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Dollar edges up, posts gains after rough week..................Tokyo, March 21: The dollar edged higher against the yen and Swiss franc on Friday, recovering to post a rise on the week after initially plunging to record lows as the collapse of Bear Stearns stirred fears about the broadening credit crunch.

The dollar clung to gains as investors sold commodities such as oil and gold and bought back the U.S. currency, partly to take profits on winning positions before a long weekend and the first quarter wraps up on Monday.

"The dollar firmed as players such as hedge funds are aggressively booking profits everywhere, turning the funds into dollars," said Hideki Amikura, forex manager at Nomura Trust and Banking.

"We don't know yet whether it means the end of the credit market turmoil that has hit the dollar or just an end of the first act," Amikura said.

Trade was subdued as many Markets across the world were closed for Easter weekend holidays. In Asia, most Markets besides Japan were closed. Major European and U.S. Markets are also closed on Friday.

Market players said it was too early to expect a sustained rebound in the dollar, which plummeted to a near 13-year trough against the yen at the start of this week as well as record lows versus the euro and Swiss franc.

But confidence in U.S. assets was partially restored by the Federal Reserve's aggressive efforts to relieve the credit crisis.

Among the array of initiatives, the Fed pushed JPMorgan Chase to absorb Bear Stearns, started lending directly to securities firms for the first time since the Great Depression and slashed interest rates by 75 basis points to 2.25 percent.

Thanks to the Fed's efforts, the dollar climbed 1.5 percent on the week against the basket of major currencies to around 72.75

The dollar posted its biggest gain against the euro since mid-December on Thursday as oil prices briefly dipped below $100 barrel for the first time in two weeks and gold dropped to a one-month low.

The euro edged up around 0.1 percent to $1.5445 from late U.S. trading on Thursday, but well off a record high of $1.5905 struck on electronic trading platform EBS on Monday.

The dollar on Friday rose around 0.3 percent against the yen to 99.65 yen hovering above a 12-1/2-year low of 95.77 yen hit on EBS on Monday. On the week, the U.S. currency climbed 0.6 percent.

The dollar was up 0.1 percent on the day at 1.0087 Swiss franc

"The fact that there is a credit...

Here’s why it’s wise to stay invested in commodities
23 Mar, 2008, 0058 hrs IST...........................

NEW YORK: Commodity prices falling almost as fast as they rose this year raise questions again on the wisdom of investing in such markets, but those in the game for long will say it’s worth it, a market researcher said.

“If you’re trading these markets on a daily basis, you’re going to have some gut-wrenching experiences,” said Gary Gorton, a professor at the University of Pennsylvania’s Wharton School and consultant to AIG Financial Products Corp. “But if you take a passive long position, you can see that you’ve done very well,” he said in an interview.

Energy, metals and agricultural prices tumbled on Thursday, giving back some of the huge gains posted since January. US crude oil broke below $100 a barrel, off Monday’s all-time high of $111.80. Gold futures in New York traded above $900 an ounce, after this week’s record high of $1,033.90. Wheat futures in Chicago fell below $10 a bushel after reaching almost $13.50 in February . Traders said the sell-off was mainly profit-driven as investors who had gained handsomely in commodities in recent months took some of those returns to cover losses in stocks and other investments that had done badly in the same span.

But in some markets like oil and copper, the selling was also due to concerns over demand. US wheat exports fell to 4-month lows, a report said on Thursday, as buyers awaited lower prices. Those developments have prompted
Gorton, co-author of ‘Facts and Fantasies about Commodity Futures’, a widely quoted industry study on the benefits of having commodities in a portfolio, disputed that notion. “If you take a longer view of over a month or six months, you can see there are reasons why these prices had gone up this high,” Gorton said, adding that structural weaknesses in the global economy had made commodities scarce resources that growing populations needed more and more of.

“There are some commodities which are highly speculative like precious metals. But for others, like grains, fundamentals explain their extraordinarily high prices,” Gorton said. “In China, for instance, as the standard of living rises, people are eating better. The grain is going somewhere, it’s not being wasted. What’s pain for some people is bread for other people.”

Gorton said studies on commodity market cycles going back to 1959 showed no periods when raw materials prices appeared disconnected from fundamentals and inventory levels. “The thing to keep in mind about commodities is that they historically have returns positively correlated within a group but negatively correlated across other groups of commodities and asset classes,” he said.

“This means metals are positively correlated to metals. But metals and grains would be negatively correlated,” he said, adding that this was one of the main benefits investors obtained when diversifying into commodities.

Illustrating his point, Gorton said the Dow-Jones AIG Commodity Index has been outperformed this year by its agricultural subindex which, in turn, was beaten by its grains subindex. “Is all that a bubble? I don’t think so.”

Subprime make IT cos lend helping hands to clients
22 Mar, 2008, 0815 hrs IST.................................

BANGALORE: Barely a quarter back, the biggest frown line on IT services companies was caused by a volatile rupee. Most companies were pushing their case with clients for price revision and experimenting with new forex cover options to minimise the currency shock. But, the scenario has undergone a sea change in just a matter of weeks. With the US subprime crisis and recessionary trends unfolding a story which has led to even more uncertain times, India’s IT services companies, predictably, are prepared for a cautious outlook on rupee.

The IT industry faced the brunt when the rupee rose dramatically and almost gained around 15% in 11 months. However, the rupee has remained stable against the dollar in the last six months, hovering around 40 mark.

By and large, for every one per cent rise in rupee against the dollar, the operating margins of IT companies is hit by 40-50 basis points. At the same time, companies have been able to use various levers to hedge against the appreciating rupee. According to a study done by Tholons, a offshore advisory firm, “Many companies focused on acquiring businesses in other currency geographies and also focusing on domestic business, which were immune to currency fluctuations.”
It further said that in some cases, efforts were made to sign rupee denominated contracts. Organisations also resorted to hedging balance sheets and cash flows. The other lever that organisations are utilising to counter the effect, is one of improving operational efficiency.

A senior executive of a large IT services firm says, “The rupee story is over. It is a wait and watch time. Also, now is the time when we cooperate with our clients who may be in a vulnerable position.” So, IT firms are looking at becoming their partners and also in helping them tide over the tough times.

At a time when there are question marks on IT spends and large offshoring contracts, Indian vendors have little choice but to come up with confidence-winning tricks. Companies may be pushing solutions that not just offer cost arbitrage but also bottom line enhancing outcome. “It will not happen overnight. But, we can, for instance, take over the IT department of a large corporation, and drive down costs and enhance value,” said an executive from India’s top six IT firms.

Such a move will not just put these firms as strategic partners but also land them with far larger budgets compared to a piecemeal contract. Obviously, the premise is that any crisis would actually increase offshoring when the dust settles. The picture will be clearer in the next two quarters, trackers say.

Economy to grow at 8.5%’

New Delhi, March 23: The Prime Minister's Economic Advisory Council has retained its projection for economic growth at 8.5 percent for the next fiscal, despite a slowdown in the industrial sector, rising inflation rate and global uncertainty.

"I think that (GDP growth of 8.5 percent in 2008-09) should still hold," Council Chairman C Rangarajan said.

Earlier, reacting to slowdown in industrial growth for the month of January, he had said the GDP growth next fiscal would depend on "whether trend in industrial production will reverse or not".

What has happened to consumer durable sector can reverse itself if cyclical upturn begins, he had said.

Growth in industrial production slipped to 8.7 percent in April-January 2007-08, compared to 11.2 percent in 2006- 07. Industrial growth for January nosedived to 5.3 percent compared to 11.6 percent in the same month last year.

Output of consumer durables registered a negative growth of 3.1 percent in January, against positive 5.3 percent growth in the same month last year.

"Slowdown in industrial production could be cyclical and budget steps could boost industrial production," he had said.

The council has, however, marginally scaled down its growth projections to 8.9 percent for this fiscal from 9 percent earlier, on account of slow expansion in manufacturing and energy generation.

The central statistical organisation, on the other hand, projected the economy to grow at 8.7 percent this fiscal. Releasing the council report, Rangarajan had said the sub-prime mortgage crisis in the US and its effect on other European countries would have a bearing on India's growth.

While the council expected the slowdown in the developed world to be modest and not dent India's economy much, it feared that the global situation could turn out to be recessionary due to geo-political factors and may significantly affect the domestic economy.

Rangarajan had said "if recession turns deep in US followed by slowdown in Europe, it will have consequences for India."

Last week, he said weak sentiments in the US could slow down capital flows into India, which is not a bad thing for the country.

"To some extent, capital flows may come down a little bit... Because the flow of funds from other countries going abroad may be affected by sentiments prevailing in the United States," he had said.

On rising inflation, he had said it was a little beyond comfort zone and the current situation is not favourable for a cut in interest rates.

His statement came when inflation rate was 5.11 percent, but now it has climbed to an 11-month high of 5.92 percent

SEBI says no to non-IPO first day price band

Mumbai, March 23: Taking note of concerns that a circuit limit on first day of trading could hamper price discovery, market regulator SEBI has asked the bourses to do away with imposition of such price bands in the case of non-IPO share listings.

In a circular sent to all the stock exchanges of the country, Securities and Exchange Board of India said that it "has received representations expressing concerns of effect of price band on price discovery in cases of merger, de-merger, amalgamation, capital reduction and scheme of arrangement."

Currently, the stock exchanges have a policy for imposition of price band on first day of commencement or recommencement of trading in respect of cases of merger, de-merger, amalgamation, capital reduction, scheme of arrangement, revocation of suspension, direct listing on another stock exchange while being listed on one exchange.

Following consultation with the bourses, SEBI said it has been decided that in cases of merger, demerger, amalgamation, capital reduction, scheme of arrangement, and in cases of rehabilitation packages approved by the board of industrial and financial reconstruction and in cases of Corporate Debt Restructuring (CDR) packages, "there is no need to have a price band on the first day of commencement or recommencement of trading."

"The price band may be retained in all other cases on the first day," SEBI said. The new policy for commencement and recommencement of trading of securities would come into force with immediate effect, it noted.

SEBI has also asked stock exchanges to provide it with the implementation status in the next monthly development report.

The move is aimed at protecting the interests of investors in securities and promote the development of and regulate the securities market, the circular said.

Only useful SEZs should be given sanctions`

New Delhi, March 23: To check undue proliferation of Special Economic Zones, approval given to such enclaves should be cancelled if they do not start functioning within a timeframe, a key Finance Ministry official said.

"SEZs are essentially a good thing. They are helping us in inflow of investments and generating employment. But you should not have SEZs just for the sake of SEZs," HAC Prasad, Senior Economic Adviser in the Finance Ministry, told reporters.

Prasad was a key member of the team, which penned External Sector Chapter of the Economic Survey 2007-08. The Survey has called for checking the proliferation of SEZs.

"What we said is that there should not be undue proliferation of SEZs. There should be some timelines within which these SEZs start functioning and yielding high exports," he said.

These zones should yield high exports within that timelines, so that economic activity is expanded and employment generated, Prasad said.

"But, if SEZs are sanctioned, I think it has to be seen that they take off. It they are not taking off, then after some time possibly we have to cancel the sanction given. There is no question of sitting over SEZs and saying I have got SEZ and not implement it," he said.

He, however, said he did not have any number in mind which could be considered optimum for SEZs in Indian context.

"I don`t want to specify a particular number. We have to keep a constant watch and monitor them, and at the sanction stage itself, we have to see that they are potentially good SEZs, and not have too many SEZs at the same place," Prasad said.

Opec sees oil at USD 80-110 in 2008

Algiers, March 23: Petroleum prices will range between USD80 and USD110 per barrel for the rest of 2008, Opec President Chakib Khelil said on Saturday.

Khelil, who is also Algerian Energy and Mines Minister, said that Opec was under "big pressures" from consuming nations who liked to portray the group as responsible for high oil prices, when in fact the market was responding to US economic problems and the falling dollar.

"Prices will continue to be high, and the prices for the rest of the year will be between USD80 and USD100," he said.

Cheney, Saudi king share views on oil

Riyadh, March 22: US Vice President Dick Cheney and Saudi Arabia`s King Abdullah shared some common views about factors in the oil market that have pushed prices to record highs, a senior US official said on Saturday.

Cheney and Abdullah held about 4-1/2 hours of private, one-to-one meetings on Friday at the king`s farm on the outskirts of Riyadh, where the vice president also met the Saudi oil minister.

"There was I think a lot of commonality in their assessment about the structural problems confronted by the global energy market now and some discussion of probably the way forward, how we work together to try and stabilize the market," the US official told reporters travelling with Cheney.

The talks covered "what could be done shorter-term, but probably more about what`s necessary to do over the medium to longer term," he said.

The official would not give details of the discussions between Cheney and the Saudi king, a U.S. ally and leader of the world`s top oil exporter, calling them confidential and private conversations.

Cheney`s trip follows a visit to Saudi Arabia by President George W. Bush, who in January called for OPEC to increase production, but the crude oil exporters` group decided to hold production steady.

Saudi Arabia is the only OPEC member that can easily add significant amounts of extra oil to the market. Record-high oil prices have dealt a blow to the U.S. economy, which has also been contending with a housing market crisis. Production Capacity

Cheney, on Monday in Iraq, outlined some of the structural problems he saw that had pushed oil prices above $100 a barrel -- not a lot of excess production capacity worldwide, rising demand from countries like China and India, and the declining value of the dollar.

The senior administration official said Cheney and Abdullah also discussed the commitments made by the king during his visit to Bush`s Texas ranch as crown prince in 2005.

"That I think is coming close to being fulfilled on billions of dollars of Saudi investment into increasing capacity, and I think that`s being done," the US official said.

Oil prices have risen to record highs above $100 a barrel because investors have piled into commodities as the value of the US dollar has sharply fallen. The price fell below $100 on Thursday on fears of a U.S. economic slowdown.

Cheney and King Abdullah also discussed Iran, Iraq, Syria, Lebanon, Afghanistan, Pakistan and Israeli-Palestinian issues, the official said. Cheney reviewed his visits this week to Iraq and Afghanistan with Abdullah.

The United States wants Saudi Arabia and other Arab allies to establish a diplomatic presence in Iraq and help reconstruction efforts in Afghanistan.

Cheney was due to leave Saudi Arabia later on Saturday for Israel where he will meet Israeli officials, followed by meetings with Palestinian officials over the weekend.

Youngest Billionaires


Mark Zuckerberg, U.S.
Age 23

$1.5 billion, self-made

Tech's newest golden boy founded addictive social-networking site Facebook in February 2004 from his Harvard dorm room. He left school for Silicon Valley that year. Microsoft paid $240 million last October for a 1.6% stake, giving the company an implied valuation of $15 billion. Some analysts and a few Facebook investors think that's high. We think Zuckerberg's stake is worth $1.5 billion. Regardless, Zuckerberg is the youngest billionaire on earth and possibly the youngest self-made billionaire ever

India likely to attract Rs 1,00,000 cr FDI in gold mining

Mumbai, March 23: India is expected to attract foreign direct investment of Rs 1,00,000 crore per annum in mining exploration of gold and diamond in the country, a top minister has said.

The new mining policy National Mineral Policy 2008 is expected to go through in Parliament session next month, Union Minister of State for Mines Subbarami Reddy said.

Nearly 14 companies from Australia, Canada and South Africa have shown keen interest in bringing their technical expertise required for identifying the potential of a mining block, Reddy said, adding that the government officials will be visiting these countries to explore the possibilities of more investment.

"We have to awaken the world entrepreneurs to invest in exploration of countries rich mineral wealth," Reddy said.

Under the new policy, entrepreneurs who invest heavy risk capital will automatically get the mining lease. This will enable and protect their capital because to achieve the exploration of minerals we need heavy money.

The policy was approved by the Union Cabinet last week after a delay of nearly two years, and aims to attract FDI to the tune of USD 250 million annually in the mining sector in the next five years.

India has a mineral area of 18.5 lakh sq km, but lacks the technology and capital to exploit them. But once the new policy comes into effect, global entrepreneurs would flock India with technology and capital, he said.

India produces 89 minerals, out of which 11 are metallic and 52 non-metallic. The country is estimated to have 2.92 billion tonnes of bauxite, or 10 percent of the world's reserves, and 276 billion tonnes of coal.

It also has 14,000 tonnes of gold reserves, but the country only produces three tonnes of total annual demand of 800 tonnes. The demand for gold in India is expected to go up to 1,200 tonnes per annum, Reddy said.

An amendment to make the required changes in the existing Mining Act will be introduced in the ongoing session of Parliament. The new policy will shorten the time it takes for new mining leases to be granted by state and federal governments to about six months to a year. At the moment it is often a long and tortuous process.

After the period proposed in the policy, applications will be automatically referred to a tribunal.

Under the new guidelines, foreign and domestic firms should find it easier to invest in the exploration and mining of gold, diamonds and metals like copper and zinc, and prospecting companies will automatically obtain a mining licence.

On the royalty issue, the Minister said after the policy announcement, states would get more royalty, which would be decided on the basis of the selling price as against the present tonnage basis.