Rupee down 22 paise against USD in early trade

The Indian rupee depreciated 22 paise against the US dollar in early trade on Monday, snapping its six-session upward journey, on expectations of fresh capital outflow by foreign funds as domestic bourses may open in the negative zone, in line with other Asian markets.

At the Interbank Foreign Exchange (Forex) market, the local unit, which had gained nearly 4.9 per cent during the last week, turned weak and fell 22 paise to 47.32 a dollar.


On Friday, the domestic currency had ended 27 paise higher at 47.10/12 against the greenback.


Forex dealers said the benchmark Sensex is likely to open on a weak note in line with other Asian markets, which are down up to 1.5 per cent, leading to capital outflow by foreign funds.


Month-end dollar demand also put pressure on the rupee, they added.

Oil holds above USD 60 in Asia

Oil held above USD 60 a barrel in Asian trade on Monday ahead of a meeting this week of the Organisation of Petroleum Exporting Countries (OPEC).

New York's main futures contract, light sweet crude for delivery in July, was down 33 cents to USD 61.34 a barrel in morning trade.


Brent North Sea crude for July delivery retreated 23 cents to USD 60.55.


Prices eased as investors cashed in on profits ahead of the OPEC meeting on Thursday.


"Traders are taking profit from the markets," said Mark Pervan, a senior commodities analyst with ANZ Bank in Melbourne.


"It's probably a view that there is less likelihood of an output cut. OPEC has been fairly quiet on cutbacks so far," he said.


Algerian oil Minister Chakib Khelil was quoted by Newswires as saying that he expected oil prices to hit USD 70 dollars a barrel next year.



Oil at USD 70 a barrel is widely seen as the sustainable level for producers to resume large efforts to search for oil and gas.


The global economic crisis which towards the end of 2008 has seen energy demand plummets, dragging prices along with it.


Oil prices have fell from a record around USD 147 per barrel in July to about USD 32 in December as demand dropped off but have since risen gradually.

Shares rebound after test shock

Shares in South Korea suffered sharp falls following news of North Korea's nuclear test, before recovering.

South Korea's Kospi index fell as much as 6%, before rebounding strongly to end just 2.85 points lower at 1400.90.

There was little impact elsewhere in the region, with Tokyo's Nikkei index closing up 1.3% and Hong Kong's Hang Seng closing up 0.35%.

European markets opened lower, while the UK and the US markets are closed for a public holiday.

At 1000 BST France's Cac 40 index was less than 1% down at 3198.66 points. In Frankfurt the Dax was 1.2% lower at 4858.16.

Rupee breaches 47 level to hit five-mth high of 46.98 a dlr

The Indian rupee continued its upward march for the sixth consecutive day and breached the crucial 47-level against the US currency for the first time after 19th December, 2008, on sliding dollar in the overseas markets.

The rupee also drew support from encouraging trend in the local stocks and continued optimism about faster reforms in the financial sector paving the way for increased capital inflows.



At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed stronger at 47.15/20 a dollar from its previous close of 47.37/38 a dollar and later hit a five-month high of 46.98 against the American currency.



It, however, pared gains and was quoted at 47.14/15 a dollar in late morning trade.



Forex dealers said weak dollar overseas provided a fresh impetus to the Indian currency.



The dollar fell to its recent lows against the basket of currencies on fears about the US losing the AAA rating.



They said the rupee trimmed its gains due to some dollar buying by banks, probably on behalf of oil companies.

Japan upgrades economic outlook

Japan's central bank has upgraded its economic outlook, saying the worst of the recession might be over.

The move came after the bank's two-day policy meeting, at which it opted to keep interest rates on hold at 0.1%.

While domestic demand is expected to remain low, the bank said exports, on which Japan is heavily reliant, were forecast to pick up.

Data on Thursday showed Japan's economy shrank in the first quarter at its fastest rate since records began.

Output contracted by 4% during the first three months of the year, or by 15.2% on an annual basis, as exports fell, according to official figures.

Recovering

"The pace of deterioration in the Japanese economy will likely moderate," the Bank of Japan said.

"Going forward, although domestic private demand is likely to continue to weaken, exports and production, after levelling out, are expected to start recovering and public investment to increase."

The latest outlook is more optimistic than the bank's forecast in April, when it said economic conditions had "deteriorated significantly".

While the bank did not provide new growth forecasts with numbers, it said it would expand the types of collateral on offer in order to encourage lending.

High costs fuel record loss at BA

British Airways has announced the biggest loss since the company was privatised in 1987.

BA reported a loss before tax of £401m for the year to 31 March, after seeing its results hit by a weak pound and higher fuel costs.

BA made a revised profit of £922m in the previous year.

Although revenues increased to almost £9bn, BA faced a near-£3bn fuel bill. Chief executive Willie Walsh said he saw "no signs of recovery anywhere".

Fuel costs rose 44.5% after the price of oil soared last year. The weaker pound also contributed to rising costs as fuel is bought in US dollars.

The results included redundancy-related costs of £78m.

BA said it had cut more than 2,500 jobs since last summer and added that it was in talks with unions about "pay and productivity changes".

"The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging," Mr Walsh said.

PM for pushing reforms, jobs and investment

Set to begin a new term in office, Prime Minister Manmohan Singh on Tuesday spoke of the need for reforms and reverse the slowing down of investment and employment generation caused by global economic slowdown.

Shortly after he was elected leader of the Congress Parliamentary Party paving way for him to become the Prime Minister for the second term, Singh said, "There is some slowing down of investment and employment generation. We have to reverse this. We have to revive growth and make it even more inclusive."

The Prime Minister said sustaining growth requires new investment and better management of government finances. This also "requires reform of the economy... Revitalisation of agriculture and acceleration of industrial development".

After growing by an average annual nine per cent for the last four years, the Indian economy came under pressure of the global meltdown and expanded at a slower pace of around seven per cent in 2008-09.

"...The global economic slowdown has hurt us.," Singh said. He said he would ask every minister to set time-bound targets for implementation of the election promises of the Congress Party and policies of the each ministry. "We will undertake quarterly review of the programme implementation by each ministry," he said.

The savings and investment rates have to be kept high to remain globally competitive in the face of economic challenges, he said.

Pound strengthens against dollar

The pound has strengthened against the dollar, after Bank of England minutes revealed that policymakers considered boosting money supplies.

The prospect of the move, which could encourage lending - stimulating the economy - boosted sterling.

By Wednesday afternoon, one pound could buy $1.5514, up from Tuesday's close of $1.5350. A day earlier, sterling had reached a five-month high of $1.5525.

The dollar was also weaker against both the euro and the yen.

At noon, the euro was trading at 88.16p.

Meanwhile, the yen was hit by the announcement that the Japanese economy had shrunk by more than 4% in the first quarter of 2009.

With analysts seeing indications of economic recovery, there are signs that investors are moving away from the greenback, often deemed a safe haven.

In January, the pound hit a 23-year low of $1.35 against the dollar.

Last July, the pound was worth more than $2 but its value plunged as signs emerged over the degree of the downturn in the UK.

The May minutes also showed members had unanimously voted in favour of keeping interest rate unchanged at 0.5%.

The Bank of England's minutes showed the bank was open to increasing its quantitative easing plan by the maximum £75bn permitted, which would help encourage lending.

Oil prices rise to six-month high

Oil prices have hit six-month highs, breaking through $60 a barrel as investors wait for key US inventory figures later on Wednesday.

US light crude rose to $60.70 a barrel, while London Brent climbed to $59.18.

US crude slipped below $60 on Tuesday, dragged lower by official data showing a record fall in the number of new homes built in the US.

Investors are hoping to see a fall in US inventories that would indicate an increase in demand for oil.

But some analysts believe the price will climb, even if inventories rise.

"I expect the market to push higher even if there's a build in the inventories, just because that's where the momentum is," said Jonathan Kornafel at Hudson Capital Energy.

Oil prices have risen from $50 a barrel over the last three weeks, as optimism about the state of the world economy has grown.

And it has jumped from $32 levels seen in January, though remains well below the record high of $147 touched last July.

Toyota unveils new Prius hybrid

Toyota, the world's biggest carmaker, has revealed the latest revamp of its Prius petrol-electric hybrid in Japan.

The carmaker said it has had 80,000 advance orders in Japan. It is aiming for sales of 400,000 a year globally.

Incoming president Akio Toyoda, the grandson of the company's founder, said the future of cars rests on this model.

Prius is the world's best-selling hybrid, but Toyota's dominance of the sector has been challenged by rival Honda's cheaper Insight model.

The new Prius gets a combined 50 miles per gallon, compared with 46 mpg for the 2009 model, Toyota said.

It has not yet announced when the new version will be available outside Japan.

Worst loss

The carmaker is pinning its hopes on a new Prius boosting sales, after this month reporting its worst annual loss of 436.94bn yen ($4.4bn; £2.9bn) in the year to 31 March, due to the deepening recession and strong yen.

The Prius, launched in 1997, is now in its third generation.

By the end of April, Toyota said it had sold 1,028,000 of the cars worldwide, more than half of them in North America.

Toyota said its Japan prices for the Prius would start at just over 2m yen, or about £13,800 ($20,900), which is cheaper than the current Prius.

It also announced it will cut the price of the second-generation model on sale now, to 1.89m yen, the same price as Honda's Insight.

Stock market into buying frenzy; trading suspended for day

Hailing the decisive mandate to the Congress-led UPA, investors went into a buying frenzy, resulting in an unprecedented surge in the BSE Sensex, which rose by nearly 2,100 points and forced the authorities to suspend trading for the day.

Trading was suspended for two hours within seconds of opening of the market after the BSE surged by over 1,300 points and the authorities closed the floor immediately after trading resumed at 1155 hours. The BSE sensex closed 17 percent higher at 14,272.63.

Echoing the sentiment, the NSE index also rose by 20 percent, prompting the authorities to suspend trading for the day.



In two bursts, the 50-share Nifty rose over 712 points, a buoyancy that led to an all-round appreciation in share prices, which marketmen say is the first of its kind.

The BSE 30-share index zoomed to close at 14,272, up by nearly 2,100 points. The NSE index surpassed all the three upper limits of 10, 15 and 20 percent, forcing the authorities to suspend trading for the day.

With the UPA getting near a clear majority in the 15th Lok Sabha, economic reforms are set to get pace in all the sectors, a leading broker said.