Rupee snaps 3-day fall as exporters cash dollars

MUMBAI: The Indian rupee snapped a three-day losing streak and ended up on Wednesday as exporters sold the dollar aggressively following its
weakness against a basket of currencies, including the Japanese yen.

The partially convertible rupee ended up at 48.07/08 per dollar, recovering more than 2 percent from a two-week low of 49.20 per dollar hit in early deals. It closed at 48.78/81 per dollar on Tuesday and traded in a wide 47.75-49.20 per dollar band for the day.

Talk of central bank intervention above 49 per dollar also propped up the rupee, but two dealers said the selling by some state-run banks was probably on behalf of exporters. "It's a typical December market," said a senior dealer at a foreign bank.

Financial markets are shut on Thursday for Christmas and many foreign banks have wound down their trading positions ahead of the year-end, with only a handful of private and state-run banks active in the market. "Volumes are low, volatility is high and there is only very few players in the market," he said.

One-month volatilities, a gauge for daily fluctuations in the rupee were around 15 percent, a level it has stayed near for most of the month.

The rupee has gained 4.2 percent this month, helped partly by foreign portfolio inflows of $462 million in December, but is down 18 percent in 2008 on equity withdrawals of more than $13 billion. Dealers said dollar demand from oil refiners seen in early trade dried up later, also helping the rupee.

The dollar slipped against the yen and a basket of currencies in thin trade on Wednesday as investors braced for U.S. data that may add to the grim outlook for the nation's economy. One-month offshore non-deliverable forward contacts were at 48.25/48.40, a shade weaker than the onshore rate.

US falls deeper into recession as job market darkens

WASHINGTON: US consumers cut their spending for a fifth straight month in November as a year-old recession tightened its grip, but with prices
dropping, they got more for each dollar, a report showed on Wednesday.

A separate report showed initial claims for jobless aid last week hit the highest level in 26 years. The Commerce Department said spending shrank by 0.6 percent last month after falling by 1 per cent in October. However, a sharp drop in prices pushed inflation-adjusted spending up by 0.6 per cent, the first increase since May.

The report also showed incomes fell 0.2 per cent after a slight gain in October, a sign of the strain consumers were under as the holiday shopping season started.

Separately, the Labour Department said the number of US workers filing new claims for unemployment benefits jumped by 30,000 to 586,000 last week, the highest since November 1982, suggesting a steepening drain of jobs is likely into 2009. "All in all, the scenario remains pretty weak," said Daniel Katzive, director of global foreign exchange for Credit Suisse in New York.

The latest data wouldn't change most forecasters view that the US economy is still weakening, he said. The incoming administration of President-elect Barack Obama is preparing a huge economic stimulus package to complement the Federal Reserve's efforts at boosting economic activity through reduced interest rates. A third report from Commerce showed orders for long-lasting durable goods slipped 1 per cent in November, a less severe drop than anticipated but it comes after the biggest drop in October orders since mid-2000.

Orders plummeted 8.4 in October. There were some positive notes in the durables report, as orders rose in November for computers, machinery and fabricated metal products. Transportation equipment orders, down 7.4 per cent after a 12.7 per cent October decline, was the main drag on orders. Excluding transportation, durable goods orders were up 1.2 per cent after falling 6.8 per cent in October but analysts doubted it marked any turning-point in economic prospects.

Most analysts think mid-2009 is the earliest point at which some relief from the current severe downturn may start to be seen. "The pickup in orders in November does not meaningfully alter the underlying weak trend, but it was a relief to see at least a pause in the downward movement," said Michael Moran, chief economist for Daiwa Securities America in New York.

The spending report showed personal savings edged up in November to 2.8 per cent of disposable income from 2.4 per cent in October, still a low level but a possible sign the year-old recession is causing consumers to begin putting more into bank accounts rather than spending it. Prices fell 1.1 per cent as gasoline costs continued to slide. But so-called core prices, which strip out volatile food and energy costs, held steady for a second straight month.

World Bank bars Satyam for 8 years

The World Bank has barred Satyam Computer Services from doing any business with it for the next eight years even as the share prices of India's fourth-largest IT firm tanked 13.5 per cent on rumours that B Ramalinga Raju, founder and chairman, has resigned.

Speculation was also high on news that Wipro Technologies, India's third-largest IT firm, might acquire Satyam, something both companies denied.

Foxnews.com on Tuesday reported that the World Bank ban started in September this year "due to alleged malpractice's including bribery". The news report said the World Bank debarment -- the harshest sanction ever made by the bank since 2004 -- was meted out for 'improper benefit to bank staff' and 'lack of documentation on invoices'.

"The information is true," Sudip Mozumder, a spokesman for the World Bank in New Delhi, told Reuters. Moreover, Robert Van Pulley, the information security official, admitted to the ban during a recent meeting with officials of the Government Accountability Project, a 30-year-old whistle-blowing organisation based in Washington.

When contacted, a Satyam spokesperson said that "the company does not comment on individual clients".

According to reports throughout 2003 to 2008, the World Bank has paid Satyam hundreds of millions of dollars to maintain and manage its software systems across global networks as well as look at back-office operations.

In 2005, the bank's chief information officer, Mohamed Muhsin, was asked to leave after being accused of improperly buying preferential stock options from Satyam, even as he awarded the firm major contracts. A top-secret investigation led to Muhsin being banned permanently from the bank in January 2007.

Satyam has been in the line of fire since it made an attempt to acquire Maytas Infra and Maytas Properties for $1.6 billion that are partially owned by the promoter family. Within 10 to12 hours of this announcement, the company retracted its decision due to investor outrage.

Re ends at 48.78/81 per dollar

MUMBAI: Rupee dropped to its lowest in nearly two weeks on Tuesday, as falling shares raised concerns of foreign fund withdrawals and month-end
dollar demand from importers applied downward pressure.

The partially convertible rupee ended at 48.78/81 per dollar, off an intraday trough of 48.95, its lowest since Dec. 12, according to Reuters data, but around 1.6 per cent lower than Monday's close of 48.01/03.

The rupee has gained around 2.7 per cent this month, helped partly by foreign portfolio inflows of $462 million in December, but is down nearly 20 per cent in 2008 on equity withdrawals of more than $13 billion. Indian shares fell 2.4 per cent on Tuesday to their lowest close in more than a week, as global economic uncertainties and concerns about corporate earnings triggered a flight from risky assets.

"Trading will remain choppy this week. And we are looking at a range of 47.95 to 49.50 against the dollar," a state-run bank trader said. Traders saw heavy dollar demand from importers, including crude refiners, usually witnessed towards the end of each month.

"This is likely to remain tomorrow and (the rupee) may be reaching 49," Paresh Nayar, chief forex dealer at Development Credit Bank, said.

Oil falls further as demand slows

Oil prices have further extended their losses, due to growing signs of weakening demand from consumers and the global economic slowdown.

Share price falls on Wall Street and a record decline in Japanese exports have heightened economic worries.

US light, sweet crude for February delivery slipped 23 cents to $39.68 a barrel in Singapore, after falling 6% on Monday.

Brent crude oil fell 10 cents to $41.35 a barrel.

Among the latest government economic stimulus measures, China cut its interest rates on Monday for the fifth time in four months amid mounting anxiety about spreading job losses and worker protests.

Surging demand from China and other emerging nations had sent oil prices to record highs of $147 a barrel in July, before the economic crisis began to slow demand.

Now, however, even in China oil demand is falling, shrinking for the first time in three years in November.