Connect with us

Business

Dollar starts new year with a hangover as others find cheer

Published

on

The dollar started the new year where it left the old one, under pressure as investors wagered US economic outperformance could be coming to an end as optimism on trade brightens the outlook for growth globally.

Signs of progress in the Sino-US trade dispute undermined the dollar for much of December, leaving its index down 1.9% on the month. It was flat on Thursday at 96.440 having touched a six-month trough ahead of the holidays.

The euro edged up to $1.1220, after gaining 1.8% in December to reach its highest since early August. It now looks set to challenge that August peak at $1.1249.

The dollar looked like slipping further on the Chinese yuan after shedding 1% last month to stand at 6.9640. It was also finely poised on the yen at 108.67, just a whisker from the December lows and major support around 108.40.

“A more encouraging global growth outlook and flush dollar liquidity conditions are undermining the USD,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia.

“Specifically, global fiscal/monetary policy settings will remain accommodative in 2020 and China’s growth slowdown is stabilising.”

China’s central bank on Wednesday cut the amount of cash that banks must hold as reserves, releasing around 800 billion yuan ($114.91 billion) to shore up the economy.

The dollar had benefited from US economic outperformance for much of 2019, but an easing in Sino-US trade concerns has boosted optimism that this year could favour other major nations.

While activity was light on Thursday, traders were on watch for any repeat of last January’s “flash crash” when massive stop-loss selling swept through an illiquid holiday-hit market.

There are fears the same could happen this week with Tokyo off and Japanese retail investors again heavily short of yen and long of risky high-yielding currencies, including the Turkish lira and the South African rand.

For liquidity reasons, these positions are usually “legged” through the US dollar – selling yen for dollars and dollars for lira – so any mass unwinding roils more than just the yen crosses.

Yet, unlike last year, the authorities are on alert with the Financial Futures Association of Japan warning against wild moves.

The Federal Reserve has already averted a squeeze in lending markets as banks took only a small portion of its d $150 billion in year-end funding, leaving repo rates at the lowest since March 2018.

source

Business

Economic growth set to bounce back as slump bottoms out: Govt

Published

on

Indian economic growth is poised to bounce back after slipping to a more than six-year low of 4.5% in the July-September quarter as the government has taken measures to prop up investments and consumer demand, a top government adviser said. “Corporate tax reductions, the Insolvency and Bankruptcy Code and the banking sector reforms have helped and will help propel growth further,” Sanjeev Sanyal, principal economic adviser at the finance ministry, told Reuters.

The Insolvency and Bankruptcy Code, introduced in May 2016, has helped banks to recover billions of dollars stuck in outstanding corporate loans and offer loans to new borrowers.

Sanyal said economic growth was set to accelerate to 6% in the financial year beginning in April, compared with estimated growth of 5.0% in the current one.

But many private economists are less optimistic, saying the current downturn may continue for the next few quarters due to a dip in private investments and tepid consumer demand.

Nomura said Asia’s third-largest economy will see a sub-par recovery, and forecast 4.7% GDP growth for the current fiscal year and 5.7% for the next fiscal year.

Sanyal dismissed the conservative estimates and said his numbers took into account early signs of recovery in manufacturing and a pick-up in consumer demand.

He said the government expected that average consumer price inflation would fall to 4% in the next financial year beginning April, after a recent spike driven largely by food prices.

There is enough space for the central bank to further cut interest rates, however, as inflation was likely to ease following a fall in vegetable prices, he said.

“While there was a slowdown, this slowdown has by and large now bottomed out, and if anything from here on, growth is going to go up,” Sanyal said.

Finance Minister Nirmala Sitharaman, who tabled her annual budget earlier this month, told parliament on Tuesday that the signs of “green shoots were visible” and the economy was no longer in trouble.

The Reserve Bank of India last week kept it policy rates steady but downwardly revised the country’s growth forecast for the first half of the next fiscal year to 5.5-6.0% from an earlier projection of 5.9%-6.3%.

Sanyal said the budget has offered a clutch of tax incentives for sovereign wealth and insurance funds, which would leave more banking funds for private companies despite higher state borrowings.

Other than the coronavirus outbreak in China, there is no “major other disruption,” to India, he said adding it was difficult to quantify the impact as the situation was still evolving.

source

Continue Reading

Business

Taking steps to fix GST loopholes, says Nirmala Sitharaman

Published

on

Finance minister Nirmala Sitharaman said on Saturday that the government was taking several steps such as using data analytics to plug loopholes in the Goods and Services Tax (GST) collection and prevent particular areas of misuse and gaming of the system.

During the last three months, the GST collection crossed Rs one lakh crore every month, she said addressing a press conference in Chennai on Budget 2020-21.

At the GST Council meetings, there was a feedback from state finance ministers about various loopholes due to which tax revenue was not accruing to the government, she said. To plug such loopholes and to halt particular areas of misuse and gaming of the system, a lot of steps were being taken, she said.

“Economy is at its robust level and macroeconomics is at its best. The fundamentals are strong. The foreign exchange reserves and FDI investments are at their maximum level,” she said.

She said that there is also a plan by Centre to increase the interaction of banking officials.

She exuded confidence that “India will get back to 8% growth” and said the government is making efforts to “pursue the goals”.

Revenue secretary Ajay Bhushan Pandey said a targeted approach was being followed by tapping on data analytics and Artificial Intelligence and it has helped improve GST collections. In November the collection was close to ~1,04,000 crore and in December it was about Rs 1,03,000 crore, while in January it was around Rs 1,11,000 crore, he said.

The economy has improved and the improved collection was in view of several measures taken, he said. Citing use of data analytics, he said data from income tax, GST, customs, export and import was being mined.

A red flag report on areas of mismatch was prepared, he said, adding a large number of people were tax complaint and honest tax payers. It was only a fraction that might be a few thousand of GST taxpayers who required scrutiny, he said.

In cases of mismatch being up to a level, the tax payers are notified through a text message (SMS) and if it was large, officials are also notified to find out if the discrepancy was due to a genuine reason or otherwise.

Such targeted measures have helped the government improve the tax collections without any “overreach,” he said.

The government will continue to follow identification of problem areas. “We will continue this further and improve collection through data analytics and artificial intelligence so that people who are trying to gain the system are identified in their pursuit and honest taxpayers can be completely free of hassles,” he said.

source

Continue Reading

Business

Facebook adds Dropbox CEO to the board of directors

Published

on

Mark Zuckerberg has made his long-time friend Drew Houston, co-founder and CEO of file hosting service Dropbox, one of the members of Facebook board of directors.

Zuckerberg and Houston have been friends for several years, appearing in photos together at birthday parties and other events.

“Houston brings valuable perspective to our board as a leader of a technology company with services used by millions of people and businesses,” Zuckerberg said in a statement late Monday.

“It’s been inspiring to watch Facebook grow into a platform that reaches billions of people around the world. I’m looking forward to working with Mark and the rest of the Board on the many opportunities and challenges ahead,” added Houston.

Houston co-founded Dropbox in 2007 with Arash Ferdowsi.

He has led the company’s growth from a simple idea to a service used by over 600 million people around the world.

Today, the company is one of the world’s leading business collaboration platforms with 14 million paying subscribers and 2,300 employees across 12 global offices.

Facebook has undergone various board changes in the recent past.

In April last year, Netflix CEO Reed Hastings left Facebook’s board after serving on it for eight years.

The social networking giant then added Paypal’s senior vice president of core markets Peggy Alford, who became the first African-American woman to serve on its board.

Facebook’s current board members are: Mark Zuckerberg; Peggy Alford, Senior Vice President, Core Markets of PayPal Holdings, Inc; Marc L. Andreessen, Andreessen Horowitz; Kenneth I. Chenault, Chairman and Managing Director, General Catalyst; Drew Houston, Co-Founder and CEO, Dropbox; Sheryl K. Sandberg, Chief Operating Officer, Facebook; Peter A. Thiel, Founders Fund; and Jeffrey D. Zients, CEO, the Cranemere Group.

source

Continue Reading

Newsletters

Enter your email address to get latest updates

Advertisement

Trending

Copyright © 2018 - 2019 Delhi Wire.