Posts Tagged ‘traders’

GLOBAL BOARD OF TRADE (GBOT)

Adding another trading floor in the whole list of numerous exchanges around the world, Global Board of Trade (GBOT) ”the first international multi-asset exchange”  based out of Mauritius, was officially launched by that country’s Prime Minister Navinchandra Ramgoolam.

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GBOT is a wholly owned subsidiary of Financial Technologies (INDIA) Limited, a leading provider of trading technology solutions and a global leader in creating and operating transparent, efficient, and liquid tech-centric exchanges transacting a broad spectrum of asset classes, including equities, commodities, fixed income, and foreign currency instruments. GBOT is also a member of leading industry associations such as Association of Futures Markets (AFM), Futures and Options Association (FOA), Swiss Futures and Options Association (SFOA), and Defra EU Emissions Trading Scheme (EU ETS).

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In the Hands of………..

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GBOT has a very strong board comprising reputed names such as Mr. Venkat Chary (Chairman), Mr. Jignesh Shah (Vice- Chairman), Mr. Mohammad A. Vayid (Director), Mr. V. Hariharan (Director) , Mr. Joseph Hadrian Bosco (Managing Director and Chief Executive Officer).

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Trade Timings

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It is proposed that the normal market trading hours on Global Board of Trade for Currency and Commodity Derivatives Segments will be 09:30 Hrs Mauritian Time (05:30 Hrs GMT) till 23:30 Hrs Mauritian time ( 19:30 Hrs GMT). Any decision about revision of the trading hours, as and when it happens, will be informed to the market participants via trading circulars.

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Value Propositions

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  • The strategic location of Mauritius (i.e. GMT +4) with respect to the rest of the world will enable the investing community to hedge price risk movements vis-à-vis the asian, Europenn and American markets.

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  • Trades will be in the form of standardized contracts and participants will be anonymous , thus ensuring the price discovery  process will be free from the influence of any vested interest or non-market forces.

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  • The commodity market segment of GBOT will enable sellers and buyers of commodities to protect their business from the adverse effects of price volatility in the terrestrial markets. The price risk management will be through the time-tested process of ‘hedging’.

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  • The advantage of a moderate tax regime prevailing in Mauritius will be of immense benefit to investors and traders alike.

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  • GBOT would offer commodity as well as currency derivative products on its state-of-the-art electronic exchange platform with efficient clearing and settlement systems to ensure counter-party guarantee for all trades.

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  • For the first time worldwide, two African currency futures will be traded.

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Products:

Bullions: Gold, Silver

Currencies: EUR/USD, GBD/USD, JPY/USD, USD/MUR, ZAR/USD

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OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

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Commodity Weekly Commentary 2nd – 6th August

Bullion counter hammered down last week as prices fell like nine pins after investors wind up their long positions in gold and silver. Gold slid nearly $100.0 from the historic record highs, recorded June 21 at $1265.30 an ounce, affected by traders reducing their stakes and investments in the SPDR Gold Trust, the world’s largest exchange-trade fund.

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The absence of fundamentals from Europe, led traders to turn to the US for signs of global recovery, but the disappointment came from US durable goods report which slumped in the month of June by 1.0 percent, compared with a revised -0.8%. Base metal pack extended their previous week gains as global inventory draw down and gains in the euro boosted the metals despite a surprise decline in U.S. orders for long-lasting
goods.

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Western world unwrought aluminium stocks fell to 1.192 million tonnes in June from a revised 1.306 million tonnes in May, industry data showed. Moreover, gains in equity market also supported the prices as investors anticipate robust demand in near future. In energy counter crude oil prices wiped out its previous week gains and just fell from the level of $80 after the U.S Energy department reported a surge in inventories in the US. However, crude oil prices managed tom conquer some part of the lost territory mainly on the back of the softer US dollar index.

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However, natural gas futures ended higher last week, backed by firmer cash prices and a government report
showing another light weekly inventory build despite ongoing concerns about too much supply.

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As regards agro commodity, the week gone by majorly known for profit booking at higher levels in many commodities. Traders preferred profit booking in most of the spices as they became overbought in the market. Cardamom futures caught the attention of traders as they traded in lower circuits throughout the week, supported by weak spot market.

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After trading in positive territory for many weeks, finally jeera, turmeric and pepper saw pause in the rally as stockiest released some stocks at higher levels. Good monsoon and improved sowing in producing area dragged down guar counter in both spot and future market.

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What surprised the market was the upside move oil seeds. R M seed, refined soya oil and crude palm oil witnessed nonstop four week rally on confident move in CBOT amid fall in dollar index.

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Maize futures ignored the positive sentiments of CBOT and moved down on profit booking. Additionally, soyabean saw good short covering. Good export demand supported mentha futures to recover from its week low. Weak sentiments in spot market continuously hammered the potato futures.

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OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,http://www.smctradeonline.com
,http://www.smcwealth.com

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NATURAL GAS “Volatile by Nature, getting ahead” Final Part :)

3. Active hurricane forecasts may underpin prices

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The numbers are out. An active storm season is predicted for the Atlantic and natural gas-related ETFs are already gearing up and moving on the news. More storms than “normal” – about 16 – are anticipated to hit the Atlantic coast of  the United States this season. Of these, eight are expected to become hurricanes and about four of them are going to be intense, according to the Tropical Storm Risk.

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The forecast joins a growing number of predictions that the 2010 Atlantic hurricane season, which starts June 1, will be among the most active on record. As the number of hurricanes rises, so do the chances of one striking the oil-rich Gulf of Mexico or Florida’s crop areas.

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The Gulf is home to about 30% of U.S. oil and 12 % of U.S. natural gas production, the U.S. Energy Department says. It also has seven of the 10 busiest U.S. ports, according to the Army Corps of Engineers. Meanwhile, BP is still trying to cap a leaking offshore oil well that has created a devastating slick that is washing up in Louisiana. Attempts to stop the oil will be hampered if and when a tropical storm or hurricane passes through the Gulf of Mexico.

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4. Warm Weather

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It is expected that temperatures in the Northeast and Midwest, the key gas consuming regions, to average above normal in the coming days, with highs frequently climbing to the mid-80s Fahrenheit area. However, a healthy economic recovery also could trigger a strong gain in industrial demand this year, which accounts for nearly 30 percent of total gas consumption.

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Crude Oil & Natural Gas Ratio

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Historically, the price of oil and natural gas has moved in tandem because the demand for both commodities move up or down in conjunction with the economy and weather. The historical oil-to-gas price ratio has ranged from 6:1 to 13:1. For example, at a 10:1 ratio, if the price of natural gas is $7 per MMBtu, then the value or price per barrel of crude oil is expected to be around $70 per barrel. This oil-to-gas price ratio move up and down based on current and expected future events, particularly if there is political unrest.

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However, the oil-to-gas price ratio changed dramatically in the middle of 2009. As crude oil climbed to over $80 per barrel & natural gas NYMEX prices fell to $4 per MMBtu, taking the oil-to-gas price ratio to 20:1.Because of the wide price ratios last summer, some investment companies urged investors to buy natural gas commodities based solely on this ratio, under the belief that it would ultimately return to a historical level of 6:1 to 13:1, providing investors with a formidable profit. Now days we are witnessing that natural gas prices are getting underpinned and are expected to outperform crude oil so that the ratio will come again in its range.

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With keeping these fundamentals into consideration, investors can bet on this interesting commodity.

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,http://www.smcwealth.com

NATURAL GAS “getting ahead with confidence” Part 1

Scarcity is always good news for a commodity-based investment. But when it comes to natural gas, scarcitydoesn’t seem to be an issue these days. Natural gas prices have been extraordinarily volatile over the past 15 years, and the recent experience is no exception as, prices have gained sharply since August 2009. However, they are still less than half what they were in 2008.

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With an unpredicted surge in production, the natural gas price is getting cheaper and cheaper compared to oil. There are concerns among traders also that the market will be oversupplied in the short- to medium-term, with rig counts going up and industrial demand still struggling due to the weak economy. These factors translate into limited upside for natural gas-weighted companies and related support plays. But, the gap between supply and demand is expected to reverse in the coming months as natural gas producers bet on the improving U.S economy, the forecast of an active hurricane season and many other factors.

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However, natural gas might have more upside potential than downward potential for the following reasons:

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1. Rising Inventory Discourages Production

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Lower demand and higher production resulted in storage injections. U.S. Energy Information Administration data on 10th June, 2010 showed that domestic gas inventories rose by 99 billion cubic feet to 2.456 trillion cubic feet, a record high for this time of year and a level not normally reached until early July. Strong gains in storage have helped ease concerns about rebuilding stocks for next winter even if the summer turns out hot or Gulf Coast storms temporarily disrupt supplies. However, sustained low prices could reduce drilling activity over time. While the gas drilling rig count has fallen in five of the last seven weeks and raised expectations that U.S. production will slow later this year and tighten an oversupplied market, some traders worry that prices between $4.50 and $5 were still high enough to encourage more drilling. Gas prices might rise along with demand once production starts to decline.

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2. Increasing Usage for N.G

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Natural gas is an almost perfect energy source. Lower-priced natural gas will once again compete with coal for the electricity supply. Growing concerns about the environment also make it more attractive than coal. In addition, natural gas fired plants are much cheaper to build than nuclear plants. Gas now competes with diesel fuel for trucks and vans. In Asian countries, gas is being used by a growing number of regular cars. These benefits of natural gas over coal can also underpinned the prices in coming period.

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,http://www.smcwealth.com

CRUDE OIL ECONOMIC RECOVERY IS HELPING CRUDE RALLY

Crude oil, the life blood of the economy, is rallying to highest levelssince 2008 highs, indicating that the global economy is back on track which is also supported by rise in key global equities markets. In the first quarter of 2010, front-month NYMEX crude prices rose 5.6%.

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Crude oil prices have negated the hike in dollar index and crude stockpiles in US. Traders have placed fresh bets on a rise in demand affirming a faster pace of economic recovery in the US. Crude prices have more than doubled since dropped below $35 late in 2008, but still significantly lower as compared to the record high neaar $147 a barrel in july 2008.

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Positive economic indicators of US like PMI, home sales and employment data are showing that economic recovery is back on track and that will increase fuel consumption. Data showing an unexpected increase in pending home sales and a survey result indicating service sector growth added to investors’ confidence in the US economy .

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The institute of supply management’s non-manufacturing index rose to 55.4 in the month from 53.0 in february, sharper than economists expectation for a modest increase to 53.6.

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A report from the National Association of Realtors the pending home sales index rose 8.2% to 97.6 in february,  from a downwardly revised 90.2 in the previous month, countering consensus expectations for a 51 decline.

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According to EIA “Projected economic growth this year is higher in this forecast, with U.S. real GDP growing by 208% and world oil consumption weighted real GDP growing by 3.4%”. Given expected oil demand growth in 2010, oil prices should continue to firm despite expected increase in both non- OPEC and OPEC production this year.

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According to EIA” projected growth in domestic crude oil production is more moderate in 2010, increasing by about 210,000 bbl/d” Crude oil future outlook looks promising as it is driven mainly with global economic recovery. And summer demand in US will also keep the prices well supported.

Commodity Weekly Commentary 5th-9th April

In the week gone by interesting moves were witnessed in gold futures. Gold prices surged high on international bourses while strong rupee kept domestic gold prices under check. International gold futures ended the first quarter with a positive note on buying driven by volatile currencies, firm stock markets and oil as well as euro zone debt but it struggled to sustain gains since hitting a record above $1,200 an ounce last December.

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The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said that its holdings stood at 1,129.823 tonnes as of March 31, 2010. Even, silver showed smart gains on international as well as on domestic exchanges. In base metal pack; copper futures hit 20-month highs last week, starting the second quarter in upbeat mood as improving demand sentiment and investor cash supported metals.

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Falling LME inventories helped aid sentiment in recent weeks, with copper stocks dipping 1,875 tonnes to 512,450 tonnes, having hit 6-1/2 year highs at 555,075 tonnes in mid-February. Nickel stood as outperformer last week among all the base metals as prices rose 34.9 percent in the first quarter of this year, outperforming other metals traded on the LME.

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The buying was triggered by expectations of stronger demand from stainless steel mills. In energy counter;  crude oil futures hit their highest level this year and posted the loftiest settlement for a front-month crude  contract in almost 1.5 years as a weakening dollar attracted buying.

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Bearish trend was witnessed in most of agri commodities in the week gone by. Guar pack futures fell last week tracking weakness in the spot market, hopes of normal monsoon rains in 2010 and sufficient stocks. The movement in guar seed is largely driven by the monsoon report as it is a rain-fed crop.

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However, in top producer Rajasthan, output is likely to drop by 80% to 241,000 tonnes in 2009/10 as scanty  rains trimmed area and yields. Profit booking at higher levels, drop in spot prices and rising arrivals  kept chana futures under check last week. In oil seeds section; soya bean and soya oil futures also  tad down tracking losses in the U.S. market, while rapeseed traded sideways tracking weakness in soya  market on output concerns.

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Traders are now speculating that output would be lower for mustard than the estimates considering the arrivals in spot market. In spices pack; jeera and chilli prices settled in red zone while pepper futures surged high for the third consecutive week due to extended bargain buying on the exchange platform. The factors supporting the rise in prices are firm rates in the international markets and active buying of exchange because of tight supply situation in the physical markets.

Indian Stock Traders To Contend With Fewer Holidays in 2010 !

Indian Stock Traders To Contend With Fewer Holidays in 2010

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Indian brokerages and traders would have to contend with fewer trading holidays in 2010, going by the list of weekdays on which the markets will remain closed in 2010.

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Moreover, they would have to put in longer hours this year owing to the decision of stock exchanges to increase the trading hours.

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In comparison to 2009, when there were 19 holidays throughout the year, the projected number of public holidays in 2010 has dropped to just 11, including the first day of the year.

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As per the official of Bombay Stock Exchange (BSE), this is certainly not by design.

Eight holidays this year — including Dussehra, Guru Nanak’s birthday, Christmas, Independence Day — fall either on a Saturday or Sunday,” he said.

“It’s only that we have mentioned them on our holiday list.”

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According to SMC Capital’s Jagannadham Thunuguntla, the Securities and Exchange Board of India was already contemplating a cut in the number of holidays to align the Indian markets with other peers, where trading holidays are restricted to six-seven a year.

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“This year, coincidentally, this has fallen in place. Many festivals and events are on weekends. That’s why, if you notice, today has been declared a holiday as a consolation to us,” Thunuguntla told.

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The authorities at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have not only increased the trading hours by 55 minutes but have also decided not to advance the opening bell this year .

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From Jan 4 onwards, trading will commence at 9 a.m., while the closing bell will ring at 3.30 p.m. in a move intended to woo foreign funds from other major Asian markets like Singapore and Hong Kong.

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CRUDE OIL …. “Can It Continue The Recovery With Same Pace In 2010”

Crude oil, which is the  lifeblood of the economy, has shown stunning recovery in this year as prices have merely doubled from low of $35 to nearly $80. Thanks to the dose of economic stimulus packages which revived the global economy to come out of recession and hence the traders sentiments in crude oil turned in favour of bulls. But the million dollar question is that can crude continue this recovery in medium term. But as of now it seems that the speculative upside and downside rally is over which was seen when it rocked higher toward $147 and then plunged to $35. From here on, the key fundamentals of supply and demand will be the driver of crude prices.

In the year 2009 dollar weakness was the prime reason for the swift rally in crude oil prices. As crude oil is considered as other asset class and massive flow of hedge funds supported the crude oil prices.

Stunning recovery worldwide after a severe recession and the improvement in expected GDP figures by IMF also kept bulls interested.

Now as the global economy is slowing limping back to normal which is suggested by various economic indicators but still the skepticism of pace of recovery is questionable which will further guide the crude movements.

It is important to remember that current pricing on crude oil is influenced by world demand, not just U.S. demand. The Asian economies are improving; China’s economy expanded by 8.9% in the third quarter. Global macro economy will be the key driver of the crude oil prices in times to come.

Crude oil is primarily a transportation fuel. So increase in crude oil usage in transportation will get boost as the global economy continue to recover.

Oil has risen by 79 percent this year on signs that global economy is recovering from its worst recession since World War II, stoking fuel demand amid output cuts by the Organization of Petroleum Exporting Countries.

OPEC countries kingpin Saudi Arabia, also believes that $75 per barrel is a fair price for both consumers and producers. In September meeting, OPEC members said they were content with the direction in which prices were heading. While voicing worries about high oil stock levels globally, they decided to hold production steady and focus on compliance factor with existing production quotas. The lack of production discipline, however, appears to continue. According to latest OPEC report group’s production averaged 26.52 million barrels per day in October, a 50,000 barrel per day increase from September.

Recently OPEC, supplier of about 35 percent of the world’s crude oil, revised its estimate for 2010 global demand growth by 750,000 barrels or 0.9% to 85.07 million barrels a day. OPEC in September agreed to maintain output quotas at 24.845 million barrels per day, will hold its next meeting in Luanda, Angola, on December 22.

The hurricane season in the US has also remained quite in this year as no major hurricane hit the US refineries. Hurricane season generally starts from June 1 and lasts through November.

In a nutshell crude oil will not see one sided movement and will remain volatile in the year 2010. Dollar index has been under lot of pressure in the year 2009, which has given support to the crude oil prices but as the dollar index is expected to show some recovery in first quarter of 2010 that can exert pressure on crude oil prices.

OECD demand of energy is slated to increase in the year 2010 and will give support to the crude prices. China energy demand is also expected to rise in the year 2010 and that will keep the prices supported.

So overall the prices in the next year can remain in the range of $55-85.

Relation Between Price and Inflation – How ?

Relation Between Price and Inflation

There is always a direct relation between prices of certain commodities and inflation. 🙂

Let’s take the price of oil. This and inflation are connected in a cause and effect relationship.

As oil prices move up or down, inflation follows in the same direction. 🙂

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The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products.

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For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

🙂

To understand inflation, we must first understand what the word means.

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.

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When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

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As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation.

This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy.

🙂

Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain “Inflation is too many dollars chasing too few goods”.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up.

Hence the retail price index goes up, and inflation takes place. 🙂

Inflation does NOT however mean an increase in the general price level of goods and services within a country.

What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation.

An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

🙂

Prices and inflation

When inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc.,

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* industrial slowdowns.

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Market prices for ordinary citizen are not like that.

When supply is more than demand, industries slow down the output and the prices go up.

When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy.

Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

🙂

In conclusion, inflation will always be with us; it’s an economic fact of life.

It is not intrinsically good or bad, but it certainly does impact our lives.

Everyone knows, once the prices go up they stay up and never come down.

It has no meaning to common man if it does not translate into reasonable living standards.

🙂

There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

To understand inflation, we must first understand what the word means.

Inflation is an increase in the price of a basket of goods and services that represents the economy as a whole. It is an upward movement in the average level of prices, measured as an annual percentage increase. As inflation rises, every rupee you own buys a smaller percentage of a good or service.

The value of a rupee does not stay constant when there is inflation. This value is seen by looking at its purchasing power, i.e. the real, substantial goods that money can buy. Because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain “Inflation is too many dollars chasing too few goods”.

This is not difficult to follow. Imagine a world with two commodities: Mangoes picked from mango trees, and paper money printed by the government. In a year where there is a drought and mangoes are scarce, the price of mangoes rise, as there is substantially more money chasing very few mangoes.

Now if demand for goods and services doesn’t fall as much, then price of goods and services go up. Hence the retail price index goes up, and inflation takes place.

Inflation does NOT however mean an increase in the general price level of goods and services within a country. What inflation actually means is an inflation of the money supply, i.e. an increase in the total number of rupees in circulation. An increase in the price level is a normal consequence of inflation because it depreciates the currency, lowering each rupee’s purchasing power.

Prices and inflation

There is always a direct relation between prices of certain commodities and inflation. Let’s take the price of oil. This and inflation are connected in a cause and effect relationship. As oil prices move up or down, inflation follows in the same direction. The reason why this happens is that oil is a major input in the economy – it is used in critical activities such as fueling transportation – and if input costs rise, so does the cost of end products. For example, if the price of oil rises, then it costs more to make plastic, and a plastics company then passes on some or all of this cost to the consumer, which raises prices and thus – inflation.

However, even when inflation comes down, prices in the market do not come down immediately. The reasons may be many. Inflation comes down due to

* fall in consumption,

* low industrial output,

* fall in industrial commodity prices, especially crude, steel, etc., and

* industrial slowdowns.

Market prices for ordinary citizen are not like that. When supply is more than demand, industries slow down the output and the prices go up. When inflation is down RBI reduces the interest rate, prime lending rate, etc., which increases liquidity in the economy. Excess money is then often used for speculation with traders cornering the stock and creating artificial scarcity, thereby increasing the prices or not letting it come down.

In conclusion, inflation will always be with us; it’s an economic fact of life. It is not intrinsically good or bad, but it certainly does impact our lives. Everyone knows, once the prices go up they stay up and never come down. Negative inflation has no meaning to common man if it does not translate into reasonable living standards.