Tag Archives: Run batted in

RBI can sell upto $30bn to support rupee; may opt for NRI bond

http://www.hindustantimes.com/business-news/WorldEconomy/RBI-can-sell-upto-30bn-to-support-rupee-may-opt-for-NRI-bond/Article1-1081534.aspx

In order to arrest rupee depreciation, the Reserve Bank of India has a capacity to sell up to $30 billion from the forex reserves and may go for an NRI bond issue to mop-up up to $20 billion, foreign brokerage Bank of America Merill Lynch said on Monday.

“We expect the RBI to eventually mobilise $20 billion via NRI bonds, a la 1998 Resurgent India Bonds and 2001 India Millennium Deposits, as the sell-off of emerging market debt should constrain the ability of FII debt limit hikes to raise forex reserves,” it said, adding that the central bank can sell upto $30 billion to support the rupee.

The BofAML report said that five year money can be raised by issuing the 7 to 9% coupon bonds to stabilise markets, just as it was done in 1998 and 2001.

The country’s banks had raised $4.8 billion and $5.5 billion from the bonds targeted at the diaspora during the economic crisis years in 1998 and 2001, respectively.

BofAML said it expects RBI to defend the Rs. 60 to a dollar level. The rupee opened 40 paise down against the dollar on Monday and was trading at Rs. 59.74 to the dollar at 2:37pm.

Every round of volatility in the rupee (the current one has been on for over three weeks now) causes a dent of up to $15 billion to the forex reserves, and considering where the reserves stand right now, RBI can sell up to $30 billion, the report said.

The selling will get the country’s import cover down to six months from the current seven months, the BofAML said.

Its strategists expect the rupee to peak at Rs. 59 to a dollar, according to the report.

RBI will start buying rupee once markets stabilise and the inflows from Unilver buy back, which would be in the region between $3 billion and $5 billion, happen,  it said.

Raising the rates is not the answer to arrest the fall in rupee, it said, noting that the differential between the $Federal Reserve’s lending rate and the RBI’s is already at a peak of 7%.

Sahara freeze order gets Sebi Rs 52 crore in cash, investments: report

http://profit.ndtv.com/news/corporates/article-sahara-freeze-order-gets-sebi-rs-52-crore-in-cash-investments-report-323634?pfrom=home-otherstories

New Delhi: Market regulator Securities and Exchange Board of India (Sebi) has been able to get hold of cash and investments totalling about Rs. 52 crore and details of more than 450 acres of land so far through its attachment orders against Sahara group entities.

In the high-profile case involving refund of over Rs. 24,000 crore to the bondholders of two Sahara companies, Sebi had passed orders for attachment of various properties and freezing of accounts in February after the entities failed to deposit the entire money.

Cash totalling over Rs. 23 crore, received from various banks pursuant to these orders, has been invested in a term deposit for now, while investments worth about Rs. 28 crore in mutual funds and demat accounts have also been frozen, sources said.

After passing its attachment orders, Sebi informed all the banks, depositories, mutual funds and NBFCs, among others, about the matter and also requested RBI to direct the chiefs of the banks to transfer the money of Sahara firms to a designated Sebi account.

Sebi had also approached the Collectors of as many as 600 districts to request them not to permit the concerned Sahara entities and persons from any sale or transfer of properties attached by the regulator.

As a result, the District Collectors and Revenue Officers from various parts of the country have provided Sebi details of more than 450 acres of land belonging to Saharas, sources added.

The regulator has already asked the Supreme Court to allow it to appoint an Officer of Special Duty and other officers to deal with the objections and claims relating to the property to be sold and for conducting the sale of the property to garner funds for refunding the investors’ money.

Saharas have so far deposited Rs. 5,120 crore with Sebi towards the refund and claims that this amount is more than sufficient to meet the outstanding liabilities towards its bondholders as the group has already paid close to Rs. 20,000 crore directly to the investors.

The money was raised by Sahara Housing Investment Corporation Ltd and Sahara India Real Estate Corp Ltd from about 3 crore investors through issuance of certain bonds.

However, these claims have been disputed by Sebi before the Supreme Court, which is expected to resume hearing the case next month. In the meantime, Sebi has begun the process for refund of the money to the genuine investors after verifying their credentials.

A pilot study conducted by Sebi for ascertaining the genuineness of investor documents submitted by Sahara, however, found that close to 99 per cent of the bondholders were untraceable, said the sources.

Under this programme, Sebi sent out redemption notices inviting claims to more than 21,000 bondholders but it received less than 300 claims, which are currently under examination.

While more than 7000 notices returned undelivered, there was no response in respect of over 13,000 notices. Sebi will refer these case to Sahara for further verification, the sources said.

Last month, Sebi began inviting claims from Sahara bondholders in a prescribed format and has said it would directly transfer the refund money to the bank accounts of the genuine investors and they can not get the money without having a bank account.

The Supreme Court last month told Sebi to begin refunding the money to genuine investors from Rs. 5,120 crore deposited with it so far, while the matter would be heard further by the apex court on July 17.

As per the court orders, Saharas would also have to bear the costs incurred by Sebi in the entire refund process. Sebi is already believed to have incurred huge costs, including initial expenses of about Rs. 56 crore for putting in place storage, scanning and repayment systems, for the humongous task of facilitating these refunds and Saharas have to clear these bills.

The regulator had contracted Stock Holding Corporation of India (SHCIL) for work relating to storage, digitisation and scanning of investor documents and for creation of a database. This contract alone was worth Rs. 25.97 crore.

Besides, another contract of Rs. 29.88 crore was given to UTI Infrastructure Technology and Services for the work relating to redemption related activities in this case.

The Supreme Court has also appointed a retired judge to oversee the matter at a monthly remuneration of Rs. 5 lakh in addition to travelling, accommodation and other expenses, all of which are borne by Sebi and recoverable from Sahara.

After Sahara firms were told by the Supreme Court to hand over the investor documents to Sebi, the group sent 127 trucks with more than 31,000 cartons of papers to the regulator’s headquarters in Mumbai.

However, these contained only 75 per cent of the entire documents required to be submitted. Finding it impossible to store them at any of its offices, Sebi decided to keep them at a warehouse of SHCIL Projects  Ltd, a subsidiary of SHCIL.

Rupee ends off day’s low at 59.68 against dollar

http://profit.ndtv.com/news/forex/article-rupee-ends-off-days-low-at-59-68-against-dollar-323677?pfrom=home-latest

The rupee fell to near record lows on Monday as foreign investors continue to sell debt and stocks as part of an exit from emerging markets, with only fears of central bank intervention arresting a further drop.

The partially convertible rupee closed at 59.68/69 per dollar, against its previous close of 59.27/28. It fell to a low of 59.8250 in session.

The rupee is likely to continue hovering around a record low of 59.9850 hit on Thursday as long as global markets remain weak over worries about the rollback of U.S. monetary stimulus and concerns about China’s financial sector.

Dealers were split about whether the Reserve Bank of India (RBI) had intervened in the spot and onshore forward markets, suggesting any action would not have been strong. The central bank is seen likely to defend the 60 level for the rupee, which also provides formidable technical and psychological resistance.

Reserve Bank of India Deputy Governor Anand Sinha said on Monday the central bank and the government are doing whatever is needed to get a “hold over” the deteriorating macro economic conditions.

Investors are now awaiting the release of the current account deficit data on Friday, which will underline whether the funding pressures for the economy will further rise.

“One key factor is whether foreign equity investors pull out. But the government and RBI look determined to take steps to stem the rupee’s fall,” said Samir Lodha, senior partner at QuantArt.

“The RBI seems to have been active in the forex market over the past few sessions. They seem to be protecting the 60 level for now.”

The Sensex shed 1.2 per cent on continued worries about outflows after foreign institutional investors sold cash shares for nine straight sessions, totalling Rs. 7760 crore, as per exchange and regulatory data.

Foreign funds have sold a net $5.33 billion in rupee debt since May 22, the day Fed Chairman Ben Bernanke first hinted at stimulus withdrawal.

In the offshore non-deliverable forwards, the one-month contract was at 60.14, while the three-month was at 60.84.

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 around 59.79 with a total traded volume of $6.4 billion.