India antitrust body orders probe into Asian Paints after Birla complaint
The Competition Commission of India's initial review showed Asian Paints had breached competition laws, the order showed.
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Reuters
23 minutes ago
- Reuters
India's new light touch on FX volatility spurs hedging ramp-up
MUMBAI, July 2 (Reuters) - The Reserve Bank of India's increased tolerance for rupee volatility is prompting companies to more actively manage forex risks, enhancing the economy's resilience to global shocks. Since RBI Governor Sanjay Malhotra assumed office in December, the rupee's daily trading ranges have nearly tripled and a key volatility indicator has doubled, reflecting the central bank's reduced intervention in forex markets. The central bank is comfortable allowing the rupee to move in line with Asian peers, stepping in only to curb excessive volatility, said four sources familiar with the central bank's thinking and treasury heads at large banks. The RBI did not immediately respond to an email seeking comment. The central bank's less interventionist stance has effected a notable pick-up in currency hedging by corporates. In turn, this contributes to a more stable financial system, according to former RBI chief Duvvuri Subbarao. In the past six months, the rupee has fluctuated between 83.77 and 87.95 per dollar, prompting companies to ramp up hedging and move away from complex derivatives that carry higher risk in volatile markets. "Overall, appreciation for forex risk and hence hedging is much higher among clients than it was last year," B. Prasanna, treasury head at India's third-largest lender ICICI Bank, said. One-month implied volatility, which hovered below 2% for much of 2024, has more than doubled, reflecting the shift in market dynamics. Data from clearing house CCIL shows companies have responded to a rise in volatility. Between December and May, the total currency hedges taken by exporters and importers via forwards were higher than any six-month rolling period since 2020. "If companies hedge adequately, they are protecting themselves against currency fluctuations and minimising the chances of systemic pressure," said Subbarao, who served as RBI governor from September 2008 to September 2013. This financial stability will have implications for economic growth, he said. Subbarao pointed out that excessive interventions by the central bank could reduce the incentive to hedge, creating a moral hazard as companies outsource risk management to the central bank. He noted that inadequate corporate hedging had exacerbated pressures during the 2008 global financial crisis and the 2013 Federal Reserve "taper tantrum". Small and mid-sized businesses have especially stepped up hedging activity, treasury officials and forex consultants said. These firms try to save costs by avoiding hedging in times when the currency is stable. "RBI's change in approach has prompted an increase in our hedge ratios over the last few months," said Abhijeet Bhushan, treasurer at diamond company Hari Krishna Exports. The Mumbai-based company has annual forex exposure of about $600 million. "With the rupee moving in wider bands and the central bank adopting a less interventionist stance, we can't afford to stay under hedged to the extent we used to." Bhushan said the company is using the rupee's increased two-way swings to hedge opportunistically, at times covering up to 90% of its confirmed exposure. In the past three years, hedging levels would typically not exceed 60–70%. Company executives at half a dozen small businesses Reuters spoke to said that planning for forex risk had become imperative as even small changes in exchange rates could materially affect earnings. A senior executive at a mid-sized auto parts firm said the company had become more active in hedging during periods of rupee depreciation. That was in contrast to last year's approach, when consistent RBI intervention allowed for a more relaxed strategy, the executive, who declined to be identified as they are not authorised to speak to media, said. The executive added that other firms in the industry too had adopted a more hands-on stance toward managing currency risk. Heightened volatility has also lessened demand for exotic derivatives. Abhishek Goenka, CEO at forex advisory IFA Global which advises around 900 clients, said companies had reduced exotic options and were doing less of structures such as forward extras, enhanced collars and target redemption forwards. On hedging, he said that "overall hedge ratios have gone up among importers, whereas exporters have changed the composition of their hedge portfolio."
Reuters
27 minutes ago
- Reuters
Oil prices little changed as investors look ahead to OPEC+ meeting
SINGAPORE, July 2 (Reuters) - Oil futures were little changed on Wednesday as investors are wary ahead of a meeting of major producers this week to determine output levels for August. Brent crude was up 1 cent at $67.12 a barrel at 0124 GMT, while U.S. West Texas Intermediate crude fell 5 cents to $65.40 a barrel. Demand expectations received a boost on Tuesday after a private-sector survey showed factory activity expanded in June in China, the world's biggest oil importer, analysts said. Since Iran and Israel have halted attacks on each other following their 12-day conflict, Brent has traded between a high of $69.04 a barrel and low of $66.34 since June 25, as concerns of supply disruptions in the Middle East producing region have ebbed. "Oil prices seem to be in a tight range as we've seen a reduction in geopolitical risk and nerves about what OPEC may do in regards to raising production," said Phil Flynn, senior analyst with the Price Futures Group. Price have been kept in check by expectations that the Organization of the Petroleum Exporting Countries and its allies including Russia, know as OPEC+, will boost its August crude oil output by an amount similar to the outsized hikes agreed in May, June, and July. Four OPEC+ sources told Reuters last week the group plans to raise output by 411,000 barrels per day next month when it meets on July 6. The market is already seeing the results of the previous OPEC+ increases with Saudi Arabia, the world's biggest oil exporter, lifting shipments in June by 450,000 bpd from May, according to data from Kpler, its highest in more than a year. In the U.S., crude oil inventories rose by 680,000 barrels in the past week, according to sources citing figures from the American Petroleum Institute. Official data from the Energy Information Administration is due Wednesday at 10:30 a.m. ET. U.S. non-farm payrolls data due on Thursday will shape expectations around the depth and timing of interest rate cuts by the federal reserve in the second half of this year, said Tony Sycamore, analyst at IG. Lower interest rates could spur economic activity which would in turn boost oil demand. Investors are also watching trade negotiations ahead of U.S. President Donald Trump's tariff deadline of July 9. Trump on Tuesday said he is not thinking of extending the deadline.
Reuters
37 minutes ago
- Reuters
Dollar wallows near 3-1/2-year low as Fed cuts, Trump bill in focus
TOKYO, July 2 (Reuters) - The U.S. dollar hunkered near the lowest since February 2022 against major peers on Wednesday, as traders considered dovish hints from Federal Reserve Chair Jerome Powell, along with the potential impact of President Donald Trump's spending bill. The greenback was pinned near its weakest since September 2021 on the euro, and was at its lowest since January 2015 versus the Swiss franc. Powell reiterated on Tuesday at the European Central Bank's annual conference in Sintra, Portugal that the Fed is taking a patient approach to further interest rate cuts, but didn't rule out a reduction at this month's meeting, saying everything depends on incoming data. That raises the stakes for the monthly non-farm payrolls report on Thursday. Indications of labour market resilience in the U.S. JOLTS figures overnight saw the dollar rise off Tuesday's lows. The dollar index , which measures the currency against six major counterparts, edged up slightly to 96.677, but didn't stray far from the overnight low of 96.373. Markets are also keeping a close watch on Trump's massive tax-and-spending bill, which could add $3.3 trillion to the national debt. The bill, which was passed by the U.S. Senate, will return to the House for final approval. "The confirmation that this is an increase in issuance, an increase in government spending well beyond its means, is not necessarily good news for the Treasury market, and it's arguably one of the reasons the dollar's going down," said Rodrigo Catril, a strategist at National Australia Bank. Also weighing on the U.S. currency has been Trump's continued attacks on Powell, putting Fed independence in the spotlight. On Monday, the President sent the Fed Chair a list of global central bank key rates adorned with handwritten commentary saying the U.S. rate should be between Japan's 0.5% and Denmark's 1.75%, and telling him he was "as usual, 'too late.'" The greenback held steady at 0.7906 Swiss franc , after dipping as low as 0.7873 franc in the previous session. The euro was flat at $1.1802, sticking close to the overnight peak of $1.1829. Sterling edged up slightly to $1.37435, approaching Tuesday's high of $1.3787, a level last seen in October 2021. The dollar made up a little ground against the yen , adding 0.1% to 143.59 yen, following the prior session's 0.4% slide.
