India’s foreign exchange reserves declined by USD 1.506 billion to USD 366.139 billion in the week to October 14, due to fall in foreign currency assets, the Reserve Bank said today.
In the previous week, the reserves had decreased by USD 4.343 billion to USD 367.646 billion.
It had touched a life-time high of USD 371.99 billion in the week to September 30, 2016.
Foreign currency assets (FCAs), a major component of the overall reserves, dipped by USD 1.486 ..
FCAs, expressed in US dollar terms, include the effect of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the reserves.
Gold reserves remained steady at USD 21.406 billion, the apex bank said.
The special drawing rights with the International Monetary Fund declined by USD 8 million to USD 1.468 billion, while India’s reserve position with the Fund dipped by USD 12.8 million to USD 2.356 billion, RBI said.
India’s gold imports declined by 58.96 per cent to 270 tonnes from January to September from 658 tonnes that were shipped-in during the corresponding period of last year, a research report said on Tuesday.
According to the report by the industry body Assocham, gold imports declined due to a prolonged strike by jewellers and continuation of 10 per cent custom duty on imports.
The report stated that smuggling of gold has been on the rise due to high custom duty, even as the industry demands a lower levy structure to encourage official imports.
India has been among the two biggest gold consumers in the world with average imports of more than 1,000 tonnes per annum reported in the recent past.
Further, the industry body pointed-out that it expects gold prices to stay firm in the range of Rs 30,500-Rs 33,500 per 10 grams.
The report said that gold prices are expected to remain firm in the backdrop of continuous global political and financial risks coupled with revival in demand in the domestic market. The prices have appreciated by about 25 per cent since January this year.
“The moot question among the buyers and analysts is whether scope for any further run is left when gold has seen so much of a rally, the best among all the assets classes – including quantitative easing led stock markets,” the research paper by Assocham said.
“Revival in Indian consumption, financial risks in the Chinese economy, tapering tantrums of the US Federal Reserve as also close American Presidential elections are all seen as the push factors for the gold to remain as a safe haven.”
China reported lower than expected September reserve figures. Polish central bank Governor Glapinski adjusted the forward guidance. Brazil will open up development of its so-called pre-salt oil fields to foreign companies. Colombia’s referendum on the FARC peace agreement failed by a razor-thin 50.2% to 49.8% margin.
In the EM equity space as measured by MSCI, Brazil (+5.3%), Czech Republic (+4.4%), and Hungary (+3.0%) have outperformed this week, while Peru (-3.3%), UAE (-2.2%), and South Africa (-1.4%) have underperformed. To put this in better context, MSCI EM rose 1.4% this week while MSCI DM fell -0.7%.
In the EM local currency bond space, Brazil (10-year yield -23 bp), India (-8 bp), and Turkey (-4 bp) have outperformed this week, while the Philippines (10-year yield +38 bp), Colombia (+19 bp), and Poland (+11 bp) have underperformed. To put this in better context, the 10-year UST yield rose 14 bp this week to 1.73%.
In the EM FX space, BRL (+1.7% vs. USD), HUF (+1.4% vs. EUR), and RUB (+1.3% vs. USD) have outperformed this week, while TRY (-1.5% vs. USD), KRW (-1.3% vs. USD), and CLP (-1.3% vs. USD) have underperformed.
Although Chinese markets are still closed for the national holiday, lower than expected September reserve figures were reported. They fell to $3.166 trillion from $3.185 trillion. This is a new five-year low. This was also a somewhat larger drawdown than surveys anticipated, which when coupled with the softening yuan suggests that capital outflows from China may be picking up again.
Polish central bank Governor Glapinski said he expects the next move to be a hike, but adjusted the forward guidance. He now sees the likely start of the tightening cycle in early 2018 instead of late 2017. Deflation appears to be easing, while the economy rebounded in August after a weak July.
- The Hungarian central bank capped the amount commercial banks can keep at its 3-month deposit facility.
- S&P upgraded Hungary from BB+ to BBB- with stable outlook.
- Bank of Israel will move to 8 meetings per year starting in 2017, down from 12 currently.
- S&P raise the outlook on Russia’s BB+ rating from negative to stable.
- The South African Reserve Bank signaled a potential end of the tightening cycle.
In the EM equity space as measured by MSCI, Brazil (+5.5%), Turkey (+5.0%), and Peru (+4.9%) have outperformed this week, while Qatar (-0.6%), Hungary (flat), and South Africa (+0.3%) have underperformed. To put this in better context, MSCI EM rose 3.6% this week while MSCI DM rose 2.1%.
In the EM local currency bond space, Brazil (10-year yield -36 bp), Turkey (-26 bp), and Hungary (-17 bp) have outperformed this week, while Ukraine (10-year yield +9 bp), Mexico (+2 bp), and China (flat) have underperformed. To put this in better context, the 10-year UST yield fell 7 bp this week to 1.62%.
In the EM FX space, ZAR (+3.5% vs. USD), RUB (+2.3% vs. USD), and CLP (+2.1% vs. USD) have outperformed this week, while MXN (-0.6% vs. USD), PHP (-0.4% vs. USD), and CNH (-0.4% vs. USD) have underperformed.
The Hungarian central bank capped the amount commercial banks can keep at its 3-month deposit facility. Those deposits stand at HUF1.6 trln today, and the central bank said it would lower that amount to HUF900 bln by year-end. This unconventional policy is akin to monetary easing, as it pushes funds out of its deposit facility and into government bonds and the interbank market. The end result should be lower government borrowing cost, lower lending rates, and a weaker forint.
Organizers of the 2020 Tokyo Olympics are hoping to source the gold, silver and bronze needed to make medals for the games by tapping the country’s “urban mine” — made up of millions of discarded smartphones and other small consumer electronics.
Such electronic waste contains enough precious metals to produce all the medals for the Olympic and Paralympic Games to be held in Japan’s capital four years from now, according to a group of Olympic organizers, government officials and company executives that discussed the proposal in June.
For the 2012 London Olympics, 9.6kg of gold, 1,210kg of silver and 700kg of copper — the primary component of bronze — were used to produce medals. In comparison, the amount of precious metals recovered from discarded small consumer electronics in Japan in 2014 included 143kg of gold, 1,566kg of silver and 1,112 tons of copper.
Country’s foreign exchange reserves rose by $ 2.81 billion to reach a all time high of $ 365.49 billion in the week to July 29, helped by rise in foreign currency assets, the Reserve Bank has said.
In the previous week, the reserves had dropped by $ 664 million to $ 362.69 billion.
Foreign currency assets (FCAs), a major component of the overall reserves, rose $ 2.79 billion to $ 341.04 billion in the reporting week, as per RBI data.
FCAs, expressed in dollar terms, include the effect of appreciation/depreciation of non-US currencies such as euro, pound and yen held in the reserves.
Gold reserves remained unchanged at $ 20.58 billion.
The country’s special drawing rights with International Monetary Fund increased by USD 8.5 million to USD 1.48 billion while the reserve position rose by $ 13.6 million to USD 2.39 billion, RBI said.
EM ended last week on a soft note, due in large part to the attempted coup in Turkey. Weakness in the lira spilled over into wider EM weakness in thin Friday afternoon market conditions. The situation in Turkey has calmed, and so EM may gain some limited traction this week. However, that calm will likely be very fragile and so we retain a defensive posture with regards to EM.
Central Bank of Turkey meets Tuesday and is expected to keep the benchmark rate steady at 7.5%. However, it is expected to deliver another 50 bp cut to the overnight lending rate from 9% currently. Inflation moved back above the 3-7% target range in June, and so the bank will have to play it cautiously, especially in light of the current political uncertainty.
Poland reports June industrial and construction output, retail sales, and PPI Tuesday. Central bankers appear mixed on the policy outlook right now. If the economy continues to soften, we expect the MPC to tilt more dovish in H2. Next policy meeting is September 7, and the decision will depend on how the economy looks over the next couple of months.
Malaysia reports June CPI Wednesday, which is expected to rise 1.8% y/y vs. 2.0% in May. After last week’s surprise 25 bp cut, this data point doesn’t have much relevance. However, if the inflation trajectory remains benign, further rate cuts are likely in H2. The next policy meeting is September 7, and another cut then is possible.
Is China’s army of retail investors behind some of the recent surge in silver?
That’s the view of Saxo Bank, which reckons the recent advance of the Devil’s metal mirrors that seen in steel rebar and iron ore earlier this year
Silver has advanced more than 10 per cent over the past week and hit $21 an ounce for the first time since 2014 on Monday. In the year to date it is up more than 40 per cent, outpacing gold, another safe haven asset.
Saxo says the pick up in trading volumes on the Shanghai Futures Exchange over the past week and the decline in open interest suggest Chinese retail investors have “taken over silver for now”.
“As long this continues, we are likely to see bigger daily price swings with the Asian session seeing most of this,” Saxo said in a note to clients.
Commodity trading in China surged earlier this year as retail investors, high net worth individuals and yield hungry wealth mangers piled into the sector, using it as a quick and easy way to place leveraged bets on the outlook for the domestic economy.
With Gold and Silver Prices Breaking Out In a HUGE Upside Move, London Analyst James Turk Joins A Crucial Metals & Markets to Break It Down:
You Haven’t Seen Anything Yet – Real Move Begins After Silver Takes Out the $50 High…
In the Final Blow-Off Top, You Won’t Sell Your Gold and Silver For Dollars…
- $20: We’re Very Close to Breaking Out Here in Silver. Is it Time to Pile In?
- Deutsche Bank Trading at 25% of Book Value- What is the Market Pricing In?
- THIS is Why You Want to Maximize Your Exposure to Gold and Silver
- James Turk Explains Why He Is “So Bullish On Gold and Silver Here, Particularly Silver Bullion”
- Silver Will Ultimately Take Out $50 High, That’s When the REAL Silver Bull Market Begins!
Someone very real and VERY BIG is standing for gold. This “someone” would not be bribed to go away last month and does not look like they will go way this month!
Who is this long who all of a sudden cannot be bribed to stand down?
Looking specifically at silver, we have a true potential atomic bomb in the works for July…
For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, “first, no one has this much (gold or silver), second, no trader would ever sell in this fashion and destroy the price he will receive for the sale. Clearly the sales were done to affect price downward”. Each time I have written on this topic and suggested it would ultimately end with a delivery default I have been trolled. It looks very much like we will soon find out a default of delivery is not only possible but highly probable.
Starting with gold, last month (May) saw 221,000 ounces stand for delivery. This amount actually grew during the month which is highly unusual as the amount standing has ALWAYS dropped during delivery periods, this is the first time to my knowledge that the amount standing actually increased.
For comparison, May 2015 delivered only 2,500 ounces. Looking back at June of 2015, the amount standing on first notice day was 509,000 ounces. The final amount delivered was 295,000. As I have written and questioned before, who would fully fund their account 100% to take delivery …and then “go away”? The answer of course is someone willing to accept a “premium” as a bribe to not take delivery.
This June as you know does look to be quite interesting. The initial amount standing was 49.119 tons or over 1.5 million ounces. The amount dropped on day two by about 4 tons but has since gained back nearly all of it to stand at 49.11 tons. (If I am not mistaken, this month is the largest month of gold contracts ever standing for delivery.) Over 40 tons have already been served so we know these longs could not be persuaded to “go away”. We have seen no evidence of delivery for March, April or May. If we add these together with June, we have 65.813 tons standing with only 51.12 tons of registered gold.