Rupee turns into Asia's worst emerging market currency as funds shun India

Agencies
December 21, 2021

The Indian rupee is set to end a tumultuous year as Asia’s worst-performing emerging market currency with foreign funds fleeing the nation’s stocks.

The currency declined 1.9 per cent this quarter as global funds pulled $4.2 billion of capital out of the country’s stock market, the most among regional markets where data is available.

Foreigners sold Indian stocks as Goldman Sachs Group Inc. and Nomura Holdings Inc. recently lowered their outlook for equities, citing lofty valuations, at a time when concerns about the Omicron variant are roiling the global markets. Record-high trade deficit and the central bank’s policy divergence with the Federal Reserve have also impinged on the rupee’s carry appeal.

“The monetary policy divergence and widening current account gap have set depreciation in the rupee in the near term,” said B. Prasanna, head of global markets, sales, trading and research at ICICI Bank Ltd in Mumbai.

Depreciation in rupee is a double-edged sword for the Reserve Bank of India. While a weaker currency may support exports amid a nascent economic recovery from the pandemic, it also poses risk of imported inflation, and may make it difficult for the central bank to maintain interest rates at a record low for longer.

QuantArt Market Solutions expects the rupee to decline to 78 per dollar by end-March, falling past the previous record low of 76.9088 reached in April 2020, while a Bloomberg survey of traders and analysts forecast the rupee at 76.50. The rupee is set to drop about 4 per cent this year in a fourth straight year of losses.

Stocks on the edge

Foreign exodus from stocks have led to the benchmark S&P BSE Sensex Index falling by about 10 per cent below an all-time high touched in October. Despite that, the one-year forward price-to-earnings ratio for the Sensex is near 21, compared to 12 for MSCI’s Emerging Markets Index, meaning there’s room for the equities to fall even further. Bonds have seen $587 million of outflows this quarter.

Bearish rupee calls are rising as India’s trade deficit widened to an all-time high of about $23 billion in November amid higher imports. The ample liquidity in the banking system, partly created by the RBI’s dollar purchases, may make it difficult for the central bank to intervene to the same extent in 2022 to curb rupee’s losses, according to Goldman Sachs. 

Still, not all are pessimistic. A likely reversal in foreign inflows in the coming quarter on account of share sales in companies including Life Insurance Corp. of India, billed as India’s biggest initial public offer, may cushion the rupee, according to UBS AG.

The rupee gained 0.4 per cent on Tuesday to 75.63 per dollar, helping pare the recent declines.

Beyond the temporary spike in dollar/rupee expected in the next four-to-six weeks, “we see the one-off flows and supportive 1Q current-account seasonality to come at play,” said Rohit Arora, emerging market Asia strategist at UBS. “As long as oil remains tamed, rupee should end the fiscal year below current levels possibly in 74-75 range.”

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News Network
November 14,2024

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The UN special rapporteur for Palestine has slammed Israel’s parliament for passing a law authorizing the detention of Palestinian children, who are “tormented often beyond the breaking point” in Israeli custody.

Francesca Albanese, the UN special rapporteur on the rights situation in the Occupied Palestinian Territory, in a Thursday post on X, characterized the experiences of Palestinian minors in Israeli detention as extreme and often inhumane.

The UN expert highlighted the grave impact of this policy, noting that up to 700 Palestinian minors are taken into custody each year, a practice she described as part of an unlawful occupation that views these children as potential threats.

Albanese said Palestinian minors in Israeli custody are “tormented often beyond the breaking point” and that “generations of Palestinians will carry the scars and trauma from the Israeli mass incarceration system.”

She further criticized the international community for its inaction, suggesting that ongoing diplomatic efforts, which often rely on the idea of resuming negotiations for peace, have contributed to normalizing such human rights violations against Palestinian children and the broader population.

The comments by Albanese came in response to Israel’s parliament (Knesset) passing a law on November 7 that authorizes the detention of Palestinian children under the age of 14 for “terrorism or terrorist activities.”

Under the legislation, a temporary five-year measure, once the individuals turn 14, they will be transferred to adult prison to continue serving their sentences.

Additionally, the law allows for a three-year clause that enables courts to incarcerate minors in adult prisons for up to 10 days if they are considered dangerous. Courts have the authority to extend this duration if necessary, according to the Knesset.

The legislation underscores a shift in the treatment of minors and raises alarms among human rights advocates regarding the legal and ethical ramifications of detaining children and the conditions under which they may be held.

Thousands of Palestinians, including hundreds of children and women, are currently in Israeli jails—around one-third without charge or trial. Also, an unknown number are arbitrarily held following a wave of arrests in the wake of the regime's genocidal war on Gaza.

Since the onset of the Gaza war, the Israeli regime, under the supervision of extremist minister Itamar Ben-Gvir, has turned prisons and detention centers into “death chambers,” the ministry of detainees and ex-detainees’ affairs in Gaza says.

Violence, extreme hunger, humiliation, and other forms of abuse of Palestinian prisoners have been normalized across Israel’s jail system, reports indicate.

Over 270 Palestinian minors are being detained by Israeli authorities, in violation of UN resolutions and international treaties that forbid the incarceration of children, as reported by Palestinian rights organizations.

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News Network
November 13,2024

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New Delhi: The Supreme Court took a firm stance on ‘bulldozer justice’ today, affirming that the Executive cannot bypass the Judiciary and that the legal process must not prejudge the guilt of an accused. In a significant judgment, the bench led by Justices BR Gavai and KV Viswanathan set new guidelines for demolition practices, responding to petitions challenging the controversial bulldozer actions taken against individuals accused of crimes.

The rise of this practice, termed 'bulldozer justice,' has seen authorities in various states demolish what they claim to be illegal structures belonging to accused individuals. However, multiple petitions questioned the legality and fairness of this approach, bringing the matter before the court.

Justice Gavai highlighted that owning a home is a cherished goal for many families, and an essential question was whether the Executive should have the authority to strip individuals of their shelter. “In a democracy, the rule of law protects citizens from arbitrary actions by the state. The criminal justice system must not assume guilt,” stated the bench, underscoring that due process is a fundamental right under the Constitution.

On the principle of separation of powers, the bench reinforced that the Judiciary alone holds adjudicatory powers and that the Executive cannot overstep these boundaries. Justice Gavai remarked, “When the state demolishes a home purely because its resident is accused of a crime, it violates the doctrine of separation of powers.”

The court issued a strong warning about accountability, stating that public officials who misuse their power or act arbitrarily must face consequences. Justice Gavai observed that selectively demolishing one property while ignoring similar cases suggests that the aim might be to penalize rather than enforce legality. “For most citizens, a house is the product of years of labor and dreams. Taking it away must be an action of last resort, thoroughly justified,” he said.

In its directives under Article 142 of the Constitution, the Supreme Court established new demolition guidelines. These include:

Mandatory Show-Cause Notice: No demolition should occur without first issuing a show-cause notice. The person served has a minimum of 15 days or the duration stated in local laws to respond.

Transparency of Notice Content: The notice must include specifics about the alleged unauthorized construction, the nature of the violation, and the rationale for demolition.

Hearing and Final Order: Authorities are required to hear the response of the affected individual before issuing a final order. The homeowner will have 15 days to address the issue, with demolition proceeding only if no stay order is obtained from an appellate authority.

Contempt Proceedings: Any breach of these guidelines would lead to contempt proceedings. Officials who disregard these norms will be personally accountable for restitution, with costs deducted from their salaries.

Additionally, the court mandated that all municipal bodies establish digital portals within three months, displaying show-cause notices and final orders on unauthorized structures to ensure public transparency and accountability.

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News Network
November 12,2024

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The Taliban regime has appointed Ikramuddin Kamil as the acting consul in the Afghan mission in Mumbai, Afghan media has reported.

It is the first such appointment made by the Taliban set up to any Afghan mission in India.

There was no immediate comment from the Indian side on the appointment that came.

The Ministry of Foreign Affairs of Afghanistan has announced the appointment of Kamil as the acting consul in Mumbai, the Taliban-controlled Bakhtar News Agency reported on Monday, citing unnamed sources.

"He is currently in Mumbai, where he is fulfilling his duties as a diplomat representing the Islamic Emirate," it said.

The appointment is part of Kabul's efforts to strengthen diplomatic ties with India and enhance its presence abroad, the media outlet said

Kamil holds a PhD degree in international law and previously served as the deputy director in the department of security cooperation and border affairs in the foreign ministry, it said.

He is expected to facilitate consular services and represent the interests of Afghanistan in India, the report added.

Kamil's appointment comes days after the external affairs ministry's point-person for Afghanistan held talks with the Taliban's acting defence minister, Mullah Mohammad Yaqoob, in Kabul.

Sher Mohammad Abbas Stanikzai, the Taliban's deputy foreign minister for political affairs, also posted on X about Kamil's appointment.

The appointment of Kamil is seen as part of efforts to facilitate consular services to the Afghan population in Mumbai.

There has been almost negligible presence of diplomatic staff at the Afghan missions in India.

Most of the diplomats appointed by the Ashraf Ghani government have already left India.

In May, Zakia Wardak, the seniormost Afghan diplomat in India, resigned from her position after reports emerged that she was caught at the Mumbai airport for allegedly trying to smuggle 25 kg of gold worth Rs 18.6 crore from Dubai.

Wardak had taken charge as the acting ambassador of Afghanistan to New Delhi late last year, after working as the Afghan consul general in Mumbai for more than two years.

She took charge of the Afghan embassy in New Delhi last November, after the mission helmed by then ambassador Farid Mamundzay announced its closure.

Mamundzay, who was an appointee of the Ghani government, had moved to the United Kingdom.

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