Oil prices drop despite scheduled OPEC meet

Oil prices sank on Thursday as plunging stock markets outweighed news that OPEC will hold an emergency meet next month to discuss the impact of the chaos on world markets.


With prices far below record highs around USD 147 hit in July, analysts said the Organisation of Petroleum Exporting Countries (OPEC) could cut output to defend its precious oil revenues.



New York's main contract, light sweet crude for delivery in November, fell USD 1.71 to USD 87.24 a barrel. Brent North Sea crude for November sank USD 1.46 to USD 82.90 a barrel.



The price of crude oil fell sharply as nervous traders eyed fresh falls on global equity markets, which sparked renewed concern about slowing economic growth and weaker energy demand, analysts said.



But traders remained concerned that OPEC could slash output in November in an attempt to prevent the market sinking any lower.



"Market participants are still very much concerned that (oil) demand will continue to dwindle as global economies continue to slow sharply," said Sucden analyst Nimit Khamar in London.



"However, increased expectations that OPEC may ... cut output is underpinning the market."



The OPEC cartel on Thursday said that it would convene an emergency meeting in Vienna on 18th November to discuss the effects of the global financial crisis on crude prices

Zimbabwe inflation hits new high

Zimbabwe's annual inflation rate - already the world's highest - has soared to 231,000,000%, newly released official figures for July show.

The rise - from 11,200,000% last month - was largely due to increases in the prices of bread and cereals.

A landmark power-sharing deal between President Robert Mugabe and opposition leader Morgan Tsvangirai has failed to ease the country's economic crisis.

Meanwhile, the UN says it needs $140m for food aid over the next six months.

The UN World Food Programme estimates that two million people are in need of food aid, and that the figure will rise to 5.1 million - or 45% of the population - by early 2009.

"Millions of Zimbabweans have already run out of food or are surviving on just one meal a day - and the crisis is going to get much worse in the coming months," said WFP official Mustapha Darboe.

The inflation figures are from July - before the power-sharing deal - but reports from Zimbabwe suggest that the prices of many goods has continued to shoot up, while the value of the Zimbabwe dollar is plummeting

Rupee plunges to 49.07 against US dollar in early trade

The Indian rupee on Friday fell to more than six-year low of 49.07 against the US dollar at 0940 hrs owing to deepening global financial crisis amid weak Asian stock markets.


The level was last seen in May 2002.



At the Interbank Foreign Exchange (Forex) market, the domestic unit, which fell to 48.80 and closed at 47.99/48.00 on Wednesday, on Friday lost further ground by falling by Rs 1.08 at 49.07 against the greenback.



The local unit was trading at 49.02 a dollar in early trade before trading at 49.07.



Meanwhile, exporters and economists had said that the Indian currency may fall to 50 a dollar in the next two months in the wake of global financial crisis.

CCPA approves Indo-US nuke agreement for signing today

The Cabinet Committee on Political Affairs (CCPA) last night approved the landmark accord to implement the civil nuclear deal that will be inked by External Affairs Minister Pranab Mukherjee and Secretary of State Condoleezza Rice in Washington.


Prime Minister Manmohan Singh at a meeting of his senior Cabinet colleagues in New Delhi discussed the final shape of the agreement and the accompanying statement by President George W Bush after which the go ahead was given for signing the agreement on Friday.



On Wednesday, Bush had signed into law the enabling Congressional legislation that approved the agreement.


The over two-hour long meeting, which was attended by Mukherjee, Defence Minister A K Antony, Home Minister Shivraj Patil and Railways minister Lalu Yadav is understood to have analysed Bush's statement threadbare on whether it met India's concerns, particularly over fuel supply assurances.


Addressing New Delhi's concerns on certain provisions in the US Congressional legislation on the nuclear deal, Bush assured India that the new law makes no changes on fuel supply assurance commitments or the terms of the 123 agreement.


Signing the bill into law at a ceremony in the White House, Bush said "the bill approves the 123 agreement I submitted to Congress and establishes the legal framework for that agreement to come into effect."


At the same time, he maintained that the agreement with India was consistent with the US Atomic Energy Act and other elements of the US law.


Concerns had arisen in India over fuel assurances after statements by officials in the US that these guarantees were merely political in nature and not legally binding.

Libya blocks Swiss oil deliveries

Libya has stopped oil shipments to Switzerland months after the brief arrest of Muammar Gaddafi's youngest son for assault sparked a row.

Issam Zanati, chief executive of Libyan oil firm Tamoil, said the decision had been taken "in light of recent media reports", without giving details.

Tamoil says it supplies 20% of the Swiss fuel market and has more 300 petrol stations in the country.

Charges against Hannibal Gaddafi and his wife were later dropped.

They had been accused of hitting two of their staff.

The BBC's Rana Jawad in Tripoli says the embargo is in retaliation for Switzerland's failure to meet Libyan demands that it apologise for the earlier incident.

Libya had previously threatened to halt shipments when Hannibal Gaddafi was first arrested.

He and his wife were released on bail three days later and Libya did not follow through on the threat.

The two servants dropped all charges after receiving undisclosed compensation.

Swiss authorities made no immediate comment on the latest development.

Speaking to Reuters news agency by telephone, Tamoil's Issam Zanati said that deliveries of Libyan crude oil to Tamoil refineries in Italy and Germany would not be affected.

Sensex trims early mornings losses

The Bombay Stock Exchange benchmark, Sensex, on Friday staged partial recovery after the Reserve Bank of India reduced CRR by further one percent and pared nearly half the early morning losses of over 1,000 points.


The Sensex was quoted at 10,904.13, down by 424 points at 1050 hrs after most of the heavy-weight stocks pared early losses. In early morning trade, Sensex had plummeted by 1,088 points at 10,239.76 points.


Similarly, the wide-based National Stock Exchange's Nifty was trading 99 points down at 3,334.65 after hitting a low of 3,198.95 points in early trade.



Market analysts said the Reserve Bank of India's announcement of additional one percent cut in Cash Reserve Ratio (CRR) to 7.50 percent would improve liquidity situation in the market.



The RBI's announcement to inject about Rs 60,000 crore into the cash-strapped system lifted the market sentiments, which brought some relief to the tumbling market, brokers

said.



The BSE banking index was down by 5.42 points at 5,459.25 after diving by nearly 11 percent in opening trade.

RBI cuts CRR by additional 1 pc

Taking swift action to inject about Rs 60,000 crore into the cash-strapped system, the Reserve Bank on Friday announced additional one percent cut in mandatory requirements for banks to keep cash with the central bank over and above 0.50 percent reduction announced earlier.


With this, a total 1.50 percent cut in Cash Reserve Ratio (CRR) to 7.50 percent will come into effect from Saturday.

"Accordingly, on a review of the evolving liquidity situation in the context of global and domestic developments it has been decided to reduce CRR by 150 basis points to 7.50 per cent with effect from the fortnight beginning October 11, 2008 instead of 50 basis points reduction announced on October 6, 2008," RBI said in a statement in Mumbai.





Both the measures -- a one percent and a 0.50 percent cuts in CRR -- came ahead of RBI's mid-term review of monetary policy slated for 24th October.


"In the context of the abrupt changes in the international financial environment, it is important to note that the economic fundamentals of the Indian economy are strong and resilient and that India's financial system is sound, well-capitalist and well-regulated," RBI said.



The central bank said money in forex markets in India have been operating in a relatively orderly manner.



"The current domestic market conditions are essentially a reflection of the adverse developments and extreme uncertainty in international financial markets," the statement said.



The Reserve Bank also said that it would ensure price stability along with the growth process.



"The Reserve Bank is monitoring developments closely and continuously and would respond swiftly and even preemptively to any adverse external developments impinging on domestic financial stability, price stability and inflation expectations and the continuation of the growth momentum of the Indian economy," it said.



Finance Minister P Chidambaram had already assured the nation that liquidity will be injected into the system if the need arises.



Besides RBI's measures, certain other steps like lifting of curbs on Participatory Notes by market regulator Sebi and relaxation in overseas borrowing norms by the government have already been taken to inject money flow into the system.

Iceland nationalises biggest bank

Iceland has nationalised its biggest bank, Kaupthing, and suspended trade on its stock exchange in an attempt to prevent further panic in the country.

Kaupthing is the third bank to be rescued by Iceland's government.

The OMX Nordic Exchange Iceland is closed for trading for two days because of "unusual market conditions" and will reopen on Monday.

Meanwhile, Iceland's Prime Minister Geir Haarde criticised the UK's move to freeze Icelandic bank assets.

Mr Haarde said the UK used anti-terrorism legislation to freeze assets in Landsbanki in order to protect UK savings in one of its units, Icesave.

"We do not consider this to be a particularly friendly act. But we understand that the UK authorities need to act in the interests of their citizens," he said.

Prime Minister Gordon Brown has condemned Iceland's handling of the collapse of its banks and its failure to guarantee British savers' deposits.

Mr Brown said it was "effectively illegal" and "completely unacceptable".

Unusual conditions

Mr Haarde said Iceland had not decided whether to seek help from the International Monetary Fund to weather the crisis.

The country's Financial Supervisory Authority said it took over Kaupthing to safeguard its domestic banking system.

All domestic deposits at the bank were fully guaranteed, it added.

On Wednesday, the UK Treasury arranged for ING Direct to take over the £2.5bn of deposits of 160,000 UK customers of Kaupthing's online arm, Kaupthing Edge.

The Swedish central bank had already agreed to provide a loan to the bank's Swedish arm.

Iceland's government has now seized control of all three of the nation's major banks. Landsbanki and Glitnir were taken over earlier this week.

The country of just 300,000 people has struggled to cope with the global financial crisis.

"The action taken... was a necessary first step in achieving the objectives of the Icelandic government and parliament to ensure the continued orderly operation of domestic banking and the safety of domestic deposits," Iceland's Financial Supervisory Authority said.