21 August, 2013

Rupee continues to struggle, hits life low of 65.56 vs dollar

The rupee fell past 65 to the dollar to a record low on Thursday, after Federal Reserve minutes hinted that the US was on course to begin tapering stimulus as early as next month and as foreign investors become sellers of Indian stocks.

In an ominous sign for Asia's worst-performing currency this year, overseas investors who had been net buyers of Indian stocks so far in 2013 headed for the exits this week, selling a net $500 million worth of shares in the four sessions through Wednesday.

Foreigners have also sold a net $1.3 billion of Indian government and corporate bonds so far this month.

Asia stocks sink as Fed hints at stimulus phaseout

Asian stock markets fell on Thursday after the Federal Reserve made it known that its top officials were leaning toward phasing out its massive stimulus program.

The Fed released minutes of its July policy meeting on Wednesday that showed most members want to slow down the pace of a massive bond-buying program. The US central bank has been purchasing $85 billion of financial assets a month, which was intended to push down interest rates and spur borrowing and growth.

However, US economic data in recent months has been strong enough to stir some Fed officials to call for a winding down of the asset purchases. That has sparked a sell-off in stock markets, which had been pumped up by the low interest rate policy, with some weaker Asian economies such as India and Indonesia particularly hard hit. India's rupee continued to post fresh record lows, with the dollar buying more than 65 rupees on Thursday.

Disruptive Technology: IT co IPsoft's cognitive solutions to replace human agents in BPO services

IPsoft, which relies on artificial intelligence to manage computer networks, is ready to disrupt the business process outsourcing (BPO) industry by using what it calls "cognitive technology" that enables machines to do the work of humans, the India-born founder of the New York-based company said.

"By Christmas you will see it in action in one of the largest media companies," founder and Chief Executive Officer Chetan Dube told ET in an exclusive interview.

IPsoft's cognitive technology assimilates information just like the human brain and processes it with reliability of computers to solve problems, he said. A global investment bank and a large media company will be among the first users of the cutting-edge technology, Dube said, but declined to identify the customers.

Customs duty decision may hit flat TV sales in the UAE

Government's decision to impose customs duty on flat television panels, the latest move to arrest the steep fall of Rupee, is likely to have an impact in the UAE with the electronics retailers bracing for a 20 per cent decline in sales.

According to a news report, the total market size of TV sets in the UAE is around 85,000 per month and TV sets being carried to India are around 20,000 monthly.

"Sales for TVs will definitely be impacted as it isn't only NRIs buying TVs to take back to India but also tourists. We estimate that TV unit sales could be affected by as much as 20 per cent overall," Khaleej Times reported Jacky's Electronics chief operating officer, Ashish Panjabi as saying.

Beginning August 26, India has decided to levy a 35 per cent customs duty on LCD and LED television sets that passengers bring along with them as part of the duty-free baggage allowance of Rs 35,000.

According to Panjabi, sales revenue may not quite drop to this extent as tourists and NRIs generally go for 32 or 40-inch models to carry back to India, whereas higher-ticket value items like 46-inch TVs and above have largely been confined to the domestic market.

"The action taken by the Indian government to impose customs duty on flat panels brought to the country by air passengers, which hitherto were totally exempted, cannot be seen in isolation to arrest the rupee's decline," Dr Ram Buxani, president of the ITL Group said.

According to Buxani, this is simply correcting the system, which may, in short run, affect Duba's already not-so-bright electronics trade, but will bring stability to the business which is the long-term goal.