On a day when most of the ATMs across the country went literally dry, the RBI came out to assure the public that there was no shortage of currency with the RBI. The finance ministry also clarified that more notes were being printed and the RBI had sufficient notes in its vaults. RBI has also clarified that the shortage of cash in ATMs is more due to logistical reasons. Ironically, Telangana and Andhra Pradesh have been facing a massive notes shortage for over 1 month since Chandrababu Naidu walked out of the BJP government over the special status to the state of Andhra Pradesh.
The INR tanked to a 7-month low of 65.64$ on Tuesday as the ongoing trade war between the US and China as well as the risk of further upsides in crude prices sent the rupee into a free fall. The trade deficit for the month of March also widened while the full-year trade deficit for 2017-18 almost doubled on a YOY basis. With the Brent Crude trading above the $71/bbl mark, India risks a sharp rise in the trade deficit in the coming months. Ironically, the US has accused India of being a currency manipulator and artificially strengthening the rupee to the detriment of US export interests.
The CBI has questioned the former BOB chairman and five other officials pertaining to the Rotomac loan default case. Rotomac had defaulted on a loan of Rs.2919 crore to BOB. CBI is also investigating the loan fraud angle in the Rotomac case. The CBI inquiry was called for in a hurry by BOB after they feared that the Kotharis may also flee the country like Nirav Modi and Mehul Choksi. Rotomac had made a fortune making pens but in the last few years the company had been struggling to stand up to cheaper pens coming into India from China. This had forced Rotomac to diversify into unrelated areas.
Deutsche Bank has decided to call of its proposed sale of it is retail and private wealth management business to IndusInd Bank. Deutsche has an India portfolio of nearly $4.6 billion. With changes happening at the top, Deutsche is now considering additional investments into India to enhance its India business. India is critical to Deutsche Bank as it is the third largest economy in Asia and Deutsche already has nearly 12,400 employees in India. In fact, Deutsche Bank has a credit exposure of €15.20 billion to India, making it the second largest Asia exposure after Japan.
The International Monetary Fund (IMF) sees some serious problems for global GDP growth after 2020. However, the IMF expects the current growth revival in the world economy to continue for at least another 2 years. IMF has retained its global growth forecasts at 3.9% for the year 2018 but has slightly upgraded US growth forcasts as a direct outcome of tax cuts initiated by Donald Trump. However, the IMF believes that the US may only be the first country to hike rates and other economies like Japan and the EU region may also follow suit, apart from UK. This tightening of rates would lead to tightening in the money markets leading to lower growth. However, the IMF has raised serious reservations over a full-fledged trade war as it could result in weakening currencies and impose huge costs.
Vedanta has presented its resolution plan for beleaguered Electrosteel Steels which will entail an infusion of Rs.5200 crore into the company by Vedanta. However, existing shareholders of Electrosteel will be left holding less than 10% in the new company. The resolution plan presented by Vedanta for Electrosteel has already received approval from the NCLT. Of course, the transaction is still subject to the approval of SEBI and the CCI. Last year, the company had made a loss of Rs.1463 crore and is expected to report a similar loss in this year too.
