The Rupee Slide

A depreciating domestic currency doesn’t only mean a more expensive trip abroad; more expenses on Higher education in the United States, or importing a sports bike. It could hold back a drop in home loan EMIs and pull down investment returns. Hence, here are some of the most common questions that come to mind.

Why now?

It was about to happen. India consumes a lot more than what it produces. The extra dollars the country needs comes from large foreign investors who bring in dollars to buy Indian stocks and bonds. Economists call it funding the 'current' account deficit with 'capital' flows. There are fears that matching the flows may no longer be that easy in the near future.

Why? Don’t Brazil, Indonesia and South Africa do the same?

They do and the values of all these currencies are falling against the dollar. Capital flows from abroad aren't a problem when cheap money is available around world markets. This has been the case in the last few years with Fed, the US central bank, buying bonds and pumping money as it waited for the world's largest economy to come out of coma.

The Fed is not doing it immediately. So, why is there panic? Won’t a recession in china soften commodity prices and help India?

Financial markets are driven by herd mentality. Lower price of oil and other commodities may help India six months later. But for the moment the trading call is: sell bonds, stocks, and currencies of countries that have high current account deficit. Even if a trader thinks differently, he is forced to join the sellers as security prices slip. In fact, currencies of Australia, South Africa, and Brazil which export commodities have fallen more than the rupee.

What can authorities do?

Besides changing rules to lure more foreign direct investment, there are talks of floating a special deposit scheme or offshore bonds for NRIs. Such schemes have worked before with SBI spearheading it. Here, the risk of foreign exchange fluctuation is borne by the government. A $15-20 billion inflow from such a scheme can, to an extent,stabilise the rupee. While the money has to be repaid three to five years later when the deposit (or bond) matures, there was very little outflow in earlier schemes as most NRIs preferred to park the money with Indian banks instead of withdrawing it.

Why isn't RBI doing anything? Isn't it supposed to defend the currency?

The central bank possibly feels that it wouldn’t be prudent to intervene and take on these bigger global market forces. Rupee's fall in end May and early June was due to huge bond sell offs by foreign funds that are short-term traders trying to make quick money. Recently, trading rules were simplified and foreign investment limit in bonds were raised to attract investment. But this was hot money that came in fast, left in a hurry and may again return. Such investors may continue to fuel the ups and downs in the rupee.

Weight loss exercise you can do at home

If you ask any average person in your office or just walking down the street, they would say that they want to lose weight but just don't have the time. Gymming is a great way to lose weight fast. However, we all have busy schedules and cannot go to the gym to do weight loss exercise. Sometimes, we are also just plain lazy.

However, what if you could do these weight loss exercises at home? Most people would shrug and say that home exercises are light and don't really help you lose weight fast. But you are mistaken. Some home exercises are very effective for weight loss. You can get a better idea if you scrutinize the weight loss exercises you do in the gym. For how many of these exercises do you need equipment? It is mostly the weight training exercises that require sophisticated equipment. The weight loss exercises can be easily done at home without the help of extra props.

Giving yourself a no equipment workout at home could be a great way to lose weight. When you do your weight loss exercises at home, there are more chances of you being regular. And we already know that consistency is the key to lose weight.

Here are some simple weight loss exercises that can be done at home.

EMIs are unlikely to get cheaper

Even as the Reserve Bank of India (RBI) cut the key policy rate by 25 basis points for the third time since January and kept the cash reserve ratio (CRR) unchanged to promote growth, banks seem to be in no mood to reduce lending rates, at least for now.

Banks have been stumped by RBI's warning that there is little room to ease monetary policy further due to persistent risk of inflationary pressure.

"The balance of risks stemming from our assessment of the growth-inflation dynamic yields little space for further monetary easing," RBI Governor Duvvuri Subbarao said in its policy statement for 2013-14.

After the latest rate cut, the repo rate at 7.25 percent is the lowest since May 2011.

Although Subbarao was hopeful that banks would lower rates during the next three to six months by amounts similar to the RBI's total rate cuts of 75 basis points so far in 2013, bankers for the time being rule out any such possibility.

For starters, the country's premier lender State Bank of India's Chairman Pratip Chaudhuri said "there is nothing to transmit", while Citibank India CEO Pramit Jhaveri said "the repo cut by itself will not necessarily result in transmission of rates or lead to higher growth prospects, unless accompanied by better liquidity conditions and more public sector, government and private investment spending."

The bearish mood was visible across markets as well, with stocks, the rupee, and bond prices all falling.

Bank of India CMD V R Iyer noted that RBI policy recognised the pressures on growth, it has also provided a clear guidance that the recent assessment of growth-inflation dynamics provides little scope to the RBI for further monetary expansion.
In his policy, Subbarao, sought to put the ball in the government's court hinting that monetary policy action, by itself, cannot revive growth.

"It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment, alongside continuing commitment to fiscal consolidation," he said.

Private sector lender ICICI Bank's MD&CEO Chanda Kochhar conceded that the rates in the certificate of deposits have been going down, but termed it as a cyclical phenomenon.

"The present downward movement in deposit rates will not be sustained. And a lending rate cut will depend only on the movement of cost of funds," she said.

HDFC Bank Chief Economist Abheek Barua said the policy was not only more hawkish than what macro conditions would warrant but also more guarded than the March review.