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Goldman Sachs is using the euro to fund its long rupee carry trade, betting that the European Central Bank will continue to reduce interest rates. The bank is particularly optimistic about the rupee compared to other high-yield Asian emerging market currencies. The euro has declined against the dollar this year due to interest rate cuts by the European Central Bank, while the Reserve Bank of India has focused on controlling inflation. The rupee is considered stable due to the central bank's interventions and large foreign-exchange reserves. Despite the recent elections in India, Goldman Sachs remains positive about the rupee's outlook. They also recommend buying Indian bonds, particularly the two-year paper. [Extracted from the article]

Goldman Sachs is using the euro to fund its long rupee carry trade, betting that the European Central Bank will continue to reduce interest rates. The bank is particularly optimistic about the rupee compared to other high-yield Asian emerging market currencies. The euro has declined against the dollar this year due to interest rate cuts by the European Central Bank, while the Reserve Bank of India has focused on controlling inflation. The rupee is considered stable due to the central bank's interventions and large foreign-exchange reserves. Despite the recent elections in India, Goldman Sachs remains positive about the rupee's outlook. They also recommend buying Indian bonds, particularly the two-year paper. [Extracted from the article]

(Bloomberg) -- India's central bank is working toward a phased introduction of a digital currency and will put forth a final design after it has conducted large scale pilot projects. The Reserve Bank of India is exploring the option of implementation of an account-based central bank digital currency or CBDC for the wholesale segment and token-based currency for the retail sector, it said in a paper released on Friday. [Extracted from the article]

(Bloomberg) -- Sign up for the India Edition newsletter by Menaka Doshi - an insider's guide to the emerging economic powerhouse, and the billionaires and businesses behind its rise, delivered weekly. The revised rules require the Reserve Bank of India's approval for any change in classification of bond holdings out of the held-to-maturity book. India's bond yield curve steepened with shorter bonds rallying more than longer-tenor debt after the central bank tweaked investment guidelines for lenders in line with global standards. [Extracted from the article]

(Bloomberg) -- India's central bank will launch the retail version of its digital currency on a test basis starting Thursday, a month after allowing some banks to use it for settling secondary-market transactions in government securities. Banks participating in the pilot are the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in four cities. Four banks will initially run the digital currency pilot, with another four joining at a later stage, the Reserve Bank of India said in a Tuesday statement. [Extracted from the article]

Indian stocks are expected to continue their winning streak and reach near-record highs. However, caution is advised for pharma stocks, as long-term technical indicators suggest a potential downturn. Despite a global slowdown in deal-making, India remains a bright spot with the Adani Group planning to sell a stake in Ambuja Cements. Mutual funds' lending to shadow banks has reached a record high, indicating their growing dependency. The rupee has weakened against the dollar but is strengthening against other trading partners, which may boost India's trade competitiveness. [Extracted from the article]

(Bloomberg Businessweek) -- Anonymous Cash Is Flooding India's $7 Billion Elections It's a vestige of the system that prevailed after a 1969 ruling barred companies from funding political parties; even though the ban was lifted in 1985, corporate donors had gotten used to making anonymous cash donations. The donor - whose name isn't attached - delivers the piece of paper to a political party, and then the party exchanges it for cash. [Extracted from the article]

JPMorgan Chase & Co. is set to add India's government bonds to its emerging markets index, which is expected to attract billions of dollars in investments. Global funds have already invested close to $11 billion in index-eligible bonds, and JPMorgan predicts that $20 billion to $25 billion will come in over the next 10 months. India's debt has become popular among emerging market investors due to its strong economic growth and stable currency. Indian bonds offer access to a high-growth, high-yield market, and the country's sovereign debt has outperformed its index counterparts over the past decade. [Extracted from the article]

India is expected to attract billions of dollars in investments as JPMorgan Chase & Co. adds the country's government bonds to its emerging markets index. Global funds have already invested close to $11 billion in index-eligible bonds since the announcement, and JPMorgan predicts that $20 billion to $25 billion will come in over the next 10 months. India's debt has become popular among emerging market investors due to its strong economic growth and stable currency. The inclusion of Indian bonds in the index offers global investors access to a high-growth, high-yield market. [Extracted from the article]

Indian bonds are performing well compared to other Asian bonds despite fluctuations in US Treasuries. This makes Indian debt more attractive to investors, especially with its upcoming inclusion in major global indexes. Factors such as fiscal prudence, rupee stability, and positive domestic developments are contributing to the stability of Indian bonds. Additionally, India's foreign-exchange reserves are at a record high, and the rupee is the best-performing currency in emerging Asia. The government's reform programs and the possibility of Prime Minister Narendra Modi winning a third term are also boosting the appeal of Indian assets. [Extracted from the article]

"The market found it very difficult to digest the inflation numbers, and we don't see commodity prices coming down, especially oil", said Srinivasan, who expects the RBI to first start draining liquidity using reverse repos, followed by a hike in the reverse-repo rate, and eventually a hike the benchmark interest rate after March 2022. (Bloomberg) -- India's central bank may signal the start of a normalization of its accommodative monetary policy at its August meeting amid accelerating inflation and risks from surging oil prices, according to ICICI Prudential Life Insurance Co. "We need to prepare ourselves for a rise in interest rates, starting with a rise in the reverse repo rate", said Arun Srinivasan, head of fixed income at the company, one of India's top private life insurers, that manages funds worth 2.14 trillion rupees ($29 billion) "The signs point to it.". [Extracted from the article]

Emerging-market assets, including equities and currencies, have reached their lowest levels of 2024 due to concerns about global economic growth and delayed monetary easing. The reversal in market sentiment came after US retail-sales data showed a strong economy despite high borrowing costs, and the dollar's rally added pressure on local currencies. China's economic recovery also showed signs of weakening, with growth in retail sales and industrial output falling short of expectations. Additionally, the European Union's trade restrictions against China have increased risks for the country's economy. The selloff in emerging-market assets has led to declines in the MSCI Emerging Markets Index and the Indian rupee reaching a record low. Geopolitical tensions in the Middle East and concerns about Hungary's budget deficit have further impacted market sentiment. [Extracted from the article]

The article reports on the continuing use of the Indian rupee instead of electronic payments, despite the Indian government's attempt to curtail cash transactions. It mentions the boost in electronic payments when four-fifths of the bank notes were withdrawn from circulation, which didn't last when the new rupees were distributed. The article also describes reasons for not using electronic payments, including the lack of experience with technology, spotty access, and lack of trust.

The weighted average call rate, which the Reserve Bank of India closely monitors, has held above the policy rate for most of the past month and even breached the emergency funding rate of 6.75% on some days. (Bloomberg) -- India's shorter-maturity bonds rallied and money market rates eased on bets that a withdrawal of the nation's highest value currency note would leave banks with surplus cash to invest. [Extracted from the article]

(Bloomberg) -- India's capital market regulator has asked merchant bankers to review their standards for due diligence and wants better price disclosures amid a frenzy of initial public offerings by money-losing technology startups. To protect small investors, the markets regulator in November proposed to tighten rules on how money raised by such unprofitable technology startups through IPOs can be used and how quickly big investors can exit. [Extracted from the article]

The article profiles digital payment company Paytm and examines how it has profited from India's economy policy of discontinuing 500- and 1,000-rupee bank notes. Information is included on the education and business career of founder Vijay Shekhar Sharma before the article covers Paytm's growth since the government's currency decision and the increase in competitors.

"Easy Money" Era Over in India as Shown by Lender's Defaults (1) RBI set to raise rates on weaker rupee, rising crude prices The swap market is pricing in at least 100 basis points of rate hikes in the coming 12 months. [Extracted from the article]

(Bloomberg Businessweek) -- How Nigerians Beat Bitcoin Scams After several friends of Aminu's lost thousands of dollars to scammers between them, they set up an informal exchange on the messaging app Telegram, trading among themselves. [Extracted from the article]

(Bloomberg Gadfly) -- Here's a Dash of Indian Spice for London's Jaded Palate: Gadfly As it turns out, the economics of swapping dollar debt into rupees is now inferior to borrowing directly in rupees. But until the currency is made freely convertible, masala debt may be able to attract a more diverse set of international investors than Mumbai can muster. [Extracted from the article]

Demand there fell to its lowest level in seven years as the jewelry industry went on strike in response to a government proposal to raise a tax on jewelry sales. Jewelry demand is very sensitive to price. [Extracted from the article]

Fed liftoff and China's pace of growth complicate predictions Bank of America in its year-ahead note said 2016 was bound to be better for emerging markets as commodity prices were likely to stabilize and China would skirt a much-feared hard landing. [Extracted from the article]