Sunday, August 4, 2013

More downtrend in waiting

Crude oil prices are sliding with a weaker-than-expected jobs report in the United States casting a cloud over demand. The unemployment rate fell to 7.4% in July from 7.6% in June.

Indian rupee ended at an all-time closing low of 61.10 to a dollar. Unchanged interest rates by the central bank, widening current account deficit and poor policy response from the Government were putting pressure on the rupee. According to Reserve Bank of India (RBI), India's foreign exchange reserves shot up by $960.2 million to $280.17 billion on the back of a healthy rise in currency assets in the week ended 26th July.

RBI Governor Duvvuri Subbarao said we will roll back liquidity tightening measures only after we determine that stability has been restored to the foreign exchange market. In the Reserve Bank's view, undue volatility of the exchange rate is harmful for growth and stability, and such volatility should be curbed.

The government’s move to ease foreign investment norms and increase limit for FDI is likely to boost the confidence of foreign investors, which in turn will provide much needed momentum to the country’s economy.

Rubber prices closed mixed in thin trading as market participants were winding down their holdings ahead of the long holidays. Market remained quiet in tandem with the Tokyo Commodity Exchange, due to a strong yen against the US dollar and declining Japanese equities. Asian rubber prices were expected to drop further due to slow demand and rising supply from Thailand.

The shortage of natural rubber and decrease in production has pushed up the domestic prices. On Monday in the international market the trend will be negative.

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