Expats rejoice as Indian rupee plummets

Updated 03 June 2013
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Expats rejoice as Indian rupee plummets

The Indian rupee dropped to its lowest level in 10 months and one Saudi riyal was fetching almost Rs. 15 yesterday. "My remittance fetches more rupees now." This is how the average Indian expatriate is reacting to the situation.
However, some Indian expatriates felt the falling trend of the rupee will have an adverse impact on their national economy in the long term.
"Yes, in the short term we are gaining here because our Saudi riyals are fetching more Indian rupees. No doubt about it, but it will have a very negative impact on the Indian economy. So in the long term we'll suffer there in India," A. Kadir Khan, who is living in the Kingdom for over 20 years, said.
The partially convertible rupee closed at 56.17/18 per dollar compared to 55.9550/9650 on Tuesday. The unit fell to as much as 56.37, its lowest since July 25, 2012.
"This has come in as good news to me because I have been wanting to remit a substantial amount to India," said Zabihuddin Akhtar, an accountant. "This will fetch me a good rate."
Akhtar knows full well that a depressed rupee is not good for the Indian economy. "But I am thinking of what is beneficial to me at this moment," he said. "At a time when our salaries have remained stagnant, such fluctuations are like artificial bonuses for us non-resident Indians."
John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, said the dollar has entered bullish territory and from here on it will appreciate against most currencies.
"For Saudis and expatriates it translates into more purchasing power abroad or when they remit and hopefully cheaper imports or at least not a spike in imported goods over a period of time. This should also be reflected in the rest of the GCC as the dollar forms the bulk of cross border transactions," he said.
Jarmo T. Kotilaine, a regional analyst, told Arab News: "The global economy still faces numerous risks and currency dynamics can be subject to significant short-term influences. Even though many emerging Asian currencies are likely to continue to appreciate over the coming years, this trend may be contained or even reversed by current positive momentum of the dollar."
However, he said the greenback is benefiting from growing signs of what looks like a fairly sustainable — albeit perhaps not very impressive — recovery. This is fueling speculation of exit strategies from the current quantitative easing strategies of the Fed. Even if any actual change will likely prove extremely gradual, this prospect is likely to continue to influence expectations in a way that is favorable to the dollar. By contrast, for instance, India has been loosening its monetary policy and is yet to regain its previous growth momentum.
Recent years have shown that exchange rate fluctuations can have a significant impact on remittances, most notable in terms of their timing.
"With time, the continued appreciation of Asian currencies will likely begin to put pressure on expatriate salary expectations by potentially reducing the number of people willing to come and work in the Gulf. Higher living costs in the Gulf will have the same effect. This should over time reduce the gap between expatriate and local salary expectations in a way that should favor more local employment," Kotilaine added.
He said a degree of volatility between the riyal and many Asian currencies is the result of exchange rate policies based on a free or managed float in many Asian economies. "People with an element of discretion in terms of the timing of remittances tend to increase them when the Asian currencies depreciate as this increases the purchasing power of the transfers in their home countries. Under the opposite scenario, there is a greater likelihood of retaining funds longer in the Gulf in the expectation of a more favorable rate in the future."
The rupee has so far in 2013 failed to benefit much from the nearly $ 20 billion worth of inflows into equities and debt, according to Reuters.
The index of the dollar against six major currencies was down 0.6 percent when the rupee closed.
In the offshore non-deliverable forward PNDF, the one-month contract was at 56.53 while the three-month was at 57.11.
In the currency futures market INRFUTURES, 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 56.47 with a total traded volume of $ 5.50 billion, Reuters reported.


Hyundai teams up with VW’s Audi to boost hydrogen cars

Updated 3 min 20 sec ago
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Hyundai teams up with VW’s Audi to boost hydrogen cars

LONDON: Hyundai agreed a deal with Audi on Wednesday to collaborate on hydrogen car technology, hoping to boost an energy segment that has lagged behind battery electric vehicles.
The South Korean firm wants to increase the uptake of hydrogen cars, which are propelled by electricity generated by fuel cells but have been held back by a lack of infrastructure and the push for battery electric vehicles by the likes of Tesla.
The pair will be able to access each other’s intellectual property and share components, including any new parts developed by Audi, which is responsible for hydrogen fuel cell technology in the Volkswagen Group, the world’s biggest car seller.
Hyundai hopes that the move will create greater demand for vehicles such as its ix35 model and bring down costs to make the technology profitable.
“We want to provide to our component suppliers more chance and we want to have competition between component suppliers,” Sae Hoon Kim, the head of Hyundai’s R&D fuel cell group, told Reuters in an interview in London.
“We also want to make them to have competition with other suppliers, and that competition will bring down the cost.”
Carmakers such as Toyota have touted the benefits of hydrogen vehicles, which take less time to refuel than the recharge times of battery electric cars, but are expensive and suffer from a lack of refueling stations.
Many carmakers are focusing on battery electric vehicles, which can take between half an hour and half a day to recharge, but are increasingly able to use a growing network of charging points.
Auto firms are teaming up to share the cost of developing greener technologies to replace combustion engines as regulators around the world crack down on emissions. GM and Honda have a partnership to jointly develop electric vehicles with hydrogen fuel cells that are expected to go on sale in 2020, while BMW is working with Toyota.
Kim said that a toughening of European Union carbon emission limits in 2025 would create a need for more hydrogen cars.
Hyundai sold 200 such models last year and expects to sell thousands this year, but Kim said profitability was still far off.
“100,000 or 300,000 vehicles per year per company, when that comes, I think we can make money,” he said.