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Global investors boost euro zone assets, cut Asia stocks: Reuters poll

Fri Aug 30, 2013 9:30am EDT

LONDON (Reuters) – Global investors lifted their holdings of euro zone assets to the highest in more than a year this month while trimming exposure to Asian equities during a rout of emerging market assets, Reuters polls showed.

Fund managers are growing more optimistic about the euro zone’s recovery from recession and its debt crisis, reinforced by Germany – the bloc’s largest economy – enjoying its fastest rate of expansion in more than a year in the second quarter.

Reuters monthly asset allocation polls of 54 fund managers across the United States, Europe and Japan showed that investors raised their global equity holdings to a three-month high and cut bonds, but continued to show some caution, increasing cash buffers to their highest in a year. Uncertainty remains as to whether the Fed will cut its $85 billion a month bond-buying program as early as next month.

The prospect of less Fed stimulus has battered emerging market assets this month and the poll showed that allocations to Asian stocks outside Japan dropped to their lowest in more than three years. Improving U.S. and Chinese economic data, however, has lifted optimism about the global economic outlook.

“We remain upbeat about the global economy into 2014, as the private sector is still expanding,” said Andrew Milligan, head of global strategy at Standard Life in Edinburgh.

“In some countries, a virtuous circle could be starting between consumer demand, production and credit growth.”

Investors lifted euro zone equity allocations to 16.7 percent, the highest since March 2012, from 16.2 percent last month. They raised euro zone debt weightings to 27.5 percent, the highest since December 2011 and up from 27.3 percent.

In contrast, they cut their holdings of Asian shares to 6.9 percent, the weakest level since at least January 2010 and down from 7.3 percent last month.

Overall, investors increased global allocations to equities to a three-month high of 50.7 percent, up from 50.2 percent in July. Bond holding allocations dipped to 36.5 percent, from 37.0 percent.

The polls were conducted between August 14 and 29, when world stocks as measured by MSCI .MIWD00000PUS fell nearly 4 percent on caution over the Fed’s bond-buying plans and on concern about the possibility of U.S.-led military action against Syria.

World stocks are still up 8 percent this year, however, far outstripping emerging equities .MSCIEF, which have fallen 13 percent.

Despite a reduction in allocations to safe-haven bonds, investors increased their cash holdings to 6.2 percent, the highest since August 2012, from 6.1 percent in July.

Investors said they were overweight in equities and underweight in bonds, after U.S. stocks .DJI .SPX hit record highs earlier this month.

“The main challenge for equities is not so much events as valuations, which are starting to look a bit expensive, thereby limiting upside and making them more vulnerable to any bad news,” said Robert Pemberton, investment director, HFM Columbus.


U.S. fund managers left their allocations largely untouched, with a slight increase in weightings towards equities. US/ASSET

Japanese fund managers cut their global exposure to equities, mainly in Asia, but lifted allocations to bonds in the UK and Europe to a 10-month high. JP/ASSET

European fund managers showed an increasing home bias, allocating their highest weighting to euro zone equities in 18 months. EUR/ASSET

British investors boosted their stock holdings to the highest level in more than two and a half years. GB/ASSET

(Additional reporting by Tom Bill and Natsuko Waki in London, David Randall in New York, Massimo Gaia in Milan, Sarmista Sen in Bangalore and Ayai Tomisawa in Tokyo; Editing by Susan Fenton)

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Vodafone investors split on best use of Verizon windfall

Fri Aug 30, 2013 9:26am EDT

LONDON (Reuters) – Top investors in Vodafone Group (VOD.L) are set to clash over what the company should do with perhaps as much as $130 billion in proceeds from the sale of its stake in Verizon Wireless, which is expected to be announced imminently.

Vodafone shareholders contacted by Reuters as talks continued between the British firm and Verizon Communications (VZ.N) were split between those wanting to see the cash returned as dividends and those wanting the firm to invest it.

Verizon is close to buying the 45 percent stake in the joint venture Verizon Wireless from Vodafone, according to sources.

While some investors relish the idea of a special dividend and buyback spree, others say Vodafone is selling its best asset and must reinvest much of the proceeds in the company’s future to avoid reliance on low-growth European markets.

Vodafone’s 12-month dividend yield stands at 5.5 percent compared with an average of 5.1 percent for its European and UK peer group, according to Thomson Reuters data.

A lucrative sale of its Verizon stake would free up cash to invest in new infrastructure or to acquire smaller players to diversify and offset a squeeze on revenues in the mobile phone market, where competition is strong and prices are declining.

“You only want a deal done if they are going to do something with it,” said a fund manager at one of Vodafone’s 10 largest shareholders, who declined to be named.

“The worst-case scenario is that Vodafone takes the money and just hands it all back to shareholders. Then you are left with a weird company that isn’t really doing anything.”


Vodafone has increasingly diversified from its “pure play” mobile strategy in the last 18 months, buying British fixed-line operator Cable Wireless Worldwide for $1.6 billion last year and German cable operator Kabel Deutschland for $10 billion in June, its largest deal for six years.

It is also building a 1 billion euro fiber-optic network in Spain with France’s Orange (ORAN.PA). Analysts have said fixed-line assets in Spain such as ONO or Italian broadband specialist Fastweb, which is owned by Swisscom (SCMN.VX), could be next on its shopping list.

Investors said Vodafone needed to make quick progress on this strategic shift or run the risk of becoming commercially obsolete in a market where many peers are selling packages that combine cable or satellite television, fixed-line services, broadband Internet and mobile phone deals.

“The problem for Vodafone is that they have no infrastructure to be able to offer this quad play … Pure mobile phone operators are struggling; they have to keep cutting their prices to stay in line with players who can fall back on rising revenues from broadband,” the top 10 investor said.


Even some of the company’s debtholders, who typically call for conservative use of sale proceeds to pay down debt, suggest some acquisitions might be beneficial for the long-term financial stability of the firm.

Vodafone’s net debt is twice its 2013 earnings, according to Thomson Reuters data, in line with the industry median. Its debt is rated A- by ratings agencies Fitch and SP.

“From a bondholder’s perspective, we’d always prefer actions that boost creditworthiness,” said Matt Eagan, co-manager of the $22 billion Loomis Sayles Bond Fund and a Vodafone bondholder.

“That would could come from debt reduction in the case of Vodafone. However, I’m not opposed to acquisitions to the extent they boost the firm’s business position. Consolidation in this industry has generally been positive from a credit standpoint.”

But a second of Vodafone’s 10 largest shareholders said he thought investors would want most of the proceeds from a stake sale returned to them as a condition of approving any proposal.

His sentiments echoed those of a third investor among Vodafone’s 30 largest shareholders, who said he feared the firm was already too far behind rivals who have the infrastructure in place to offer the combined packages, and the chances of overpaying for assets to catch up with them was too high.

Assuming Vodafone receives $116-132 billion of proceeds from the sale, analysts at Citi said on Friday it could distribute $40 billion in cash and Verizon common stock valued at around $26-34 billion to shareholders. That would equate to a cash distribution of 52 pence a share.

The analysts expect Vodafone to pay around $5 billion in tax, keep $15 billion to reduce debt and retain $30-38 billion in deferred proceeds.

That plan could prove unpopular among some investors.

“We would want as much cash back as possible. I appreciate they have to invest in the core of what will be left post the Verizon disposal, but I think a lot of people once they have their money back will look to exit the equity.”

“Look at this another way: people who dispose of assets tend to drive their share price up. People who acquire assets, tend to drive their share price down,” the investor said.

However, Vodafone should have enough money to appease both camps, a third fund manager at a top 10 shareholder said.

“Any (acquisition) by Vodafone is going to be in the low-single-digit billions, which in the context of $110 or $120 billion of proceeds, it’s a small proportion … you can give at least half of the cash back, have a bit of a war chest and strengthen your balance sheet,” the investor said.

(Additional reporting by Paul Sandle; Editing by Will Waterman)

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Weak spending, inflation data underscore soft U.S. economy

Fri Aug 30, 2013 9:07am EDT

WASHINGTON (Reuters) – U.S. consumer spending barely rose and inflation was tame in July, offering a cautionary note on the economy as the Federal Reserve weighs cutting back its massive bond-buying program.

The Commerce Department said on Friday consumer spending ticked up 0.1 percent as outlays on services were flat and purchases of durable goods such as automobiles fell. Spending was also held back by weak incomes.

June’s increase in consumer spending was revised up to 0.6 percent from a previously reported 0.5 percent.

Economists polled by Reuters had expected consumer spending, which accounts for about 70 percent of U.S. economic activity, to gain 0.3 percent last month.

The tepid demand dampened inflation pressures last month. A price index for consumer spending edged up 0.1 percent, slowing from a 0.4 percent increase in June. Over the past 12 months, prices rose 1.4 percent compared with 1.3 percent in June.

It was the biggest increase since February.

Excluding food and energy, the price index for consumer spending nudged up 0.1 percent after advancing 0.2 percent in June. Core prices were up 1.2 percent from a year ago, rising by the same margin for a fourth consecutive month.

Both inflation measures continue to trend below the Fed’s 2 percent target. That, combined with the lackluster consumer spending, would argue against the U.S. central bank trimming the $85 billion in bond purchases it is making each month to keep interest rates low.

Many economists, however, believe the Fed will make an announcement on the tapering at its September 17-18 policy meeting, starting off with a small cut to the bond-buying program, known as quantitative easing.

“This does nothing to alter our view of tapering. Fear of unquantifiable financial risks within a QE regime that offers diminishing returns is driving the policy agenda, not strong growth and inflation,” said Eric Green, global head for rates, foreign exchange and commodity research at TD Securities in New York.

The dollar fell against the yen and trimmed gains versus the euro on the data.

Consumer spending last month adjusted for inflation was flat after rising 0.2 percent in June.

The unchanged reading in the so-called real consumer spending, which goes into the calculation of gross domestic product, added to data on residential construction, durable goods orders, industrial production and new home sales that have suggested the economy got off to a slow start in the third quarter.

The economy grew at a 2.5 percent annual pace in the second quarter, accelerating from a 1.1 percent rate in the first three months of the year. Consumer spending rose at a 1.8 percent rate in the April-June period.

It continues to be constrained by a sluggish wage growth. Last month, income ticked up 0.1 percent after rising 0.3 percent in June.

The weak wage growth was flagged in the July employment report, which showed a drop in hours worked and hourly earnings.

Both private and government salaries fell last month. With spending matching income growth, the saving rate – the percentage of disposable income households are socking away – held at 4.4 percent.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Euro zone morale climbs in shadow of record unemployment

Fri Aug 30, 2013 9:04am EDT

BRUSSELS (Reuters) – Optimism in the euro zone’s economy improved sharply in August but stubbornly high unemployment, especially in the bloc’s weaker countries, highlighted the fissure separating the recovering north from the struggling south.

Confidence among business managers polled by the European Commission rose for a fourth successive month in the euro zone, the EU executive said on Friday. The positive trend was particularly strong in Germany and the Netherlands but was also seen in Italy, France and Spain.

The measure of sentiment across the currency bloc in August, based on business orders, industrial confidence and other factors such as companies’ hiring plans, increased by 2.7 points to 95.2.

Rising confidence has inspired some to predict that the 17 countries using the euro have overcome the worst of a crisis that was triggered by banks’ investment in risky mortgage debt and later drove some states to the brink of bankruptcy.

“The most acute phase of the crisis and the toughest period of belt-tightening is behind us,” said Dirk Schumacher, an economist with Goldman Sachs.

In a separate release, Eurostat, the European Union’s statistics agency, said annual consumer price inflation in August would be 1.3 percent, down from 1.6 percent in the previous month, due mainly to a drop in energy prices.

A lack of price pressures is a further potential boon to the economy, giving households a little more spending power, and would allow the European Central Bank to stick to its record lower interest rate policy to try to help the economy.

But while morale improved, unemployment in the euro zone in July remained at a record high of 12.1 percent, although there is a huge variation in jobless rates between countries such as Germany, where the job market is robust, and Greece or Spain where more than one in four workers have no job.

“It would be the most dim-witted thing you could do to declare … that the crisis is over,” Juergen Fitschen, the co-chief executive of Germany’s flagship Deutsche Bank, told reporters earlier this week in Brussels.

While just over 5 percent of workers in Germany were unemployed, according to Eurostat, that figure reached almost 28 percent in Greece and topped 26 percent in Spain.

Although there were 15,000 fewer people in the euro zone without a job compared with the previous month, 3.5 million people under 25 remain unemployed.

“We haven’t broken the negative dynamic in the south of Europe,” said Guntram Wolff of think tank Bruegel. “Banking fragility, weak growth and high unemployment still present a threat.”


A slowdown in euro zone inflation will give the ECB food for thought ahead of a September 5 policy meeting.

Its Governing Council discussed cutting interest rates in July but decided against and instead said it would keep them at record lows for an extended period.

Signs of economic recovery have since reduced pressure for a cut but the fall in inflation may prompt policymakers to have a rethink.

“All in all, while a recovery seems to be underway, there is every reason for the central bank to remain in strongly accommodative mode for the foreseeable future,” Jennifer McKeown at Capital Economics wrote in a research note.

ECB policymakers have sent mixed signals in the run up to Thursday’s meeting.

Cypriot central bank governor Panicos Demetriades said late last week that a rate cut was still “on the cards”, adding that the most recent data was “more encouraging”. But Austria’s Ewald Nowotny saw no arguments to cut.

German Bundesbank chief Jens Weidmann said on Thursday that the longer interest rates stay low, the less effective monetary policy becomes and the more difficult it will be to withdraw support measures.

(Additional reporting by Paul Carrel in Frankfurt; Editing by Robin Emmott and Susan Fenton)

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India’s Singh fights for "reformer" legacy as economy totters

Fri Aug 30, 2013 8:51am EDT

NEW DELHI (Reuters) – Prime Minister Manmohan Singh fought for his reputation as the architect of India’s economic reforms on Friday, insisting that the current growth and currency crunch was no repeat of the 1991 balance of payments crisis that made him a household name.

An economist by training, Singh’s long political career has been book-ended by crises.

As finance minister 22 years ago, he deftly ushered in reforms of a state-shackled economy that helped launch years of rapid growth, earning himself a place in history as the man behind India’s emergence as a new economic power.

Now 80 years old and heading into his last months as prime minister before elections, the growth bubble has burst. The latest GDP figures on Friday showed an economy growing at just 4.4 percent, the weakest pace since the global financial crisis and a far cry from ambitions for growth of 8-9 percent.

The country is saddled with hefty fiscal and current account deficits, and the rupee has fallen like a stone in recent weeks to successive record lows.

But Singh, struggling to make his thin voice heard above the din of bellowing lawmakers in parliament, said 2013 was not 1991: the exchange rate is now market set, and India has enough foreign exchange reserves to cover seven months of imports compared with just three weeks back then.

“There is no reason for anybody to believe that we are going down the hill and that 1991 is on the horizon,” he said, in his first substantial comments since the rupee suffered its steepest-ever monthly fall in August.

India’s currency predicament is partly due to an emerging-market selloff triggered by the U.S. Federal Reserve’s plans to rein in its economic stimulus.

However, it has been compounded by what Singh admitted was “a crisis of confidence” in a country where welfare programs and subsidies for the poor remain priorities for his Congress party, especially as it heads into a difficult election that is due by next May.

Singh sparred with opponents in parliament who said his legacy was at risk if he did not get a grip on the economy. Opposition leader Arun Jaitley said his track record as prime minister was one of populist policies, not reform.

“If you continue to follow the course, then the legacy that you leave behind will not be the legacy that you left behind as the finance minister. That legacy was different,” Jaitley said.

Singh blamed the main opposition party’s intransigence for India’s slow progress on a second round of deep economic reform, and said his reputation was intact on the world stage.

“There is a collective responsibility we owe to our country to send out a message to investors both domestic and foreign that India remains a viable, bankable, creditworthy proposition,” he said.

“Whatever some members of the house may say about me as the prime minister, I command a certain status, certain prestige and a certain respect in the Group of 20.”


Only the most pessimistic investors believe India is on the verge of a crisis as severe as 1991, when the central bank was forced to pawn 67 tonnes of gold in Europe to pay the bills, but the parallels are unavoidable.

Now, as then, a large import bill, rising oil prices on the back of geopolitical tensions and weak exports have resulted in a wide current account deficit.

Back in 1991, Singh responded with shock treatment, devaluing the rupee by nearly 19 percent. So determined was he to push this through that when the prime minister of the day got cold feet at the last minute, he reportedly blamed the infamous inefficiency of India’s telephone system to pretend that he could not contact the central bank in time to stop the move.

Singh later said that a crisis “concentrates the mind.”

Now, after nine years at the head of fractious coalition governments and battered by waves of corruption scandals, Singh appears to have lost some of that agility and resolve.

He is often pilloried for staying mostly out of the public eye while the country’s economy goes from bad to worse. In 2012, Time magazine ran a cover story beneath the headline “The Underachiever.”

There is still broad respect, however, for the man who was born into a poor Sikh family, studied by candlelight to win scholarships to Cambridge and Oxford, earned a doctorate with a thesis on the role of exports and free trade in India’s economy and became governor of the central bank in the 1980s.

Sanjaya Baru, a former media advisor to Singh, said there was little the prime minister could do ahead of the election to change investor sentiment about India.

“In ’91 the difference was all the policy action was taken in the beginning of the new term. Everybody knew these guys were going to be in office for a reasonable period,” Baru said.

“I don’t think the mood of investors will change until there is an election … They just feel that this government is in the shadow of an election, and that shadow has to pass.”

(Reporting by Frank Jack Daniel; Editing by John Chalmers and Neil Fullick)

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Zurich Insurance CFO named Ackermann in suicide note

Fri Aug 30, 2013 8:14am EDT

ZURICH (Reuters) – The finance chief of Zurich Insurance, Pierre Wauthier, named chairman Josef Ackermann in his suicide note, the company confirmed on Friday as it pledged to investigate whether he had been put under undue strain before his death.

The insurer has been thrown into disarray since company veteran Wauthier was found dead at his family’s lakefront home on Monday and the subsequent resignation of former Deutsche Bank (DBKGn.DE) boss Ackermann three days later.

Ackermann, one of Europe’s top financiers, quit after Wauthier’s family shared the contents of the letter with senior executives at the firm, a source told Reuters. Wauthier explicitly blamed Ackermann in the note for putting him under pressure, said the source, who declined to be named because of the sensitivity of the subject.

Ackermann has described the allegations as “unfounded” but said he would leave to avoid damaging Zurich’s reputation. He took over as chairman last year. The insurer said Ackermann had made a personal decision to leave.

Sources said Ackermann and Wauthier had clashed ahead of the company’s second-quarter results in August over how they were presented.

Wauthier, finance chief since 2011, mentioned the presentation of the results in his suicide note, a company source added.

In a conference call with investors, the company said there was no link between Wauthier’s death and Zurich’s financial performance.

“We stand by everything we said at the half year,” Chief Executive Martin Senn said.

Acting Chairman Tom de Swaan said the company would investigate the circumstances leading up to Wauthier’s death.

“The board sees it as its prime responsibility to look into the question as to whether there was undue pressure placed on our CFO,” he said, adding that he was not aware of any inappropriate behavior by Zurich’s board members.


Ackermann’s abrupt departure comes on top of a period of flux among Zurich Insurance’s upper echelons. Its life insurance chief Kevin Hogan left two weeks ago to join AIG (AIG.N) as head of consumer insurance and former general insurance head Mario Greco quit a year ago to lead Italian insurer Generali (GASI.MI).

“The board is well aware of the need to strengthen the management team, and I consider this to be our top priority,” said de Swaan, who was vice chairman under Ackermann. “Our focus is on ensuring the continued stability of the company.”

The company has set up a telephone hotline for employees shaken by the death of Wauthier, a married father of two.

Shares in the group, the worst performing insurance stock in Europe over the past six months, rose over 1.5 percent after the conference call, snapping a four-day losing streak, with investors saying Ackermann’s departure would not derail things.

“Ackermann has not been there for a long time. He’s not the architect of anything, and this is not a company in a big transition,” said one Top 20 shareholder.

The investor, who declined to be named, said Ackermann’s openness about why he was resigning was actually reassuring.

“I was quite surprised at the statement and the references to Pierre’s family. Normally, you see a holding statement,” he said.

“What he said was better than if he just walked without saying anything, because then it would look like perhaps there was a hole or that something was wrong with the accounts. Not so much a cover-up but that something might have been found in the company.”


The suicide scandal comes at a tough time for the company. Two weeks ago Zurich reported a 17 percent slide in first-half net profit and it said low investment returns meant it would miss some targets.

The company’s shares had fallen close to 11 percent in the past six months, compared with a near 10 percent increase in the European insurance index .SXIP.

A former colleague of Wauthier’s said there had been pressure within the company to turn around its share performance.

Ackermann took on the chairmanship of Zurich Insurance after failing to become chairman at Deutsche Bank.

There was some surprise that the Swiss national opted for a relatively low-profile role in insurance rather than aiming for a top spot at one of Switzerland’s banks.

But the 65-year-old moved to shake up Zurich Insurance, which he felt was lagging behind European peers. Unlike previous chairmen, he took a very close interest in the finer details of results and accounts.

Former colleagues of Ackermann say he does not court confrontation.

“I have never seen Ackermann lose his cool at a meeting. But if you were underperforming, he had a way of communicating it without having to spell it out in a way which was personal. You talked about the numbers, and they told you everything you needed to know,” said one senior banker, who declined to be named.

While he is credited with transforming Deutsche Bank into an investment banking powerhouse during a decade-long tenure, Ackermann is no stranger to controversy.

Last month, he lost a power battle at Siemens, where he is a non-executive director, over the ousting of Chief Executive Peter Loescher, and he faces the prospect of being dragged into a legal row over Deutsche’s role in the collapse of the Kirch media empire over a decade ago.

(Additional reporting by Katharine Bart in Zurich, Philip Halstrick and Edward Taylor in Frankfurt and Sinead Cruise in London. Writing by Carmel Crimmins; Editing by Will Waterman)

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Amplats to sack 3,300 workers

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Indian PM Singh says economy can weather rupee storm

Fri Aug 30, 2013 7:27am EDT

NEW DELHI/MUMBAI (Reuters) – India’s prime minister sought to quell talk of currency crisis on Friday, after the rupee plumbed record lows as it notched its biggest ever monthly fall, but there was no word of sweeping reforms needed to restore investor confidence.

Weak economic growth, a record high current account deficit and concerns about the government’s finances are proving a toxic mix for the rupee, which hit a record low of 68.85 to the dollar on Wednesday after falling 20 percent since May.

Dollar selling by the Reserve Bank of India, rather than Prime Minister Manmohan Singh’s speech to parliament, helped pull the rupee out of a slide back towards the lows on Friday, but it has lost around 10 percent of its value in August alone, according to Thomson Reuters data.

While global factors such as the potential end to U.S. stimulus and most recently tensions over Syria have sent emerging market currencies reeling, the scale of the rupee’s decline is far greater than most.

Singh said the currency’s fall was a matter of concern, but dismissed doomsayers predictions for the Indian economy, insisting its fundamentals remained sound and its banking system was well capitalized above international requirements.

“We need to ensure the fundamentals of the economy remain strong so that India continues to grow at a healthy rate for many years to come,” the octogenarian prime minister told lawmakers in his first significant speech to parliament on the economy in months.

“That we will ensure. We are no doubt faced with important challenges.”

Gross domestic product (GDP) data, due to be released after the markets close, is expected to show the economy grew 4.7 percent in the April-June quarter, the third consecutive quarter of sub-5 percent growth.

India suffered decade-low growth of 5 percent in the fiscal year that ended in March, and many analysts surveyed by Reuters during the past week expect this year to be worse.

Singh, a veteran economist who made his reputation as finance minister overseeing India’s recovery from a balance of payments crisis in 1991, predicted growth would recover to 5.5 percent this fiscal year.

With a national election due by May, Singh’s minority government is under fire from all quarters to come up with meaningful reforms, including a possible increase in diesel prices, that would lower the subsidy burden.

He said the government would need to find ways to reduce imports of gold and oil products to reduce the trade gap, and he put a gloss on the rupee’s depreciation by saying it would help make exports more competitive and reduce imports.

By mid-afternoon, the RBI’s intervention had helped the rupee recover to 66.25 per dollar from an earlier low of 67.43, to stand a touch stronger than Thursday’s close of 66.55.


Singh’s liberalization of a moribund economy in 1991 provided the platform for 20 years of rapid economic growth, and he has been credited as the architect of India’s emergence as a serious economic power.

But now he is being pilloried for lost opportunities to make further reforms during his nine years as prime minister.

While few economists believe India’s problems could become as great as they were in 1991, there is broad agreement that the country needs reforms on a similar scale to open up its markets.

“My concern is that with the election still a few months away we’re are not going to get the sort of reforms that the country needs,” said Peter Elston, head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management in Singapore.

“All we’re going to get is the reforms that are not long-term oriented, but just designed to win votes, like the food bill.”

Parliament passed this week a 1.35 trillion rupees ($20.21 billion) plan to provide subsidized grains to the poor that raised concerns about spending.

Fears that the government will fail to meet its target of bring its fiscal deficit down to 4.8 percent of GDP this year were heightened by data released on Friday.

During the first four months of this fiscal year the deficit had reached close to 63 percent of the full-year target. Revenues were just 16 percent of the target, while spending stood at 31.3 percent of the target.

On Thursday, the government approved a land acquisition act that protects farmers interests by letting them get up to four times the market rate for their land, raising doubts over how much the law would help investment in infrastructure and industrial projects.


Raghuram Rajan, a former chief economist at the International Monetary Fund, is set to take over leading the defense of rupee when he steps into his new role as RBI governor next Thursday.

The RBI’s strategy has rested on draining cash from domestic money markets and raising short-term interest rates, but that has made it more costly for struggling corporates to raise money, putting another brake on growth.

The central bank is considering a radical plan to cut gold imports, the second biggest item after oil on the import bill, a source familiar with the RBI’s thinking told Reuters,

The proposal, which has met with some skepticism, would see commercial banks buy gold from ordinary citizens and sell to precious metal refiners.

($1 = 66.7900 Indian rupees)

(Additional reporting by Himank Sharma in Mumbai; Editing by Simon Cameron-Moore)

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Positive scoping study for Mutiny’s iron project

Mutiny Gold Ltd has produced a scoping study for its Rocksteady iron-ore project in the Murchison region of Western Australia.

The internally generated study proposed that the Rocksteady hematite pit be mined using the old gold pit for ramp access.

The company said that because the study was based on an inferred resource, it could not release details of the financial analysis but noted: “The company is very encouraged by the results of the study and intends to continue to progress developing Rocksteady.”

An independent assessment of historic drilling and exploration undertaken has been correlated to formulate the initial JORC inferred resource of 650,000t at 54% Fe.

The project is contained within Mutiny Gold’s 100%-owned Gullewa multi-mineral licence area.

John Greeve, managing director of Mutiny said: “Deflector is our key project but we have a multi-mine strategy which encompasses additional gold and iron mines. Our Gullewa Tenements contain vast mineral wealth including 170km of banded iron structure. Rocksteady is the first of potentially several iron deposits which may be commercially developed.”

The company plans to start a drilling campaign targeting an additional 500,000t to 1.5Mt of resources.

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