Gold rates hit all-time high after US Fed rate hike

Friday, May 4th 2023

Good Morning ☕

In today's news, there are several interesting developments happening in India and around the world. The National Company Law Tribunal (NCLT) is yet to decide on Go First's plea for an interim moratorium as the airline is facing insolvency. On the other hand, the Reserve Bank of India has announced a 6.97% interest rate on Floating Rate Bond 2024. In other news, gold rates in India have hit an all-time high of Rs 61,490 following a 25 bps rate hike by the US Fed.

Meanwhile, unemployment is the most important issue in the upcoming Karnataka election. In global news, India and Brazil are among the most dangerous places for activists, according to a recent report. Lastly, the world's first Respiratory Syncytial Virus Vaccine has been approved by the US FDA.

1. Go First insolvency: NCLT reserves order on Go First’s plea seeking interim moratorium

Go First, an Indian airline controlled by the Wadia group, has filed for insolvency and sought interim moratorium on financial obligations. The National Company Law Tribunal is currently reviewing the airline's request. Go First has blamed US engine maker Pratt and Whitney for grounding half of its fleet and failing to comply with an arbitration order to supply spare engines and parts. The airline has canceled flights until May 9 and paused bookings until May 15, while the Directorate General of Civil Aviation has ordered the carrier to process refunds to passengers.

2. Gold rates hit all-time high of Rs 61,490 after US Fed rate hike of 25 bps

Gold prices hit a new lifetime high of ₹61,490 per 10 gm on the Multi Commodity Exchange (MCX) in India due to weakness in the US dollar following the US Fed's rate hike announcement. The inflation rate in the US being higher than the comfort zone of the US Central Bank has put the US dollar under pressure, leading to a rally in gold and silver rates. The dollar index is expected to go down towards 98 levels in the near term, which is favoring the outlook for gold. The outlook for gold and silver in the near term is positive, and both are expected to climb to new peaks.

3. Vodafone, CK Hutchison near £15 Billion UK mobile tieup

Vodafone has confirmed it is in discussions with CK Hutchison, the owner of Three, regarding a potential merger of their UK operations. According to the statement, Vodafone would own 51% of the combined business and CK Hutchison 49%. Activist investors have been pressuring Vodafone to modify its approach and improve shareholder returns. If the merger is successful, it would help Vodafone UK and Three UK to gain the scale necessary to accelerate the rollout of full 5G in the UK and expand broadband connectivity to rural communities and small businesses.

4. Karnataka polls: Unemployment Most Important Issue In Karnataka Election

According to a survey conducted by NDTV and Lokniti-CSDS, unemployment is the most significant issue for voters in the upcoming Karnataka Assembly elections, with 28% of respondents citing it as their primary concern. The survey was conducted among 2,143 registered voters in 82 polling booths from April 20 to 28. The election is scheduled for May 10, with vote counting taking place on May 13, and is expected to be a close contest between the ruling Bharatiya Janata Party (BJP) and Congress, with the Janata Dal-Secular (JD-S) potentially playing a kingmaker role. Rahul Gandhi has also raised questions about corruption in the state during his campaign.

5. India, Brazil among most dangerous places for activists?

A report by the UK-based Business & Human Rights Resource Centre has identified Brazil and India as two of the most dangerous countries for human rights and labour activists, with state-backed violence often meted out against protesters protesting against corporate abuses. The report records 63 attacks against activists in Brazil in 2022, 54 in India, and 44 in Mexico. The mining industry is identified as the most dangerous, with multinational companies or their subsidiaries linked to 43% of the recorded 550 attacks in 2022. India's JSW Steel, French oil company TotalEnergies, and UAE's Otterlo Business Corp are among the companies mentioned in the report. JSW Steel has responded, stating that betel vine farming would not be affected by its proposed steel plant in Odisha, India, and that only 45 acres of government land from Dhinkia village are included in the project.

6. Go First passengers vent out anger over flight cancellations

Go First Airlines, which filed for bankruptcy, has suspended its flight operations from May 3 to May 5, with reports suggesting that the suspension may last till May 15. The airline promised full refunds to the passengers, but some complain that they have not received the full amount. Customers who have booked directly with Go First will receive a full refund credited directly to their account, while those who booked through a travel agent will have the refund credited to the travel agent who will then need to provide the refund to the customer. The airline has apologized for the inconvenience caused and promised to provide all the assistance they can.

7. Mocha: First cyclone of 2023 likely to form in Bay of Bengal

The Indian Meteorological Department has detected early signs of a cyclone developing in the southeast Bay of Bengal and has issued warnings to fishermen and shipping communities against venturing into the region. Upon intensification, the cyclone will be named Cyclone Mocha, as per the World Meteorological Organization's naming decree to avoid confusion. The Odisha government has already put collectors and officials of 11 departments on alert, while the east coast, which has witnessed three major summer cyclones, is in a state of readiness for any possible eventuality.

8. US FDA approves world’s first Respiratory Syncytial Virus Vaccine

The US FDA has approved GSK's Arexvy, the world's first vaccine against RSV designed for older adults, paving the way for people over 60 to get vaccinated this fall. RSV infection is more common among children but also attacks the elderly population, and there is no vaccine for children. GSK's vaccine is the first vaccine that protects older adults against RSV, but CDC advisers will debate whether all senior individuals need RSV protection in June. RSV can be life-threatening for the very young, the elderly, and people with certain high-risk health problems.

9. RBI mandates all wire transfers to have complete info about originator, beneficiary

The Reserve Bank of India (RBI) has updated its instructions to all banks and financial institutions to ensure that all wire transfers, domestic and international, contain complete information about the originator and beneficiary. This is to prevent money laundering and terrorist financing platforms. According to the updated instructions, all cross-border wire transfers and domestic wire transfers above INR 50,000 must be accompanied by accurate, complete, and meaningful originator and beneficiary information. The RBI clarified that the instructions are not intended to cover any transfer that flows from a transaction carried out using a credit card, debit card, or Prepaid Payment Instrument (PPI) for the purchase of goods or services.

10. CBI arrests ex-CMD of PSU, his son after Rs 38 cr cash, valuables seized in raids

The Central Bureau of Investigation (CBI) in India has seized ₹38.38 crore ($5.15 million) in cash during a probe against former WAPCOS chief R K Gupta, in what is being called the agency's biggest unaccounted cash seizure. Gupta and his son were arrested on Wednesday on allegations of amassing ₹7.91 crore of assets disproportionate to their known sources of income. The CBI teams found the bulk of cash from Gupta's three properties and a significant quantity of jewelry, valuable items, and property documents were also seized. Gupta had joined WAPCOS in 1989 and rose to become its CMD in 2010.

11. RBI announces 6.97% interest rate on Floating Rate Bond 2024

The Reserve Bank of India (RBI) has announced an interest rate of 6.97% on Floating Rate Bond 2024 for the half-year from May 7 to November 6. The interest rate on the bond will be reset at the average rate of implicit yields of the last three auctions of 182-day Treasury Bills held until May 7, 2023. Floating Rate Bonds do not have a fixed coupon rate and have a variable coupon rate that is reset at preannounced intervals. The base rate of the FRB bond is equivalent to the weighted average yield of the last three auctions of 182-day Treasury Bills plus a fixed spread.

12. India can provide $100 bn financing opportunity in aircraft leasing space: Report

An advisory firm, Primus Partners, has stated that India has the opportunity to provide financing up to $100 billion in the aircraft leasing segment over the next 20 years. Around 80% of the commercial fleet in India is leased, compared to 53% globally, and with growing passenger traffic, the demand for aircraft is predicted to reach around 2,100 in the next 20 years. At present, Indian carriers finance their aircraft leases mainly through Ireland, Singapore, and Hong Kong. Primus Partners has suggested the need to streamline processes and the regulatory environment, with Gujarat International Finance Tec-City International Financial Services Centre having the potential to become the face of aircraft leasing in India.

What else is happening around the world?

• US interest rates raised to the highest level in 16 years

• Credit Suisse: Asia investors sue Switzerland over bank collapse

• Covid: China tourism rebounds above pre-pandemic levels

• Sir Richard Branson thought ‘we were going to lose everything’ in pandemic

• Meta putting child users at risk, says US regulator

• UK to ban all cold calls selling financial products

• AI investigated in the UK over fears of domination

• British Gas stops using contractors to force-fit prepayment meters

• Seabed power grid to link North Sea wind turbines