Rupee's fall gives a boost to steel exports

[sree45]

(Reuters) - Steel Authority of India Ltd (SAIL.NS), the country's largest domestic steel producer, expects its exports to double this fiscal year as a weak rupee makes its products more competitive.

Steelmakers such as SAIL and Jindal Steel and Power Ltd (JNSP.NS) have been looking to raise foreign sales to offset soft local demand, and SAIL's chairman C.S. Verma said the fall in the rupee over the past few months has helped.

"We are exporting mainly to the Middle East and neighbouring countries like Nepal and Bhutan," Verma told Reuters on Wednesday.

He said SAIL expects its exports to jump to 700,000 tonnes, generating sales worth about 25 billion rupees. Total production would be about 15 million tonnes.

The state-controlled firm is in the process of raising steel capacity to 17 million tonnes by March 2014, and plans to spend 120 billion rupees on the on-going expansion projects during the current fiscal year.

SAIL's net profit for the April-June quarter fell 35 percent as weak prices ate into a 5 percent growth in sales volume to 2.62 million tonnes.

But Verma said there was "no scope" for a further decline in prices and that SAIL, which has its own iron ore mines, would continue to run its plants at full capacity.

Capacity utilisation for Indian steel companies hit an all-time low of 82 percent last fiscal year due to a shortage of iron ore, according to D.S. Rawat, secretary general of lobby group ASSOCHAM.

Rupee's fall gives a boost to steel exports | Reuters

 

[shuttler]

falling @61.27 to the dollar
day lowest @61.26

India's forex reserves fell $3 billion in week ending August 2
Aug 9, 2013

KOLKATA: India's foreign exchange reserves dipped $2.996 billion in the week to August 2 to $277.167 billion. Reserves in rupee terms however rose Rs 337 billion to Rs 16,859 billion.

Foreign currency assets fell $2.155 million to $249.896 billion, Reserve Bank of India said in its weekly report.

Foreign currency assets expressed in dollar terms include the effect of appreciation or depreciation of non-US currencies such as euro, pound and yen held in the reserves.

RBI sells $2.2 billion in June to save the rupee

Aug 12, 2013

http://articles.economictimes.indiatimes.com/2013-08-12/news/41332641_1_foreign-exchange-reserves-rbi-governor-designate-rupee

MUMBAI: The Reserve Bank of India sold $2.2 billion from its reserves in June in an attempt to check the volatility in the currency market, data released on Monday showed. The central bank also sold close to $900 million in the forward market.

The rupee has lost more than 10% of its value vis-a-vis the dollar since May when the US Federal Reserve announced a plan to taper its quantitative easing programme. This encouraged foreign institutional investors to offload their holdings in emerging economies including India, pushing the rupee in to a free fall.

The Reserve Bank has been using multiple tools including raising the rates for emergency marginal standing facility, restricting daily liquidity support and announcing sale of cash management bills to squeeze liquidity from the system and tame the currency.

"We continue to believe that the rupee will not stabilize until RBI begins to recoup foreign exchange reserves, as the differential with the Fed has already widened to 700 basis points," said Indranil Sengupta, India Economist, Bank of America Merrill Lynch.

Though selling dollars is a popular method adopted by central banks to cool the currency, the RBI only has reserves to fund imports for about six months. Given the low cushion, the central bank may be restricted to aggressively sell dollars to rein in the rupee. Besides, the emerging thinking in the central bank too is against intervention.

"... We are suggesting RBI stop intervening heavily in currency markets, something we believe has limited effects on the exchange rate in the medium run, and risks sparking inflation," Raghuram Rajan, RBI governor-designate, had told ET earlier. " Many who advocate continued heavy intervention are living in the past, when such intervention may have worked."