Posts Tagged ‘ fears ’

Hyderabad Aug. 5: 

The Reserve Bank of India (RBI) has no plans to intervene to prevent the movement of the rupee at the moment.

“the rupee is essentially a Market-determined currency. so there is no policy position in terms of intervening to prevent the movement of the rupee,” the RBI Deputy Governor, Dr Subir Gokarn, told media persons on the sidelines of a lecture here on Friday.

His comment assumes significance against the backdrop of the weakening of the rupee following global fears of another recession. Intervention by the central bank could raise concerns over liquidity as the bank’s dollar purchases could suck out rupee liquidity.

Liquidity watch

Dr Gokarn said the immediate concern was one of liquidity. “we do not want the market to be disrupted by constraints of liquidity. we are watching the (liquidity) situation,” he said.

He said the two factors that would “shaping our stance” in the months ahead are domestic demand pressure and commodity prices. “we saw commodity prices soften a bit in May-June. but the trend did not persist and by the Time we started our July process, they had stabilised. now if this is the beginning of a softening trend, it clearly will have some impact on our thinking in terms of our stance,” he said.

Earlier, delivering a lecture on ‘Monetary Policy, Business Environment and Corporate Growth’ at the ICFAI Foundation for Higher Education, Dr Gokarn said recent inflationary pressures were being exacerbated by ‘structural trends in food prices”.

He pointed out that high inflation, even with high growth, was not conducive to investment or corporate performance. “On growth, our objective is to ensure that it is at maximum level that does not promote inflation. This may result in slower growth than is possible at any given time, but will help achieve sustained higher growth,” he said.

<a href="http://www.thehindubusinessline.com/industry-and-economy/banking/article2328471.ece?homepage=truetag:news.google.com,2005:cluster=http://www.thehindubusinessline.com/industry-and-economy/banking/article2328471.ece?homepage=trueFri, 05 Aug 2011 18:03:37 GMT 00:00″>RBI not to intervene in forex market: Gokarn

Michael Wright, on Monday January 3, 2011, 2:10 pm EST

Euro-Zone consumer prices estimate for the month of December is expected to rise an annualized 2.0 percent after climbing 1.9 percent in November. the reading is of particular importance due to the fact that inflation pressures lead the European Central Bank closer to raising the benchmark interest rate.

Jan 04

Euro-Zone CPI Estimate

Expectations: 2.0%

Prior: 1.9%

Fundamental Outlook

Euro-Zone consumer prices estimate for the month of December is expected to rise an annualized 2.0 percent after climbing 1.9 percent in November. the reading is of particular importance due to the fact that inflation pressures leads the European Central Bank closer to raising the benchmark interest rate. Though the central bank is unlikely to raise its key overnight lending rate amid debt contagion fears which continues to rattle the European markets, a CPI reading exceeding expectations may add upward momentum to the euro following China’s announcements that it will continue to buy Spanish public debt and up to 6 billion euros of Portugal’s debt in the first quarter (the latter has yet to be confirmed, but is worth noting). this move by the world’s second largest coutnry comes to light as concerns boil that these two economies may be next in line to tap into the EU-IMF life line. despite the medium term bearish outlook, traders should not rule out a better than expected CPI estimate report which may serve as the catalyst needed for the euro in the short term.

Technical Outlook

EURUSD Daily Chart

Charts Created using FXCM’s Strategy Trader – Prepared by Michael Wright

EURUSD: Price action halted its three day advance, but the decline may be short live as the pair eyes the 50-day moving average. Indeed, the pair has broken above its descending channel dating back to November 9th, which signals gains. As the “crowd” continues to bet against euro gains, providing the contrarian signal to buy the single currency, traders should not rule out a test of the 50-day SMA. at the same time, the MACD continues to point to gains, while the slow stochastic indicator has yet to reverse course.

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Written by Michael Wright, Currency Analyst

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Michael Wright authors FX Headlines, Fundamentals vs. Technical’s, Intraday Trading, Weekly Spotlight, and Forex trading Weekly Forecast

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Will a Better Than Expected Euro-Zone CPI Estimate Keep the Bullish EURUSD Trend Intact?