Mumbaii, May 17
The rupee hit a record low against the dollar for a second session in a row on Thursday as global risk assets remained largely under pressure, leading the Reserve Bank of India to intervene again, according to traders. Though global risk assets avoided the steep falls seen in the previous session, the mood remained grim given the political uncertainty in Greece and the challenges at home.

How aggressively the RBI defends the currency will be key in the near-term.

On Wednesday, the central bank had intervened in the morning but was then seen largely in the sidelines as the rupee broke below the previous record low hit in December, but that changed on Thursday after the currency again hit an all-time low.

"India has already had one failed attempt to prevent record highs on USD/INR and will need to try harder to avoid a test of 55.00," Westpac Bank said in a note.

The rupee slumped to a new life low of 54.60 to the dollar, surpassing the previous session low of 54.52. The RBI stepped in to prevent a wider rout, multiple dealers said. The cross settled at 54.48/49, in range with Wednesday's close of 54.49/50, according to State Bank of India data.

Dealers said liquidity was thin in the forex market with bid-ask quotes often wide.

Local stocks ended mildly positive with the BSE Sensex up 0.25 percent, but that was a fraction of earlier stronger gains.

The RBI has already taken steps like asking banks to sell half of the foreign currencies in their accounts, as well as raising the interest ceiling that local banks can offer to overseas Indians for their forex accounts.

Possible next steps by the central bank may be opening a dollar tap directly for state-run oil companies.

The one-month offshore nondeliverable forward contracts were at 54.83. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 54.59 on a total volume of $4.4 billion. — Reuters

New Delhi, May 17
German auto major Volkswagen AG on Thursday said it has put on hold the proposed Rs 2,000 crore investment plan in India as the VAT refund issue with the Maharashtra government remains unresolved.

"The normal investments required for usual operations of the company is going on but the big plans for the future have been put on hold at the moment," Volkswagen Group chief representative in India John Chacko told PTI.

He was responding to a query on whether the ongoing issue with the Maharashtra government over the change in policy regarding VAT refund has impacted the group's expansion plans, including the Rs 2,000 crore investment announced in January.

Earlier, to woo investors, the state government used to refund VAT paid on all vehicles sold by companies, which have factories in the state. It was, however, modified last year and the state government said it would refund VAT only on vehicles sold within the state.

Stating the group wants the state government to keep its commitments, Chacko said: "We’re talking to the state government to sort out the issue. We want to work in a stable conducive environment and would like to get what was committed to us."

Asked what would be the group's next step if the state government sticks to its stand, he said: "We’ll cross the bridge when it comes."

In January this year, VW had said it will invest a minimum of Rs 2,000 crore on its Indian operations by 2013 to ramp up capacity, launch new models and strengthen research activities.

The VW group, comprising Volkswagen, Audi and Skoda has two manufacturing facilities at Chakan and Aurangabad in Maharashtra.

VW had announced an investment of 580 million euros (about Rs 3,600 crore) in 2008 for setting up the plant at Chakan. — PTI

Mumbai, May 17
Gold demand in India, one of the world's leading buyers, is likely to moderate in 2012 as higher inflation trims disposable income at a time prices are stubbornly high on a weak rupee, the head of the World Gold Council in the country told Reuters.

That should bring down imports from the record high level of 2011, Ajay Mitra, managing director of India and the Middle East at the WGC, told Reuters in an interview on Thursday, which may help the Indian government in its battle with a fiscal deficit.

"Sentiment is down. The way customs duty has been administered will see moderate demand over the next couple of quarters. I don't see it as strong as we saw in the last two years," Mitra said.

In an effort to stem imports and shore up its current account, New Delhi doubled the import duty on gold to 4 percent of value in its March budget.

The government's aim is to cut the value of imports to $38 billion this fiscal year, down 35% from 2011/12. In the January to March quarter, when the duty hike wasn't effective for most of time, imports were $10.4 billion, down 3% in value from a year ago, according to the WGC.

In volume terms, gold demand in the first quarter of 2012 fell 29 percent - the sharpest fall coming in investment demand - which tumbled 46 percent, pressured by a weak and volatile rupee among other factors.

In 2011, the country used 933.4 tonnes of gold, including 567.4 tonnes in jewellery and 366 tonnes as investment.

Mitra said demand should pick up later in the year ahead of the traditionally strong fourth quarter. "Demand will pick up towards the festive season ... at the end of the third quarter."

Demand for gold is traditionally strong in the fourth quarter as the wedding season gets under way. — Reuters

Chandigarh, May 17
Amid rising voices of dissent from industry on the hike in wheeling charges on industry proposed by the Punjab State Electricity Regulatory Commission (PSERC), steel furnace units have decided to defer their protest for ten days.

Over 200 steel furnaces, located mostly in Ludhiana and Mandi Gobindgarh, who supply long, flat and special steel across north India, had gone on a strike since Tuesday, in protest against the alleged “exorbitant hike in wheeling charges from 27 paise per unit to Rs 1.27 per unit”. Representatives of the steel furnace associations, who met Thursday, told The Tribune they had decided to put off the strike till May 28.

Mahinder Pal Gupta, president of the Mandi Gobindgarh Induction Furnace Association, said the furnaces will now file a review petition with PSERC against its May 4 order, wherein the latter had recommended a hike in wheeling charges.

“Yesterday we had met the chief minister who advised us to file a review petition. We’ll file this before PSERC by Monday, and if we fail to get any positive response from them, we will proceed on an indefinite strike,” he said.

Amarjit Goyal, chairman & MD of Modern Steels, said the hike in wheeling charges was totally unjustified.

“Since power is the basic raw material for steel industry, such a hike in wheeling charges will ensure that we will not be able to get power through open access at cheaper rates. This will erode our competitiveness and business will become unviable,” he stated.

Hong Kong, May 17
HSBC, Europe's biggest bank, said it has made sustainable cost savings of $2 billion after one year of a 3-year turnaround plan, and is on target to meet its return on equity and other financial targets.

HSBC has sold 28 businesses, and some 15,000 staff have been transferred outside the group, with the exits and disposals releasing about $55 billion in risk-weighted assets, the bank said in a statement released to the Hong Kong bourse on Thursday.

"We will continue to simplify HSBC, enabling us to integrate systems and operate to high global standards internationally," chief executive Stuart Gulliver said in the statement. "We will continue to run off our legacy assets, including the US consumer and mortgage lending book."

With Gulliver's focus on shrinking the bank, analysts and investors have indicated he may soon be inclined to highlight where HSBC is expanding.

In a separate statement, HSBC chairman Douglas Flint said the board is "very satisfied" with progress made on the strategy, but return on equity (RoE) and cost efficiency metrics lag the stated targets a year after it was launched.

Gulliver, a 32-year HSBC veteran who took over the top job from Michael Geoghegan, set out to get RoE — a key measure of profitability — above 12%, and to cut costs by up to $3.5 billion to get them below 52% of revenue.

HSBC has 89 million customers across 85 countries, and has a wide presence across Asia Pacific, with a particular strength in Greater China. The bank's Hong Kong profit before tax was $1.9 billion, while the rest of Asia Pacific was $2 billion. Gulliver wants to steer the bank back to its roots as a financier of global trade. — Reuters