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Indian stocks slump on global monetary policy tightening; Rupee at new low

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Indian stocks extended their losses from the previous session and declined further on Friday morning following the latest policy rates hike by the US Federal Reserve in its fight against high inflation.At 10.05 am, Sensex and Nifty traded in the 0.8-0.9 per cent range. Further tightening of monetary policy in the US essentially means that investors will have a tendency to move to the US markets for better and stable returns.

Meanwhile, the Rupee tasted yet another lifetime low on Friday morning after the US dollar index strengthened to a two-decade high this week, on hopes that demand for safe-haven currency such as the dollar would pick up.This morning, the Rupee opened 25 paise lower to touch a record low of 81.09 versus the US dollar, against Thursday’s close of 80.86. Yesterday’s depreciation was the biggest single-day fall for the rupee since February 24.

The US Federal Reserve had raised the repo rate by 75 basis points — which is the third consecutive hike of the same magnitude, in line with expectations. The Fed also hinted that more rate hikes were coming and that these rates would stay elevated until 2024.The US central bank seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run and it anticipates that the ongoing hikes in the target range will be appropriate.

Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.Consumer inflation in the US though declined marginally in August to 8.3 per cent from 8.5 percent in July but is way above the 2 percent goal.

India’s forex reserves are at two-year low. The reserves have dropped by almost USD 80 billion since the escalation of the Russia-Ukraine tensions into war earlier this yearIndia’s forex reserves have been consistently dropping for the past few month, on account of RBI’s likely intervention in the market to defend the depreciating rupee.

Typically, the RBI intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.A depreciation in the rupee typically makes imported items costlier. “The Dollar Index may continue with its positive bias as the US Fed decided to raise interest rate by 75 bps, for a third consecutive month and signalled that it would continue to lift rates this year at a most rapid pace to combat inflation, which is running hot,” said ICICI Securities.

– Statesman/ANN



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Sun directly overhead Mannar, Periyamadu, Puliyankulam, Welioya and Pulmoddai about 12.11 noon today (30)

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The sun is going to be directly over the latitudes of Sri Lanka from  28th of August to 07th of September due to its apparent southward relative motion.

The nearest places of Sri Lanka over which the sun is overhead today (30) are Mannar, Periyamadu, Puliyankulam, Welioya and
Pulmoddai about 12.11 noon.

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Lanka tracks 11 US-sanctioned Iranian tankers off coast

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(AFP) Sri Lanka’s maritime authorities were monitoring a fleet of 11 US-sanctioned Iranian oil tankers just off the island’s southern coast, the foreign minister said Wednesday.

The tankers were spotted close to the Galle harbour where an Iranian frigate, IRIS Dena, was sunk by a US submarine in March, killing 104 sailors. Sri Lanka’s navy rescued 32 Iranian sailors from that frigate.

Iranian vessels have been in limbo, unable to return to their home port because of a US blockade.

Sri Lanka’s Foreign minister Vijitha Herath said the tankers were in international waters where they had freedom of navigation.

“These ships are away from our territorial waters… we have no hold on them, nor have we facilitated them,” Herath told AFP.

The military deployed reconnaissance aircraft and patrol boats to monitor the vessels outside Sri Lanka’s 12-nautical-mile territorial waters, a military official told AFP on condition of anonymity.

“There is no indication of any ship-to-ship transfer of oil or illegal discharge of pollutants, so there is no basis for Sri Lankan authorities to take action against them,” the official said.

Many Iranian merchant vessels moved east towards the Strait of Malacca and Singapore due to US sanctions, while several remained near Sri Lankan waters, authorities said.

Sri Lankan officials said Washington had not formally notified Colombo about sanctioned Iranian-flagged vessels

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House to debate abolition of Chief of Defence Staff post

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Parliament is to debate next Wednesday the Government’s proposal to abolish the post of Chief of Defence Staff (CDS), with the Second Reading of the Chief of Defence Staff (Repeal) Bill scheduled for September 9.

The Bill seeks to repeal the Chief of Defence Staff Act No. 35 of 2009, which was introduced shortly after the end of the armed conflict.

According to Secretary General of Parliament Kushani Rohanadeera, Parliament will meet from September 8 to 11, with the business for the week approved by the Committee on Parliamentary Business chaired by Speaker Dr. Jagath Wickramaratne.

The debate on the Chief of Defence Staff (Repeal) Bill is scheduled to take place from 11.30 a.m. to 5 p.m. on Wednesday, following questions to the Prime Minister and other parliamentary business.

The CDS post was established under the 2009 Act as part of the country’s higher defence command structure.

On Tuesday, September 8, the House will consider two Orders published in Extraordinary Gazettes under the Motor Traffic Act from 11.30 a.m. to 5 p.m., followed by an Opposition motion at the adjournment.

On Thursday, September 10, Parliament will debate a Resolution under the Women’s Empowerment Act.

The final sitting day of the week, Friday, September 11, has been allocated from 11.30 a.m. to 5.30 p.m. for several Private Members’ Motions.

The motions will cover issues including regulation of the petroleum, fuel and water industries, measures to increase the birth rate, protection of the Diyagama Forest, pension deductions affecting Pirivena teachers, food-crop cultivation in mountainous areas, development of the Kithul industry and the establishment of a Faculty of Medicine at South Eastern University.

Questions at the adjournment will be taken up at the end of each sitting day.

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