Govt stake sale may support Indian rupee

Updated 05 February 2013

Govt stake sale may support Indian rupee

MUMBAI: The Indian rupee fell yesterday, retreating from a three-and-a-half-month high touched earlier in the session, hit by a fall in domestic shares although inflows from an upcoming government stake sale could support the local currency this week.
The government is looking to raise about $ 2 billion through a stake sale, likely on Thursday, in state-run power producer NTPC Ltd., with dealers expecting foreign fund inflows between $ 300 million and $ 500 million for the transaction.
Upcoming government share sales in February and March will include state trading company MMTC Ltd. and steel maker Steel Authority of India Ltd. The government has already raised $ 585 million by selling shares in Oil India Ltd.
The disinvestment program will be critical if the government is to meet its fiscal deficit target of 5.3 percent of gross domestic product for the year ending in March and reduce concerns about India's current account deficit.
"The rupee move to below 53 today is indicating that the panic related to the current account deficit is subsiding. This typically puts the buyers at ease and adds pressure on sellers," said Satyajit Kanjilal, chief executive at Forexserve.
The partially convertible rupee closed at 53.285/295 per dollar versus its previous close of 53.19/20.
The rupee rose as high as 52.91 earlier in the session, its highest level since Oct. 18, for which dealers cited about $ 250 million of inflows from a state-run power finance firm as aiding it.
However, falling domestic shares sent the rupee lower, with the benchmark BSE index ending down 0.15 percent. The euro also retreated from its 14-month high against the dollar, hit on Friday, as speculators took profits, with investors also cautious before a European Central Bank meeting on Thursday.
In the offshore non-deliverable forwards, the one-month contract was at 53.55 while the three-month was at 54.11. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 53.47 with a total traded volume of $ 5.21 billion.

Saudi Arabia, Russia and China give EU trade reforms thumbs down at WTO

Updated 38 min 23 sec ago

Saudi Arabia, Russia and China give EU trade reforms thumbs down at WTO

  • China is suing US and EU at WTO
  • Kingdom warns new rules are concerning

The EU’s new rules against countries dumping cheap goods on its market got a rough ride at a World Trade Organization meeting, where China, Russia and Saudi Arabia led a chorus of disapproval, a trade official said on Thursday.

The EU, which is in a major dispute with China about the fairness of Chinese pricing, introduced rules last December that allow it to take into account “significant distortions” in prices caused by government intervention.

A Chinese trade official told the WTO’s anti-dumping committee that Beijing had deep concerns about the new methodology, saying it would damage the WTO’s anti-dumping system and increase uncertainty for exporters, an official who attended the meeting said.

China argued that the concept of “significant distortion” did not exist under WTO rules, and the EU should base its dumping investigations on domestic prices in countries of origin, such as China.

The EU reformed its rules in the hope they would allow it to keep shielding its markets from cheap Chinese imports while fending off a Chinese legal challenge at the WTO.
China said that when it joined the WTO in 2001, the other member countries agreed that after 15 years they would treat it as a market economy, taking its prices at face value.

But the US and the EU have refused, saying China still subsidises some industries, such as steel and aluminum, which have massive overcapacity and spew vast supplies onto the world market, making it impossible for others to compete.

China is suing both the US and the EU at the WTO to try to force them to change their rules.

Legal experts say the dispute is one of the most important in the 23-year history of the WTO, because it pits the major trading blocs against each other with fundamentally opposing views of how the global trade rules should work.

In the WTO committee meeting, Saudi Arabia said the new rules were very concerning, and it challenged the EU to explain how EU authorities could ensure a fair and objective assessment of “significant distortion.”

Russia said the EU rules violated the WTO rulebook and certain aspects were unclear and created great uncertainty for exporters. Bahrain, Argentina, Kazakhstan and Oman also expressed concerns.

But a US trade official said the discussion showed that appropriate tools were available within the WTO to address distortions affecting international trade.