissible. Nomination facility is also permitted.
Thus UCO will provide an option to resident individuals to retain their receipts from abroad in foreign currency as permitted by RBI.
8. CORRESPONDENT BANKING SERVICES
Thus UCO will provide an option to resident individuals to retain their receipts from abroad in foreign currency as permitted by RBI.
8. CORRESPONDENT BANKING SERVICES
The extensive network of branches in India and presence in two important international centres enables UCO to offer correspondent banking services to the banks.
The Authorised Forex Branches in India as well as our overseas branches are capable of providing the services that an international correspondent Bank can offer.
The Authorised Forex Branches in India as well as our overseas branches are capable of providing the services that an international correspondent Bank can offer.
UCO can provide the following main services:-
- Collection of bills both Documentary and Clean.
- Advising/confirming of L/Cs opened by banks
- Discounting of Bills drawn under L/Cs
- Maintanence of foreign currency accounts in S$ and HK$
- Maintanence of Rupee accounts in India
- Making foreign currency payments/remittance on behalf of customers of banks.
UCO's excellent service with competitive charges provide a good Correspondent Banking solution.
UCO's overseas branches are active in discounting of usance international trade bills. With foreign currency resources of overseas branches, UCO offers the most competitive rates for discounting of these bills. The bills under the L/Cs of the most of the Indian Banks as well as International Banks are also discounted at competitive rates. These transactions are undertaken by them within the Bank/Country Exposure ceilings prescribed by UCO.
UCO's overseas branches are active in discounting of usance international trade bills. With foreign currency resources of overseas branches, UCO offers the most competitive rates for discounting of these bills. The bills under the L/Cs of the most of the Indian Banks as well as International Banks are also discounted at competitive rates. These transactions are undertaken by them within the Bank/Country Exposure ceilings prescribed by UCO.
EXTERNAL COMMERCIAL BORROWING (ECB)
The foreign currency loans to the Indian corporate are granted by UCO's overseas branches. The borrowings raised by the Indian corporate from specified banking sources outside India are termed "External Commercial Borrowings" (ECBs). These ECBs can be raised within the Policy guidelines of Govt. of India/Reserve Bank of India, as applicable from time to time. ECB includes the following:-
- Commercial LoansSyndicated Loans
- Floating/Fixed rate notes and bonds
- Lines of Credit from foreign banks and financial institutions
- Import loans, loans from the export credit agencies of other countries.
UCO is very active in granting and arranging various forms of ECB facilities for the Indian Corporate. UCO can offer following services to the Indian corporates in respect of cross border financing :-
- Arranging/granting External Commercial Borrowings by way of Foreign Currency Loans, FRNs, Bonds for the Indian corporates.
- Arranging/underwriting International Syndicated Loans for the Indian corporates.
- Participating in the International Loan Syndications.
- Granting loans backed by Export Credit Agencies.
- Providing import finance for Indian Corporates.
- Issue of Guarantees such as Bids, Bonds, Performance, Advance Payment etc. for the overseas projects bagged by the Indian Corporates.
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New Zealand Dollar strength may very well be the currency’s own undoing
0 comments Posted by shuseel at 7:40 PMThe New Zealand dollar traded virtually lock-step with global financial risk appetite, dropping through early-week S&P 500 tumbles but finishing higher on the subsequent recovery. We had previously forecast that the infamous “September Effect” could lead to a sharp correction in major equity indices and similar pullbacks in the New Zealand Dollar, but the lack of follow-through in early-week declines suggests markets are unwilling to force major breakouts in key asset classes. We expect the New Zealand Dollar will continue to track moves in the S&P through the week ahead, but it will likewise be critical to watch for reactions to the upcoming Reserve Bank of New Zealand interest rate announcement.
The RBNZ is very widely expected to leave interest rates near lows of 2.50%, but the New Zealand Dollar could quite easily move on unexpected commentary following the decision. The recent Reserve Bank of Australia rate announcement quickly pushed the Australian Dollar lower as the RBA showed little indication it was likely to raise interest rates through the foreseeable future. We get the sense that the RBNZ could likewise dump cold water on rate hike speculation and force similar pullbacks in the yield-sensitive NZD. Though recent economic data shows that domestic activity is generally recovering, the RBNZ tends to place considerable weight on the New Zealand Dollar exchange rate in setting interest rates. Given that the NZ$ trades near 2009 highs, import prices will likely remain low while export industries may lose competitiveness in the global market.
New Zealand Dollar strength may very well be the currency’s own undoing, and it will be very important to watch any RBNZ references to the NZD exchange rate following the upcoming interest rate announcement. Otherwise, it remains critical to watch for any substantial shifts in financial market risk sentiment.
The RBNZ is very widely expected to leave interest rates near lows of 2.50%, but the New Zealand Dollar could quite easily move on unexpected commentary following the decision. The recent Reserve Bank of Australia rate announcement quickly pushed the Australian Dollar lower as the RBA showed little indication it was likely to raise interest rates through the foreseeable future. We get the sense that the RBNZ could likewise dump cold water on rate hike speculation and force similar pullbacks in the yield-sensitive NZD. Though recent economic data shows that domestic activity is generally recovering, the RBNZ tends to place considerable weight on the New Zealand Dollar exchange rate in setting interest rates. Given that the NZ$ trades near 2009 highs, import prices will likely remain low while export industries may lose competitiveness in the global market.
New Zealand Dollar strength may very well be the currency’s own undoing, and it will be very important to watch any RBNZ references to the NZD exchange rate following the upcoming interest rate announcement. Otherwise, it remains critical to watch for any substantial shifts in financial market risk sentiment.
Saturday, September 12, 2009
The US Dollar dropped like a stone on its way to fresh 2009 highs against nearly all major forex counterparts
0 comments Posted by shuseel at 8:34 PMThe US Dollar dropped like a stone on its way to fresh 2009 highs against nearly all major forex counterparts, breaking its long-standing trading range against the Euro in fairly dramatic fashion. The first full week of post-summer trading finally brought the sustained price moves we have long been waiting for. FX Trading volume increased notably through mid-week trade and fueled US Dollar losses, but fundamental “justification” for renewed US Dollar weakness was far less clear. According to FXCM execution desk data, open interest in the Euro/US Dollar jumped by as much as 20 percent before the week was through. A busy economic calendar in the week ahead suggests that the US Dollar may remain volatile, and it will be critical to see whether its recent downtrend may be sustained.
Demand for the safe-haven US Dollar dropped sharply on the week as the US S&P 500 and other major risk barometers reached fresh year-to-date peaks, and overall momentum favors USD losses. Indeed, forex options markets show that option traders are betting on further US Dollar weakness against almost all major counterparts. Yet those same options prices show short-term volatility expectations have dropped to their lowest levels in the past year. The fact that US Dollar weakness has not coincided with a general rise in forex volatility expectations suggests that currencies could return to sideways trading, but this will likewise depend on developments in financial market risk appetite. The 20-day correlation between the Euro/US Dollar and S&P 500 currently trades almost exactly at record-highs.
To that effect, traders should keep close tabs on S&P 500 reactions to the coming week of key US event risk. Highlights will likely include the historically market-moving Advance Retail Sales, Consumer Price Index, and Treasury International Capital System reports. Consensus forecasts call for a noteworthy pickup in domestic Retail Sales, but the expected surge is mostly a function of the highly-publicized “Cash for Clunkers” program that strongly boosted Auto Sales. Traders should instead watch for surprises out of the “Ex Autos and Gasoline” figure—predicted to gain a paltry 0.1 percent on the month. If numbers prove better than expected, the S&P will likely rally and the US Dollar may actually decline.
The following day’s Consumer Price Index numbers are less likely to force major US Dollar volatility, but traders should nonetheless keep an eye out for any especially large deviations from consensus expectations. The true fireworks may come on subsequent Treasury International Capital System (TICS) data. Analysts have long argued that massive US fiscal deficits could harm the US Dollar as the government floods markets with debt securities. Yet recent data shows that foreign demand for US Treasury bonds remains robust, and the US Dollar has thus far averted disaster. It remains important to watch for continued demand for Treasuries, and any disappointments could further fuel dollar losses.
Demand for the safe-haven US Dollar dropped sharply on the week as the US S&P 500 and other major risk barometers reached fresh year-to-date peaks, and overall momentum favors USD losses. Indeed, forex options markets show that option traders are betting on further US Dollar weakness against almost all major counterparts. Yet those same options prices show short-term volatility expectations have dropped to their lowest levels in the past year. The fact that US Dollar weakness has not coincided with a general rise in forex volatility expectations suggests that currencies could return to sideways trading, but this will likewise depend on developments in financial market risk appetite. The 20-day correlation between the Euro/US Dollar and S&P 500 currently trades almost exactly at record-highs.
To that effect, traders should keep close tabs on S&P 500 reactions to the coming week of key US event risk. Highlights will likely include the historically market-moving Advance Retail Sales, Consumer Price Index, and Treasury International Capital System reports. Consensus forecasts call for a noteworthy pickup in domestic Retail Sales, but the expected surge is mostly a function of the highly-publicized “Cash for Clunkers” program that strongly boosted Auto Sales. Traders should instead watch for surprises out of the “Ex Autos and Gasoline” figure—predicted to gain a paltry 0.1 percent on the month. If numbers prove better than expected, the S&P will likely rally and the US Dollar may actually decline.
The following day’s Consumer Price Index numbers are less likely to force major US Dollar volatility, but traders should nonetheless keep an eye out for any especially large deviations from consensus expectations. The true fireworks may come on subsequent Treasury International Capital System (TICS) data. Analysts have long argued that massive US fiscal deficits could harm the US Dollar as the government floods markets with debt securities. Yet recent data shows that foreign demand for US Treasury bonds remains robust, and the US Dollar has thus far averted disaster. It remains important to watch for continued demand for Treasuries, and any disappointments could further fuel dollar losses.
Reserve Bank of Australia keep an eye out for potentially market-moving of Australian Dollar
0 comments Posted by shuseel at 8:28 PMThe Australian Dollar survived a week of fairly disappointing economic data to finish near yearly highs against its downtrodden US namesake. Historically market-moving Retail Sales and Employment Change reports both proved sharply worse than expected, but the data releases only managed to slow down the Aussie’s rallies against the US Dollar. Of course, sharp rallies in key risky asset classes mitigated the effects of the disappointments; the US S&P 500 registered fresh 2009 highs on several different occasions. Whether or not risky asset classes can maintain their impressive trajectory remains the key question in our Australian Dollar outlook, but traders should likewise keep an eye out for potentially market-moving Reserve Bank of Australia rhetoric through early-week trade.
Previously buoyant RBA interest rate expectations led the yield-sensitive Australian Dollar higher against major forex counterparts, but a recent pullback in forecasts led to commensurate AUD weakness. At their peak, Overnight Index Swaps were pricing in an approximate 50 percent chance that the Reserve Bank would raise interest rates as soon as October. Yet official commentary following September’s rate announcement clearly stated that current interest rates were “appropriate” and instantly poured cold water on interest rate speculation.
Markets will get a closer look at the Reserve Bank’s reasoning behind their neutral stance on short-term rates, and it will be important to watch for shifts in rhetoric on inflation forecasts and future monetary policy tightening. Overnight Index Swaps still price in a marginal probability of a rate hike before the year is through. Any indication that the RBA has ruled out near-term rate hikes could easily hurt the Aussie, while hawkish rhetoric would have the opposite effect. Whatever the outcome, we could see some notable Australian Dollar moves on the minutes from the RBA’s September minutes.
Traders should otherwise keep an eye out for important shifts in risk sentiment. Recently impressive momentum gives us little reason to believe that the S&P 500 may reverse through near-term trade. Yet traders should be wary of trend exhaustion—and treat excessive AUDUSD strength with a sense of caution.
Previously buoyant RBA interest rate expectations led the yield-sensitive Australian Dollar higher against major forex counterparts, but a recent pullback in forecasts led to commensurate AUD weakness. At their peak, Overnight Index Swaps were pricing in an approximate 50 percent chance that the Reserve Bank would raise interest rates as soon as October. Yet official commentary following September’s rate announcement clearly stated that current interest rates were “appropriate” and instantly poured cold water on interest rate speculation.
Markets will get a closer look at the Reserve Bank’s reasoning behind their neutral stance on short-term rates, and it will be important to watch for shifts in rhetoric on inflation forecasts and future monetary policy tightening. Overnight Index Swaps still price in a marginal probability of a rate hike before the year is through. Any indication that the RBA has ruled out near-term rate hikes could easily hurt the Aussie, while hawkish rhetoric would have the opposite effect. Whatever the outcome, we could see some notable Australian Dollar moves on the minutes from the RBA’s September minutes.
Traders should otherwise keep an eye out for important shifts in risk sentiment. Recently impressive momentum gives us little reason to believe that the S&P 500 may reverse through near-term trade. Yet traders should be wary of trend exhaustion—and treat excessive AUDUSD strength with a sense of caution.
Tuesday, September 8, 2009
yen registered strong gains against its major counterparts after Japanese voters
0 comments Posted by shuseel at 6:39 PM
Monday in Asia, the yen registered strong gains against its major counterparts after Japanese voters handed the opposition Democratic Party of Japan a landslide victory over the long-ruling Liberal Democratic Party, spurring optimism the new government may stimulate the economy.The DPJ, led by 62-year-old Yukio Hatoyama, captured a record 308 of the 480 seats in the lower house of parliament. Prime Minister Taro Aso indicated he would resign as head of the Liberal Democratic Party, which lost almost two-thirds of its lawmakers in a complete reversal of the last election in 2005.
The DPJ has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and limiting the power of bureaucrats.
Japanese politics now enters a new phase. The LDP is no longer the largest party in parliament for the first time since its formation in 1955. Never before had an opposition party won the majority in the powerful lower house. The shakeup comes 16 years after the LDP briefly fell from power for the first time.
Investors are now waiting to see exactly what policies the new government will follow and how it will differ from the old. DPJ officials have said they would respect the independence of the Bank of Japan and are unlikely to intervene to weaken the yen, maintaining Japan's five-year absence from currency markets.
Japan's economy grew an annualized 3.7 percent in the three months ended June 30, the first growth in four quarters, after an 11.7 percent decline in the first quarter of the year.
To finance an economic aid package that would total 16.8 trillion yen in 2013, the DPJ says it will eliminate 9.1 trillion yen in unnecessary spending, tap special accounts managed by the nation's bureaucrats and abolish some tax deductions.
The yen's uptrend was also buoyed by better-than-expected Japan's industrial production and retail sales reports published this morning.
Japan's industrial output grew for a fifth month in July as global stimulus spending boosted export demand and manufacturers forecast the sector would gain momentum through the quarter.
The Ministry of Economy, Trade and Industry said that industrial production in Japan was up 1.9 percent in July, beating forecasts for a 1.4 percent increase. On an annual basis, output fell 22.9 percent compared to forecasts for a 23.1 percent contraction after the 23.5 percent decline in the previous month.
Another report showed that retail sales in Japan were down 2.5 percent on year in July, beating forecasts for a 3.5 percent decline after the revised 2.9 percent contraction in June. On a monthly basis, retail sales were up a seasonally adjusted 0.4 percent versus expectations for a 0.5 percent fall.
In addition, a survey of purchasing managers also showed manufacturing activity rose its strongest level in nearly three years. The Nomura/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 53.6 in August, the highest level since November 2006, from 50.4 in July.
The index also remained above the 50 threshold that separates contraction from expansion for the second month in a row.
A drop in most Asian stocks also supported the Japanese currency. Japan's 0.1% interest rate help speculators get funds with low borrowing costs and invest where returns are higher. Speculators profit due to the spread between both rates. Nevertheless, currency fluctuations can erase profits between the two rates.
A stronger yen also makes Japan-made goods less competitive overseas and deflates exporters' earnings abroad when converted back into the Japanese currency, hurting their profits and weighing on the export-dependent economy.
Japan's benchmark Nikkei 225 index is currently trading 14.14 points down or 0.13% at 10,548.28.
In other regional markets, South Korea's Kospi Composite was down 1%, and New Zealand's NZX-50 lost 0.43%.
The Shanghai Composite tumbled 5.4% on concerns over a fall in bank lending, which pushed Hong Kong's Hang Seng Index down 1.8%.
The yen gained more than 1% against the U.S. dollar from Friday's close of 93.65 to reach its highest level in almost 7-weeks in Asian deals on Monday. At present, the yen is trading at 92.56 per dollar. If the yen climbs further, it may find resistance around the 91.8 level.
After hitting an 8-week low of 97.8 on August 07, the yen advanced more than 5% against the dollar as the Japanese economy pulled out of its worst recession since World War II in the second quarter on government stimulus measures and strong exports.
During Asian trading on Monday, the yen soared to a 7-week high of 150.23 against the pound. This may be compared to last week's close of 152.41. On the upside, 147.2 is seen as the next target level for the Japanese currency.
The pound declined despite a report from the Hometrack showed today that house prices in U.K. rose for the first time in 25 months in August.
The average cost of a home in England and Wales rose 0.1 percent from July to 155,800 pounds, the London-based property research company said in an e-mailed statement. The increase, the first since July 2007, left house prices 6.7 percent lower than a year earlier, the smallest annual decline in a year.
The pound that jumped to a 9-month high of 163.13 against the yen on August 07 has slipped 8% since then as reports added to concern the U.K.'s worst recession since World War II may have further to run, reducing demand for the nation's assets.
Government reports showed last week that the U.K. economy contracted for a fifth consecutive quarter and business investment slumped by the most in 24 years even after the Bank of England cut its key interest rate to an all-time low of 0.5 percent and decided to spend 175 billion pounds ($285 billion) to purchase bonds to stimulate the economy.
Britain's gross domestic product contracted 0.7 percent in the second quarter, the Office for National Statistics said on Friday, a day after it reported that business investment fell 10.4 percent from the first three months of the year.
The yen that closed last week's trading at 133.93 against the euro strengthened to a 12-day high of 132.20 in Asian deals on Monday. The next upside target for the Japanese currency is seen around the 127 level.
The yen jumped to a 4-week high of 132.2 against the euro on August 19. Although the yen lost 3% thereafter, it rebounded after touching a 10-day low of 136.11 on August 24.
Overall, the euro lost 1% against the yen last week despite encouraging economic reports from Europe.
Reports showed last week that Euro-zone industrial new orders recovered in June, German IFO business climate improved in August and the GfK consumer sentiment rose to a 15-month high in September. In addition, the Euro-zone economic sentiment climbed more than expected in August.
In Asian deals on Monday, the yen edged up to a 12-day high of 87.30 against the Swiss franc. On the upside, 86.9 is seen as the next target level for the Japanese currency. At last week's close, the franc-yen pair was quoted at 88.40.
The yen that tumbled to an 11-day low of 89.66 against the franc on August 24 has gained 3% since then.
Against the Canadian dollar, the yen climbed to a 12-day high of 84.51 in Asian deals on Monday. That was up 1.5% from last week's close of 85.83. If the yen advances further, it may likely target the 84.1 level.
Canadian Finance Minister Jim Flaherty, who warned earlier this month that steps could be taken to curb a sharp rise in the Canadian dollar, said yesterday he was pleased with the currency's recent stability.
Flaherty said he had been hearing complaints from businesses that volatility in the Canadian dollar was making it difficult for them at a time when the country was already struggling to revive its economy.
During Asian deals on Monday, the yen rose to a 10-day high of 63.11 against the New Zealand dollar and a 4-day high of 77.61 against the Aussie. The next upside target level for the yen is seen at 62.6 against the kiwi and 77.4 against the aussie. The kiwi-yen and the aussie-yen pairs were worth 64.11 and 78.86, respectively at Friday's close.
The dollars of Australia and New Zealand, which like Canada's tend to rise and fall with commodity prices.
Tumbling Asian stock markets, led by a 5.4 percent fall in China's benchmark, provided a negative cue for crude. Oil investors often look to stock markets as a barometer of sentiment about the economy.
U.S. crude for October delivery fell 33 cents to $72.41 a barrel by 12:02 am ET, erasing the previous session's gain of 25 cents. London Brent crude fell 45 cents to $72.34 a barrel.
The Italian and the Euro-zone preliminary CPI reports for August and the Italian June retail sales are expected in the upcoming European session.
From Canada, the second quarter GDP report is due at 8:30 am ET.
At 9:45 am ET, the Chicago PMI for August has been slated for release.
Investors are also cautious ahead of a busy week in terms of data and central bank meetings. The U.S. payrolls report on Friday is expected to show a drop of around 225,000, which is in line with the recent trend of continued improvement in the labor market.
Central banks that are scheduled to meet this week include the Reserve Bank of Australia and the European Central Bank, while the Group of 20 is due to meet in London on September 4 to 5.
Monday, September 7, 2009
Banks will have to have greater capital under new regulations backed by the Bank for International Settlements (BIS), which consists of the world’s central banks.A more in-depth set of measures will be unveiled by the end of 2009, and are intended to be implemented in such a way as to not damage the global economic recovery.
Amongst the measures are a global minimum standard for funding liquidity and a framework for countercyclical capital buffers, above and beyond the usual minimum requirements.
Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank, has stated the new regulations would see enhanced liquidity and capital, reduced leverage and should deliver a more resilient banking sector.
The financial crisis and ensuing recession has seen banking regulation come under a strong spotlight, and earlier this month Prime Minister Gordon Brown gave an interview to The Financial Times in which he supported the notion of bankers’ bonuses being clawed back should the firm fail to perform well.
The Prime Minister has also indicated he believes that bonuses should be given on the basis of longterm success.
Sunday, September 6, 2009
The yen rose to two – week highs on the news that
According to them, investors are heading for the yen when stocks go down. Indeed, the currency gained against the Euro, the US dollar, the Australian dollar and the South Korean Won as stocks on the MSCI World Index slumped.
Economists had expected the Japanese economy to grow by more than it actually did – GDP grew to an annualized 3.7 per cent while it had been hoped the number would be closer to 3.9 per cent.
The recovery for
They say that despite the second quarter results, consumer spending within
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