Posts Tagged ‘US Dollar’

INDIAN RUPEE “SOUL TO A NATION”

We can start exploring this world’s history, present & future by several understanding & discovering symbols. On this eve of Independence, where the whole country is celebrating the Sixty four year of Independence, let’s take a look of how the country’s pride “The Indian Rupee” was designed & came into existence. The Indian rupee (sign: `, code: INR) is the official currency of India. The issuance of the currency is controlled by the Reserve Bank of India.

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The Walkthrough

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On March 5, 2009 the Indian government announced a contest to create a symbol for the rupee. During the Union Budget 2010 Finance Minister Pranab Mukherjee mentioned that proposed symbol would reflect and capture the Indian ethos and culture. Five symbols had been short listed, and the Cabinet selected the definitive symbol created by D Udaya Kumar on 15 July 2010. Kumar’s entry was chosen from 3,000 designs competing for the currency symbol.

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What does it depict?

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The symbol is a taken from the Devanagari ‘j’. It is a perfect blend of Indian and Roman letters — capital ‘R’ and Devanagri ‘Ra’. The parallel lines at the top (with white space between them) make an allusion to the tricolor Indian flag.

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Equality sign symbolizes the relativity of economy and balanced economy.

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Marked Existence

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With approval of new Indian rupee symbol, India has finally joined the privileged club of currencies, which currently has the US dollar, British pound sterling, Euro and Japanese yen. This makes India rupee the 5th currency in the world to have a clear distinguishing identity. The symbol will also be included in the Indian standard – Indian script Code for Information Interchange (ISCII).

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Adaptability

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Shiro Rekha (Uniqueness), Indian flag (Tri color), Harmonious with other currency symbols, Global and local appeal, Simplicity (High recall value), Familiar and easy to read, Easy to write & design, Easy to recollect and adapt , Blends with numerals, Balanced and Stable form, Unique & Dynamic design, Easy to implement.

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Meaning to a symbol is like Soul to a body. Psychologically, a symbol is an element of communication intended to represent repressed thoughts, feelings, or impulses & by which ideas are transmitted between people sharing a common culture. The symbol of Indian Rupee depicts one heart, one mind, one spirit, in tune with all elements. This symbol truly symbolizes our country, our tradition, our nation’s economy and its currency.

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Five designs that were short-listed by the jury and sent to the Cabinet for its approval. JAI HIND

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YUAN …. “KNEE-JERK REACTION”

The Chinese New Year has only just started, and already trade tensions are ratcheting up. The strength of China’s Yuan gave the world a confidence to end the peg & acted as a cushion for reviving from the fears of the global financial crisis, especially with European debt worries in the background.

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China’s yuan soared at 6.7980, its highest level against the US dollar since its July 2005 revaluation after the central bank signaled it would allow the yuan to continue its rise.

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REVALUATION OR REVOLUTION???

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The yuan policy change signaled that the Chinese economy “the world’s third-biggest economy” is on a more solid footing. China has been under intense global pressure, especially from the US, to introduce more flexibility between the yuan and the dollar to encourage the cash-rich Chinese to buy more from the heavily indebted West.

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Needless to say, a stronger yuan would allow China to lower the cost of its imports, particularly commodities.

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Even a small rise in the yuan could shave billions off the cost while raising the volume of China’s commodity purchases. China’s economy is still in a cycle towards overheating.

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China’s inflation accelerated in May to 3.1%, the quickest pace in 19 months, highlighting overheating risks in the fastest-growing major economy. Inflationary pressures may convince China to allow its currency to appreciate. A stronger yuan is in China’s interest to satisfy its appetite for resources.

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Yuan appreciation should benefit China’s importers of bulk commodities like soybeans, cotton, copper and various mining products including iron ore and other metal ores as these commodities, priced in the dollar, will be cheaper. The appreciation will support commodities prices in dollar terms in global markets as China will be able to accept higher prices in the dollar terms.

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Following is a list of some likely winners and losers from any yuan appreciation.

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WINNERS

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·Foreign resource companies – On hopes China’s move would increase its resource imports.

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·Foreign heavy machinery makers – The U.S. sells billions of dollars worth of machinery and products to China each year.

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·Foreign automakers – Foreign automakers that sell cars in the world’s largest vehicle market, should also gain.

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·U.S. companies such as General Electric Co and Procter & Gamble Co are likely to make currency exchange gains when their China profits are converted into U.S.dollars.

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·Chinese airlines – China’s three top carriers, Air China China Eastern Airlines and China Southern which borrow in foreign currencies to pay for aircraft, but generate reveyuan, could benefit the most. Airlines also use dollars to buy fuel.

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·Foreign luxury firms – A firmer yuan would likely boost other Asian currencies as a strong yuan is seen by investors as a pledge of confidence for Asia’s growth. That should help luxury goods makers, whose imported products will be cheaper across the region, just as more Asians benefit from increased wealth.

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LOSERS

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·Foreign retailers- Companies signed earlier memorandum of understanding for projects to build, would have to spend more in U.S. dollars to fund investments.

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·Chinese commodity firms – Companies with dollar-linked prices for their output, but their costs are in yuan, would find their revenues falling while their costs remain steady, if yuan strengthens.

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In a nut shell, China is not shying away from commodity consumption any time soon.They still have roads to pave, factories to build, and cities to expand. China is thinking ahead in terms of commodity demand. The shift toward a stronger exchange rate may give more purchasing power to its people. Chinese consumers might buy more while their counterparts in the U.S. may have to pay more & cut back on their spending as the cost of goods imported into America rises. This move is a net plus for the world economy.

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MALAYSIAN RINGGIT…… the best performing Asian currency

The “ringgit” is the official currency in Malaysia which is often known as the Malaysian dollar. The Malaysian dollar or ringgit is sub divided in to 100 sens, which are known as cents in foreign markets.

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Performance

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The Ringgit Malaysia (RM) is one of Asia’s best performing currencies in 2010 which has appreciated by 6% against the US dollar, 19% against the euro and 16% against the British pound. There were several factors which contributed to the stellar performance of the ringgit. Amongst them include Malaysia’s better than expected economic recovery, the central bank’s monetary tightening policies, the New Economic Model (NEM), speculation on revaluation of China’s yuan coupled with speculative funds inflow into Malaysia’s financial system. The currency’s strength isn’t likely to affect exporters as Europe’s sovereign debt crisis may increase capital flows to Asia & inter-Asia trade is expected to keep Malaysia’s exports at healthy growth levels. Malaysia’s exports to Europe make up some 10 per cent of its total exports.

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The Pros And Cons Of Stronger Ringgit …

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Pros:

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·Encourages the import of capital goods, which contribute to the innovation and automation of industries in the country.

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·Improves the living standards of the people by increasing their purchasing power through cheaper imports and lower inflationary pressure.

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Cons:

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·A stronger ringgit could pose challenges to the exporters of this export dependent export-dependent Malaysia such as palm oil companies.

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·The stronger ringgit usually trims the refiner margins as crude palm oil feedstock for refined products is priced in the currency. Any wild swings in the ringgit hurt refiners. “For every 100 basis points’ appreciation in the ringgit, refining margins fall by US$2-US$4 a tonne.

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·“For example, if the ringgit keeps strengthening, where previously you would collect 3.2 for every US dollar you earn, now you get only 3.1,”

Impact On Palm Oil Industry

Palm’s advance is also limited by the firmer ringgit, which has become a key determinant in price direction of late. In other words, CPO price could not be separated from the economics of converting crude palm oil, priced in ringgit, into dollar-based refined palm oil products.

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The benchmark August futures on the Bursa Malaysia Derivatives Exchange are again moving in a range searching for direction from here. Immediate support is at 2,395-2,400 (Malaysian ringgit) MYR/tonne while resistance is at 2,520 MYR/tonne followed by 2,550 MYR/tonne on the upside.

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Ringgit gain from revaluation of Yuan?

A higher yuan could actually spell good times for the Asian currencies. In other words, Ringgit would further increase as Chinese Yuan is expected to increase and ringgit typically increases with the appreciation of Yuan. China, including Hong Kong, is Malaysia’s biggest export market. A stronger yuan will be a bigger strength for China – more buying power for Malaysian goods, which would help boost shipments.

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Nonetheless, the ringgit’s upside might be somewhat limited. Malaysia being an export-oriented economy, the central bank might intervene to limit gains in the ringgit to ensure Malaysia’s exports remain competitive.

Weekly Update of The Market (08th-12th February)

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and  latest global business and industry updates.

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Weekly Update of The Market (08th-12th February)

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After starting the year on a good note & Indices making fresh highs within few weeks many Asian markets have corrected between 7 to 10%.

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The global sell off over sovereign debt problems in Europe and an unexpected rise in jobless claims in US put investors on the defensive mode.

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The anxiety about sovereign debt in Greece, Portugal and Spain sparked a sell-off in the Euro & has led strength to US dollar.

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Foreign investors sell off is an outcome of dollar-carry-trade unwinding as when they borrowed the dollar was cheap & now it is recovering.

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Investors viewed the markets in year 2010 with confidence in view of recovery gaining momentum is now shaken over the debt problems, nascent economic recovery & confidence of the governments that stand behind the euro.

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Efforts of China to curb lending preventing overheating in economy also pose a risk to derail the global recovery.

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Back at home, the effect of turmoil in the international market also made government to think its strategy on ambitious disinvestment programme.

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🙂

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Lukewarm response to the NTPC, the much awaited issue managed to get subscription of just 1.2 times on its closing day.

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The maximum bid of 20.87 crore shares was put by Indian institution under the first time adopted French Auction route.

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This has challenged the finance Ministry hopes on the proceeds from disinvestments to make up the sliding revenue & rising expenditure.

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While it looks that PSU disinvestment may not yield desired results on market weakness, the 3G auction i.e. expected to garner Rs. 35,000 crore could be postponed to next fiscal year.

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🙂

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The fate of some of the IPO’s like NMDC, Satluj Jal Vidyut Nigam Ltd and Rural Electrification Corporation that are on the disinvestment agenda before March 31, looks tough to sail through, if the stock markets do not rise and big investors do not come back.

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On the contrary, Banks like Bank of Baroda & Indian Bank that were expected to raise money overseas have put now their plans on hold.

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🙂

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The good news from the external sector continued as the data showed a 9.3% annual increase in exports in December to $14.6 billion, a second consecutive month rise.

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While imports increased by 27.2% from a year earlier to $24.75 billion.

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Food inflation remained at high levels & rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week on the back of rising pulses & potato prices.

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Markets are likely to take a closer view of the advance estimates on economic growth for the current fiscal ending March 2010 scheduled to be released on Monday.

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In the days to come an activity in the sectors like railways, fertiliser, textiles, pharma, education, power and infrastructure may be seen on expected positive policy announcements and budgetary sops.

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It was clearly mentioned last week that world markets are going in downtrend and one should be careful in such a scenario and that one should be moving in cash.

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Now the markets have taken a very sharp fall last week due to rise in Dollar Index and fall in all asset classes.

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🙂

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The coming week might see some counter rally from lower levels.

Nifty faces resistance between 4900-5000 levels and Sensex between 16400-17000 levels.

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🙂

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If we talk about commodity markets then one can see that strengthening dollar and lack of firm global cues had pressurized commodities prices to move southward.

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Investors are selling riskier assets and putting their money in dollar as a safe haven buying.

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Debt concerns facing Greece, Portugal and Spain coupled with dollar index which is trading above the mark of 80 is most likely to compel commodities to trade lower.

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French and euro zone GDP, USD advance retail sales, USD U. of Michigan Confidence will give further direction to commodities.

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Investors should keep an eye on gold – silver ratio.

It was 58:1 few months back, now reached to 67:1 on MCX, heading towards the level of 70:1.

It is demonstrating more selling in silver.

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🙂

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Stay Tuned for More on weekly updates.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Sweetness Of Sugar – Part 2 :)

Hello Friends, just an extension of our previous blog on Commodity Corner Series where we touched upon the aspects like seasonality,cyclic nature and analysis of price trend of Sugar.

Sweetness Of Sugar Part 2

Sweetness Of Sugar Part 2

Now we would read into the implication of falling production of sugar on stock market,market sentiment and the country’s import status.

Sugar Scrips Sweetens…

Falling production has sweetened sugar scrips.

Sugar stocks prices seems to remain strong for next three years.

The key drivers for such a strong up-cycle are:

1) Nominal production in current season as compared to consumption,

2) Lack of scope for further reduction in dealer stock level,

3) Increased cost of production as well as of import,

4) More sugar cane in India is being used to make jaggery that sells for almost double the price of white sugar.

In Diwali, sugar prices touched Rs. 35/ kg level.

This in turn helped all sugar companies to show growth as compared to current year’s net profit.

The most promising long positions and best return may be in sugar stocks like Shree Renuka Sugars and Balrampur Chini. Overall sugar stocks are bullish.

So take the best & calculated decision.

Imports Soaring……

For the 2009-10 crushing season (CS), the domestic and international price trends will depend on the production in Brazil, where producers should start favouring sugar over ethanol, as ethanol demand declines with falling crude prices.

With domestic consumption at 23 million tonnes for the next two years, & sugar consumption surpassing production, the country may import 3-4 million tonnes till September 2010.

The landed cost of imported sugar should be around Rs 19,000 a tonne. In the short term, the weaker USD will also support sugar.

The market seems to be in a set-up to move higher over the short run as India will continue to buy buying and the potential for imports will continue into 2009/2010 season.

……..Markets Bullish

Market sentiment has turned bullish, with the demand outlook boosted after the Indian government removed import duties.

A recovery in the world economy coupled with an increasing uptrend in these years leaves ahead sugar as a longer-term “buy and hold” commodity.

The factors that can determine the price direction for sugar futures in 2009 are:

1) If Dollar continues to rise in 2009, the upside potential for sugar could be limited,

2) Demand is a key factor for price direction,

3) A shift in acreage away from cane to crops like wheat, paddy and oilseeds as UP creating panic among farming community for Increase in cane payment arrears and delay in verdict on state advised price (SAP),

4) Mills are on the verge of early closure this season on limited availability of cane,

5) Government has come out with a policy to allow raw sugar imports to India,

6) Depreciating rupee and rising global prices, making sugar imports dearer & harden domestic sugar prices,

7) Greater diversion of cane towards the unorganized sector.

Concluding I would like to say that both the technical and fundamental outlook for the Sugar market appear to be bullish, but one is advised to trade with caution and stop losses.

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Coming ‘Diwali’ – Gold Prices Set to Reach Over, Rs 16,000 level :)

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

After taking a brief consolidation, gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before ‘Diwali’.

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According to experts, gold prices have declined for a short period last week as the precious metal dipped following a counter rally taken by the dollar.

However, the US dollar index has again started showing weakness and today dipped by 0.6 per cent at 76.54 level, which will be positive for the gold price, SMC Global’s Rajesh Jain said.

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He said gold is likely to reach 1,020 dollar an ounce (28.34 grams) level in the international markets before ‘Diwali’.

However, in the domestic market the rising trend is likely to be capped with strengthening of Rupee against the US dollar, he added.

In the domestic market the prices are likely to be slightly over Rs 16,000 per 10 grams level, Jain said.

He said, the Rupee will keep on strengthening as the equity markets are performing well, which will encourage the Foreign Institutional Investors (FIIs) to bring in more money.

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Today, the gold was trading at Rs 15,585 per 10 grams, while in the global markets it was at $1,001 an ounce.

Meanwhile, independent analysts have remarked that the bull run in gold will continue as the various monetary and fiscal stimulus programs have failed to boost the world economy, feeding through to a dis-inflationary conditions.

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The US dollar, which is considered a safe haven, softens due to the weakening economic condition.

As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.

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Gold Touches a New High of Rs 16,220 per 10 gram !

Gold-surges-alltime-high

Due to the speedy buying by stockists in advance of the festival season, in the midst of the global rates climbing to an 18-month high of $ 1,018.15 an ounce, GOLD rose by Rs 250 to touch a new high of Rs 16,220 per 10 gram in the gold market.

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However, it is said that after the metal in London increased to an 18-month high, the buying action gathered momentum as stockists indulged in buying gold.

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While, the concern was that a global economic revival may strengthen inflation in the midst of a weak dollar, enhancing demand for the metal as an alternative investment.

On the other hand, gold in overseas markets advanced 10.60 dollar, or 1.1%, to 1,018.15 dollar an ounce whereas silver coins also touched a record high of Rs 31,800 per 100 pieces.

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Further, standard gold and ornaments spurted by Rs 250 each to Rs 16,220 and Rs 16,070 per 10 gram, respectively.

On the other side, sovereign increased by Rs  50 to Rs 12,950 per piece of 8 gram.

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Marketmen said the precious metal might see new peaks in the coming days once the festival and marriage season starts on September 19.

Current upsurge maybe purely out of reason of stockists buying as retailers refrained from buying gold during ‘Sharaadh’, the ongoing inauspicious fortnight in Hindu mythology.

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According to analysts, gold may climb a high level of $1,100 an ounce in the overseas market in the next six months.

Silver ready shot up by Rs 700 to Rs 26,600 per kg and weekly-based delivery by Rs 910 to Rs 27,570 per kg.

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Silver coins rose to an all-time high by gaining Rs 200 to Rs 31,700 for buying and Rs 31,800 for selling of 100 pieces.

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However in between due to the increasing investment demand with the commencement of festival and marriage season, gold imports observed a huge rise during August at 21.8 tonnes as compared to the previous month where the import of the precious metal was 7.8 tonnes this year.

This shows that India’s gold imports have trebled in a gap of one month.

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