Posts Tagged ‘currency trading’

RBI’s Monetary Policy Stance – Part 3

Just an extension of our previous blog “RBI, Monetary Projections And Indian Economy


RBI’s Monetary Policy Stance - Part 3

RBI’s Monetary Policy Stance - Part 3

In this Blog we would touch upon the aspects as that of RBI’s Monetary Policy Stance and few more facts which carries direct or indirect connection with the RBI Policies.

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For example, business confidence index ,industrial recovery status, overall consumption and investment, export-imports status etc;

The True Facts:

So far business confidence has also improved, and demand conditions seem to have picked up, as seen by better order book and increased capital finance requirements.

Industrial recovery seems to be on its way with 5.8% growth in IIP during April-August ’09.

A revival in capital flows, and stronger performance of the core infrastructure sector (4.8% for April-August ’09) seems to be indicating a slight recovery in the economy.

However, there has been a deceleration in growth of private consumption and investment demand, and raw material prices are expected to rise on account of inflationary pressures.

The deficient monsoon could also reduce rural demand.

First quarter earnings of corporates reflect a decline in sales, and non-food credit growth has decelerated, with credit card and consumer durables related credit turning negative.

Exports have continued to decline as external demand dependent services remain sluggish.

The economy is showing some signs of recovery, while a rising CPI has now pushed WPI into the positive territory, mainly on account of higher food prices.

The RBI’s stance will thus have to manage the trade-off inflationary pressures between supporting growth and controlling .

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Monetary Policy Stance

On the basis of the above overall assessment, the stance of monetary policy for the remaining period of 2009-10 will be as follows:

– Keep a vigil on the trends in inflation and be prepared to respond swiftly and effectively through policy adjustments to stabilize inflation expectations.

Monitor the liquidity situation closely and manage it actively to ensure that credit demands of productive sectors are adequately met while also securing price stability and financial stability.

-Maintain a monetary and interest rate regime consistent with price stability and financial stability, and supportive of the growth process.

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Stay Tuned for more on the topic.

We would cover Analysis view from the Analyst with respect to the monetary point of view.

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Indian Stocks Rose to a 15-Month High :)

Indian-stocks-15-month high

Indian stocks rose to a 15-month high yesterday. 🙂

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DLF Ltd led gains as investors judged recent declines as excessive. Mahindra & Mahindra Ltd climbed on a report it will make sports utility vehicles for overseas markets.

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DLF, the biggest real estate developer, jumped 5.5% after losing 10% in the previous five trading sessions.

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Mahindra & Mahindra, the largest sports utility vehicle maker, advanced 1.5%.

Sterlite Industries (India) Ltd, the No 1 copper producer, added 3.8% after metals prices climbed.

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The Bombay Stock Exchange’s Sensitive Index (Sensex), rose 240.26, or 1.5%, to 16,454.45, the highest since May 28, 2008.

The gauge declined 0.3% on Monday, snapping a six-day rally.

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“There is strong liquidity supporting the market,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd in New Delhi. “Yesterday’s fall has made some stocks attractive.”

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The rupee advanced against the US dollar as overseas investors added to holdings of the nation’s assets amid signs economic growth is quickening.

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The rupee climbed 0.2% to 48.655 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg.

The currency has risen 0.4% this month.

India’s $1.2tn economy expanded 6.1% in the three months to June from a year earlier, accelerating for the first time since 2007, the government said last month.

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ECONOMIC INDICATORS – A Key Factor in Currency Trading : Part 1

Economic Indicators – A Key Factor In Currency Trading

Economic indicators are the most concerning part of the currency trading which are released by various agencies of the government or private sectors.

These are published on a regularly scheduled basis which helps market observers to track the pulses of an economy.

They are hardly ignored by anyone who is the participant of the financial markets.

Economic indicators are procyclic and their movement, are directly proportional to the trend of economic performances.

With so many people poised to react to the same information, economic indicators in general have tremendous potential to generate volume and push the sentiments of the people to move prices in the markets.

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Tracking the calendar of economic indicators will also help the market followers to make sense out of otherwise unanticipated price action in the market.

Let’s talk what exactly an investor can derive from these indicators:

Suppose USD has been in a tailspin for three weeks and the trading day is beginning of the week i.e. Monday.

Now it is easily predictable that many traders are holding large short USD positions.

However on Friday the employment data is yet to be released.

It is very obvious that with this key piece of economic information as it is made public, the USD could experience a short-term rally leading up to the data on Friday as traders pare down their short positions.

This shows that these small but vital informative indicators directly or indirectly rules the trading terminal and affects the prices vigorously.

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These economic indicators are mainly helpful in top down approach followed by any investor.:)

They start their analysis with global economies including both national and international economic indicators as GDP growth rates, inflation, interest rates, exchange rates, productivity and energy prices as well.

The availability of good economic data is the major attention of international markets as they are the indicator of the countries economy which is the promising destination for foreign investors.

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Not only this the other releases like personal income, unemployment rate, housing starts, retail sales etc. which are also known as coincident indicators give an overview on future performance of the related country and its economic conditions.

These indicators are changing at the same time and in same direction as the whole economy moves, so they represent directly the current state of the economy. 🙂