London has overtaken Indian financial capital Mumbai to become the top center for trading the nation’s currency, adding to a sense of urgency among local authorities to deepen the onshore market.
Average daily volumes for rupee trading in the UK in April soared to US$46.8 billion, a more than fivefold jump from US$8.8 billion in 2016, according to the latest survey from the Bank for International Settlements (BIS) released this week.
That exceeded the US$34.5 billion recorded in India.
Photo: AFP
Trading in US dollar-rupee offshore non-deliverable forwards increased threefold over the three-year period, the survey showed.
Aware of the growing size of the offshore rupee market, India’s government and central bank have been looking at ways to improve access for overseas investors and offer them more products to ramp up volumes at home.
“The sharp increase in offshore FX [foreign exchange] market activity re-establishes that it could amplify currency volatility in the domestic currency and also reduce the effectiveness of policy steps taken to limit volatility during times of stress,” Edelweiss Securities Ltd economist Madhavi Arora said.
Rupee trading — including spot, outright forwards, foreign exchange swaps and other products — also jumped in Singapore, Hong Kong and the US over the three-year period, the survey showed.
Data from a Bank of England study corroborated the trend: Average daily volume in dollar-rupee non-deliverable forwards in London was US$28 billion in April, up from just US$8 billion in October 2016.
A panel appointed by the Reserve Bank of India last month proposed extending onshore currency trading hours, allowing banks to offer pricing to nonresidents at all times and allow trading of non-deliverable forwards in the rupee among steps to deepen trading onshore.
Other Asian economies have made similar efforts.
Last year, Bank Indonesia established a domestic non-deliverable market for the rupiah, although the nation has not been able to take back significant business, the survey found.
Data released by the BIS “now makes an even more compelling case for policymakers to focus on increasing the wallet share of the onshore market,” Arora said.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such