QBiz: Jet Airways’ Losses Worsen; Lira Stumbles Against Dollar

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Turkish currency Lira. Image used for representational purpose.
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1. Jet Airways’ Net Loss Deepens to Rs 1,323 Crore in Q1

Full service airline Jet Airways saw losses worsen in the quarter ended 30 June as the impact of a fuel price hike and the falling rupee weighed heavily on the carrier’s financial performance.

The country’s oldest private airline booked a net loss of ₹1,323 crore, compared with a profit of ₹53 crore in the same quarter last year.

Fuel expense, which was about 31 percent of the company’s total expenses during the quarter, shot up by as much as 52 percent to ₹2,332 crore from ₹1,524 crore last year.

(Source: The Hindu Business Line)

2. Kerala Deluge May Shave 2.2% Off State GDP, Push Up Fiscal Deficit to 5.4%

The deluge that ravaged Kerala earlier this month, has shaved at least 2.2 percent off state GDP, which will push up its fiscal deficit to 5.4 percent this fiscal, says a report.

Most of Kerala was marooned between 8 and 20 August, and around 260 people we killed and over a 1.5 million were driven out of their homes. The state administration has pegged the damages – over 90,000 km of roads, hundreds of bridges and around 50,000 acres of crops and over 10,000 homes were destroyed, at over Rs 35,000 crore, which is much more than its annual budget.

According to an initial estimate by rating agency Acuit Ratings (earlier Smera Ratings), the flood has shaved off at least 2.2 per cent or or nearly Rs 10,800 crore of state GDP.

(Source: The Financial Express)

3. Berkshire Confirms Investment in Paytm; Buffett Not Involved Directly

US-based Berkshire Hathaway on Monday, 27 August, confirmed that it has made an investment in Paytm’s parent firm One97 Communications, ETNow reported.

The company led by legendary investor Warren Buffett confirmed to the channel that the investment has been made. Berkshire, however, clarified that it was not a transaction in which Warren Buffett was involved.

ET had reported this morning that Berkshire was in talks to invest about Rs 2,000-2,500 crore in the Paytm parent firm, in what could be the first direct investment in India by the legendary investor.

(Source: Economic Times)

4. Adani Power Is Said to Near Acquisition of GMR Power Plant

Indian billionaire Gautam Adani’s energy unit is nearing a deal to acquire a 1,370-megawatt thermal power plant backed by GMR Infrastructure Ltd., according to people with knowledge of the matter.

Adani Power Ltd. will take over about ₹3,800 crore ($543 million) of loans out of a total of ₹5,800 crore that GMR Chhattisgarh Energy Ltd owes, said the people, who asked not to be identified because the information is private. Adani Power will also assume non-funded liabilities of about ₹1,400 crore, the people said.

(Source: Livemint)

5. Govt Not to Curb Imports to Rein in CAD

The government seems to be in no mood to curb imports, even though the fear of a higher current account deficit (CAD) looms large.

CAD implies shrinking value of a country’s net foreign assets, which means less earnings and more payments in foreign currency. According to the RBI, the CAD increased to 1.9 per cent ($48.7 billion) of GDP in 2017-18 from 0.6 percent ($14.4 billion) in 2016-17 on the back of widening trade deficit.

An SBI report, released on Monday, 27 August, said the deficit is expected to reach 2.8 percent of GDP ($75 billion) during the current fiscal, with merchandise trade imbalance likely to increase to $188 billion as against $160 billion in 2017-18.

(Source: The Hindu Business Line)

6. Turkey’s Battered Lira Tumbles Again Over Outlook Fears

The Turkish lira on Monday, 27 August, lost over three percent in value against the dollar as the same concerns that have propelled the embattled currency to record lows failed to dissipate after a summer break.

The lira has lost just under a third in value against the dollar over the last month, as anxiety over the coherence of domestic economic policy coupled with sanctions announced by the United States generated market panic. The currency was trading at 6.2 to the dollar, a loss of 3.1 percent on the day.

It lost similar ground against the euro to trade at 7.2. Turkish markets reopened on Monday after a week off for public holidays and the coming week will be crucial for the lira as European markets become more active after the summer break.

(Source: The Financial Express)

7. US & Mexico Reach Trade Deal as Canada May Rejoin NAFTA Talks

President Donald Trump hailed a deal with Mexico to revamp the North American Free Trade Agreement as “a big day for trade” and said he plans to change the name of a reworked version of the accord.

Trump announced the agreement in a hastily arranged Oval Office event on Monday, 27 August, with Mexican President Enrique Pena Nieto joining by conference call. Nieto said he hoped Canada would soon be incorporated in the revised agreement, while Trump said that remains to be seen.

As he announced the move, Trump said he would drop the name Nafta for the trade arrangement because of the bad connotations of a deal that has been criticized as contributing to the flow of jobs from the US to Mexico.

(Source: Livemint)

8. IBBI Penalises Five Debt Resolution Professionals

The Insolvency and Bankruptcy Board of India (IBBI) has for the first time penalised at least five resolution professionals, seeking to strengthen the dedicated loan-recovery mechanism that aims to extricate about $160 billion of lenders’ money stuck in bad assets.

The penalties came for various reasons, including dubious conduct. Others were pulled up for not following the procedures that give the level-playing field to all creditors and bidders.

IBBI data compiled by K V Sivaraman, an insolvency expert associated with Delhi-based AAA Insolvency Professionals, show that penalties were imposed on five occasions between April and now.

(Source: Economic Times)

9. Dollar Softens as Powell Disappoints Bulls

The dollar's safe-haven appeal faded on Monday after risk sentiment in the broader markets picked up following a well-received speech from Federal Reserve Chairman Jerome Powell. The Fed chairman defended on Friday the US central bank's push to raise interest rates as healthy for the economy and signalled more hikes were coming despite President Donald Trump's criticism of higher borrowing costs.

Powell's comments were also seen to have disappointed some dollar bulls hoping for a more hawkish message. “Powell sounded natural and his speech was nothing out of the ordinary,” said Mitsuo Imaizumi, chief forex strategist at Daiwa Securities.

“But he stuck with the current policy trajectory and this means that the flattening of the US yield curve would be allowed to continue.”

(Source: The Hindu Business Line)

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