North Korea missile launch: Dollar hits rock bottom, Euro gains

Dollar index hits lowest since May 2016, dropping to a four-month low against the yen at an early stage on Tuesday. Yen, Swiss franc gain, after N.Korea fires ballistic missile. Whereas, Euro continues to probe 2-1/2-year highs vs. dollar.

The dollar was down 0.55% at 108.660 yen subsequent to hitting 108.330, its lowest since April 18.

A hazard loath inclination won in the district following the rocket dispatch (- the most recent demonstration of incitement by Pyongyang that has increased pressures in the locale over the previous month), with Japan’s Nikkei tumbling to a four-month low. The dollar had also further weakened  after Tropical Storm Harvey paralysed Houston, Texas.

The yen tends to profit amid times of geopolitical or money related worry as Japan is the world’s greatest creditor country and there is a suspicion that Japanese financial specialists will repatriate assets should an emergency appear.

“Based on past patterns in which the yen has gained on such incidences, speculators reacted immediately to the North Korean missile headlines, taking dollar/yen to the intraday lows,” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.

“But dollar/yen trimmed some of the losses after the reports that the missile actually flew over northern Japan.”

The dollar was at that point on edge, especially against the euro, after Federal

Reserve Chair Janet Yellen did not say money related approach at a national financiers’ summit in Jackson Hole a week ago, and as European Central Bank President Mario Draghi’s kept away from talking down the euro at a similar meeting.

The dollar file against a bushel of six noteworthy monetary standards was unfaltering at 92.274 in the wake of slipping as low as 92.137, its weakest since May 2016.

SOURCES: Reuters, CNBC

IMAGE SOURCE: REUTERS

Harvey causes gasoline futures to gush

U.S. gas prospects rose to a two-year high on Monday as Tropical Storm Harvey pounded the core of America’s vitality part, while the euro hit a 2-1/2-year peak, after the European Central Bank president ceased from talking down the cash.

Gas futures took off as much as 6.8% at one point as the tempest, which came shorewards on Friday as the most capable typhoon to hit Texas (home to a fourth of U.S. raw petroleum refining limit)  in over 50 years, kept on battering the state.

“The rain is expected to last through to Wednesday so the disruptions could last for some time yet,” said William O’Loughlin, investment analyst at Rivkin Securities in Sydney.

Following a repressed session in Asia as speculators anticipated harm gauges from the tempest, money related spreadbetter LCG anticipated that Germany’s DAX would open down 0.2% and France’s CAC 40 to begin the day 0.3% lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose less than 0.1%, Japan’s Nikkei was little affected, Chinese blue chips rose 1.6%, Hong Kong’s Hang Seng added 0.4%, South Korea’s KOSPI was down 0.5% and Australian shares slid 0.7%.

Subsequent to surging on Friday, unrefined petroleum costs were blended on Monday as business sectors endeavored to gauge Harvey’s effect on oil creation and refinery request.

Brent futures, the global crude oil benchmark, rose 0.3% to $52.56 a barrel, adding to Friday’s 0.7% increase. But U.S. crude futures plummented back 0.4% to $47.70, paring Friday’s 0.9% increase.

The euro rose to as high as $1.19665, whereas the dollar fell 0.3 percent (proposing milder opening on Wall Street), to 109.13 yen early on Monday and was up 0.1% from its $1.19215 close on Friday, when it advanced 1% at $1.1931, after Darghi refrained from citing the currency’s strength.

SOURCES: REUTERS, ZEEBIZ

IMAGE SOURCE: REUTERS

Pound sterling hits one week low, dashes hopes of rise in interest rates

The Bank of England Governor, Mark Carney, has said that now is not the time to tighten monetary policy as the sterling fell to a one week low against the dollar. His announcement has dashed the hope of investors who expected an imminent increase in interest rates.

The pound traded from $1.2758 to $1.2669, meaning that it sank by almost a full cent against dollar, as stated in Carney’s mansion house speech.

Carney said, “Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace”.

In a speech to London’s banking community alongside finance minister Philip Hammond, the Bank of England Governor said that interest rates could not be raised at the moment because of weak wage growth and mixed signals on consumer spending and business investment.

The sterling also fell to a five-day low of 88.04 pence per euro.

Investors are also wary about the political situation. As Britain exits from the European Union, there is a dual uncertainty of not having any government after the parliamentary election and talks. The election led to the sinking of pound by almost 3% as it did not produce clear majority of any of the political parties in the parliament, thereby disappointing the investors. This has further exerted more pressure on the pound.

Sources: The Independent, The Hindu, Reuters

Rupee down by 25 paise against Dollar in early trade

The rupee went down by 25 paise against Dollar at the Interbank Foreign exchange due to the rise in Greenback’s value against other currencies overseas, on Tuesday. It weakened further to a 62.80 against the US dollar in early trade.

Dollar’s gains against other overseas currencies seemed to have caused this fall in the value of the Indian rupee. A lower opening in the domestic equity market and increased demand for American currency from importers could have also weighed on the fall in the value of the rupee.

The Indian rupee ended up losing 39 paise, to close at a two-month low of 62.55 against the American dollar on Monday, after the controversial jobs data spurred expectations of a real early hike in U.S. interest rates.

Meanwhile, the benchmark BSE Sensex also fell by 0.12 per cent or 34.84 points to 28,809.94 in early trade on Tuesday.

Rupee tumble makes petrol dearer

Illustration Courtesy: Manoj Kureel
Illustration Courtesy: Manoj Kureel

Petrol price hikes are a matter of concern for everyone today. The prices of fuel all over the country have increased by 1.86 per litre because of the deteriorating exchange rate and increasing international oil prices. According to Indian Express, an official directly related to this matter said, “the Cabinet has restricted oil companies from raising diesel prices by more than 50 paise per litre in a month. This cap is expected to be relaxed as oil companies are losing more than 9 per litre revenue on the fuel.”

People are furious by the hike this time. There is certainly a sense of panic as the government issued four hikes in just six weeks. The current price is the fourth consecutive hike after May. Only the Union Cabinet has the authority to raise the fuel price by more than 50 paise in a month.  Though the price of petrol has been raised by 1.55 per litre, it will differ in different cities because of the local taxes.

If the value of rupee keeps on falling, the companies would have to increase the oil prices yet again. According to Indian Express, the movement of prices in international oil markets and INR-USD exchange rate is being closely monitored and developing trends of the market will be reflected in future price changes. Since last price change, the downward spiral of Rupee against the US Dollar has continued to reach a low of 60.03/USD as against 58.94/USD during the previous fortnight. Further, international petrol prices have also shown an uptrend and increased from $115.29/bbl to $117.19/bbl. The combined impact of deteriorating exchange rate and increasing international oil prices has resulted in the need to increase petrol prices by 1.55/litre (excluding VAT).

It remains to be seen what the UPA does with tremendous pressure already being exerted by the Opposition. The Reserve Bank and the State Bank of India were pressed into action last week to rescue the rupee from tumbling any further, but so far they, too, have been ineffective.

Falling rupee hits students eyeing studies abroad

Institutes like Harvard are all set to get even more costlier for Indians.

Its admission time again in foreign universities. As students across the country gear up for overseas admission , merit is not the only thing that will matter this year.

With the rupee reaching a record low of 59.9 against the dollar, students aspiring to study abroad received a massive blow to their plans. With the sudden increase of tuition fees and living expenses, students are now forced to reconsider their decisions of going abroad.

Many students have great expectations for college which goes beyond just getting a degree. For many it is all about discovering yourself, making new friends and having unforgettable experiences. For some, studying overseas is a part of their ideal college experience.

However, with the falling rupee students are left to scout for other options to pay for their fees. While some have obtained scholarships that have significantly reduced their financial burden,  others have cut down the duration of their courses. Students that have taken an education loans are  also facing the brunt of the crashing rupee.

The USA is the most favoured education destination as it attracts about 25,000 to 30,000 students from India each year. A rough estimate of the fees for studying in the US for undergrad courses ranges from 20,000 to 30,000 USD and from 30,000 to 40,000 USD for MBA courses. With the rupee weakening against the dollar, students will now have to shell out at least two to four lakh more as their overall expenses will increase. Although lenders pay fees in US currency to the overseas university, the loan amount is converted into rupee for the student.

In the coming year, students will have to shell out more for the TOEFL, GMAT and GRE application forms too. Even the prices of the admission forms are likely to cost anything between 50 USD to 500 USD depending on the institute.

A parent funding a child’s overseas education from personal savings will be critically hit as the rupee slips more and more. The overall budget will be affected as every item in the budget list will witness a change, as apart from the application fee, examination fee and the tuition fee, even the cost of living will be higher for the students.

To overcome the tide, many students are looking for alternative funding like a part-time jobs or scholarships. With their savings falling short, many middle-class students are forced to give up their dreams of studying abroad.