AMR hires Merrill to sell up to $300M in stock

FORT WORTH, Texas

American Airlines parent AMR Corp. said Friday it has hired Merrill Lynch & Co. to sell up to $300 million in stock.

The sale of stock "from time to time" will be made at market prices on the New York Stock Exchange, AMR said in a filing with the Securities and Exchange Commission.

At Friday's closing price, AMR stock had a market value of about $2.6 billion.

The shares rose 84 cents, or 8.7 percent to $10.52, in regular trading before the sales agreement was disclosed, as airline stocks benefited from a drop in oil prices. In extended trading, they fell 3 cents, to $10.49.

Fort Worth-based AMR previously filed a shelf-registration statement to sell the shares with the SEC in 2006.

Review of Markets for the week

Review of Markets for the week 24 Aug, 2008, 0000 hrs IST, ET Bureau

Markets in bear grip, Sensex dips 323 pts The Bombay Stock Exchange bellwether Sensex extended its weekly losses as the US mortgage crisis re-emerged exerting pressure on global markets in the week under review. The BSE 30-share sensitive index moved widely in a range of 14,824.92 and 14,136.86 before ending the week at 14,401.49, netting a fall of 322.69 points or 2.19 per cent from the previous weekend’s close.In the absence of domestic trigger, the markets were largely influenced by global developments, including a gradual upward movements in crude oil prices, besides sustained capital outflows from the Indian equity. Similarly, the 50-share Nifty of the National Stock Exchange tumbled by 103.25 points, or 2.33 per cent, to close at 4,327.45 from its last week-end’s close.Analysts said, the domestic bourses came under pressure as global markets were hit during the week by fresh concerns about the mortgage crisis that re-emerged after speculation of a need to bailout two largest US home finance groups — Freddie Mac and Fennie Mae.On the domestic front, they said, a fresh rise in inflation and crude oil prices caused concerns that the Reserve Bank may initiate further monetary measures to contain inflationary pressure. Inflation ascended to 12.63 per cent, while global crude oil prices surged past the $121 a barrel level on Friday. Foreign institutional investors too were net sellers in the week, particularly after SEBI’s decision of not changing the curbs imposed on Participatory Notes in its meeting in the preceding week.Heavyweights like the largest public sector bank SBI plunged 7.68%, Satyam Computer 6.19%, Grasim 6.19%, NTPC 6.11%, ICICI Bank 4.27%, ONGC 4.74% and Reliance Communications 4.28%.The broader BSE-100 Index dropped sharply by 189.87 points, or 2.46% to end at 7,524.31 from last weekend’s close of 7,714.28. The BSE-200 Index and the Dollex-200 were also quoted lower at 1,761.45 and 674.79 at the weekend compared to their last weekend’s close of 1,804.57 and 700.82, respectively.On the NSE, the S&P CNX Defty finished lower by 128.50 points or 3.59% at 3,451.40 and the CNX Nifty Junior concluded the week at 6,956.50, a loss of 217.10 points or 3.03%.Among the sectoral indices, the BSE Realty Index was the biggest loser with a fall of 218.80 points or 4.24%, followed by the BSE PSU Index, which lost 275.91 points or 3.95%. The Bankex also tumbled by 247.20 points or 3.58%.

Getting The Best Results With Your Forex Course

Getting The Best Results With Your Forex Course

Forex Course

A course on forex trade helps the individual investors understand the market and perform well in earning profit. The course includes systematic analysis of the data pertaining to the trade in the past and the vital indicators in the area of GDP, production etc, pertaining to the country. This technical and fundamental analysis gives the investor a fair sight about the market, depending on which, strategies can be formed for making money out of the market. As a part of the course, the trader is exposed to online forex trading, which gives tremendous confidence to the retailer.

Online Forex Trading

Normally, Forex trading by retail traders is done through brokers. The brokers pprovide access to the purchase and sale of the currencies as per the request. With the advent of modern communication equipments and computer peripherals today you can enter the market from the comfort of your home. A large part of what has created this access is made possible through recent developments cleaning upholstery cleaning technology. Forex trade is a 24 hour market, with one country or the other in the world participating in the trade. The online market is a spot market in the sense it settles instantly. Us dollar (USD), European Euro(Euro), Japanese Yen (JPY), Swiss Franc (CHF),UK Pound (GBP), Canadian Dollar (CAD) and Australian Dollar (AUS) are the frequently traded currencies in online forex trading.

In every transaction two currencies are involved, one is bought and the other is sold. There are many online Forex websites, which should be understood before actually doing online trading. Unlike conventional trading, online trading does not require the carpet rug amp; upholstery cleaners assistance of brokers. What a broker would be doing otherwise by receiving and placing/executing the orders, the system will do automatically and istantly in online forex trading. At the click of the mouse, the transaction is completed/executed. The online trading system is very fast and reliable.

Cross Currency

Cross currency is a currency pair in which the two currencies are not USD. In other words, the two currencies are currencies other than USD. The cross currency is more liable for fluctuation because actually in cross currency transactions, the purchase currency and the selling sheet metal fabrication are converted in to USD first and then the trade is completed. So, knowledge about cross currency transactions will enable a Forex trader to profit even when the U.S. Dollar pairs are not trending. Similarly, one should be aware of the base currency (the first currency in a currency pair), which helps take vital decisions.

Online Forex trading is a relatively new development that provides conveneint access to traders worldwide. With wireless internet access traders can now execute their trades from virtuall anywhere in the world and enjoy a lifestyle of freedom and mobility.

Use forex reserves to create sovereign wealth funds

Use forex reserves to create sovereign wealth funds
23 Aug, 2008, 1438 hrs IST,Ashok Khemka,

The foreign reserves holdings of oil and some emerging economies including the BRIC countries are reaching stratospheric levels. This external surplus is largely a result of the run-up of the oil and commodity prices. Should these nations be complacent with their high levels of forex holdings or should they worry about the opportunity costs of holding high levels of foreign reserves? This savings glut of oil and emerging economies has been largely channelled to the US, cheaply financing its large current account imbalance. The US current account deficit is estimated to absorb about 75% of the global external surpluses. Increasing liquidity of the oil and newly industrialised economies are being funnelled into financial instruments issued by advanced countries yielding negative real rates of return.

Holding adequate levels of foreign reserves is essential to meet the liquidity on account of imports and external debt service. Holding of foreign reserves balance in cash or low-yielding liquid instruments such as the US Fed securities is akin to holding cash and bank balance in current accounts by the corporate/household sector to meet the necessary liquidity in carrying out day-to-day transactions. But there is a trade off involved with increasing returns when funds are locked up in higher yielding but longer-term instruments.

India's foreign reserves holdings has been around $300 billion for quite some time, forming almost 35% of our national GDP. The surge in reserves causes a mismatch between the opportunity costs of holding the reserves with macro-economic adjustment costs incurred when they fall short. There are several global benchmarks to determine the optimal level of foreign reserves holdings providing adequate liquidity for current account transactions such as imports and debt servicing. One rule of thumb is based on imports. It predicts that reserves should be enough to cover three months of imports.

The current level of foreign reserves holdings in India covers 15 months of imports, making current foreign reserves holdings overvalued by five times. Another oft-used benchmark is the Guidotti-Greenspan rule. As per this rule, the reserves should be enough to cover the short-term debt, that is, the ratio of average reserves holdings to short-term debt payable during the year should be one. This ratio of reserves to short-term debt for India is seven as on end March, 2008. The reserves holding by this measure is seven times more than the requirement. The average reserves to GDP ratio is 35% in India as compared to 10% on average in advanced countries. All this means that our reserves are too high for comfort.

The bulk of our reserves are invested in US Fed securities. The interest rates in both US and euro areas have yielded negative real rates of return of between 2% and 3% in the last 4-5 years. At this negative real yield on investments in US government securities, India's loss on its foreign reserves holdings is anything between $6 billion and $9 billion per annum at current reserves level. This is the high cost paid by the country for maintaining excessive liquidity, besides the opportunity costs foregone by not investing in longer maturing, higher yielding bonds and equities. By either measure of present level of short-term foreign debt of $44 billion or three-months import cover of $60 billion, a reserve level of $80 billion should provide comfortable liquidity. This reserve level is also 10% of GDP, the level maintained by most advanced countries. Thus by all measures, our foreign reserves holdings are over-liquid by $200-220 billion. A part of the excess reserves holdings can be gainfully employed by the RBI to intervene in the forex market to restore the value of a grossly undervalued rupee.

By the approximate measure of McIndex Purchasing Power Parity (equivalent price of a McDonald's hamburger across countries), the Indian rupee is undervalued by 30-40%. A correctly valued rupee would reduce the import bill on oil and other commodities, sobering the spiralling inflationary effect due to over-valued imports on domestic prices. Central bank intervention in the forex markets by offloading a part of its current reserves holdings would help in sucking out excessive monetary liquidity in the domestic economy. The actual growth rate in broad money supply is in excess of 20% and exceeds the targeted growth rate by almost 6-7%.

The balance of available foreign reserves holdings ought to be gainfully deployed in foreign assets which maximise returns. The imperative of earning higher and market-based returns on foreign assets should not be lost track of. India is experiencing global financial integration with its gross foreign assets and liabilities exceeding 60% of GDP. Assets held by sovereigns currently stand at $7 trillion in international reserves of which sovereign wealth funds constitute between $2-3 trillion. (See the accompanying table for the major global sovereign wealth funds).

The US has enjoyed much better performance on foreign assets than other countries. The sum total of capital gains and income yields on US foreign assets during the period 2001-06 has been as high as 12-15% while the return on its foreign liabilities is only 5-6%, giving US a net return of 7-8% on its foreign portfolio. To appreciate the returns on FII investments in India, consider the following data as on end 2007. As per SEBI records, while the cumulative purchases by FIIs were to the tune of $501.75 billion, cumulative sales amounted to $435.41 billion and net purchases were worth $66.33 billion. The market value was $255.4 billion. A rough calculation shows that the returns on average on the FII investments in India yielded a fabulous cumulative annual rate of 351 5% on average till end 2007.

A substantial part of the current foreign reserves holdings could thus be set aside to create a sovereign wealth fund run by global professional managers rewarded with performance-based salaries and independent of bureaucratic and political meddling. It is not wise - when you permit foreign capital, which earns high returns in the domestic equity and commodity markets - to constrain the foreign capital held domestically from exploring higher returns in high yielding equities, corporate bonds and commodities markets abroad. But this calls for a paradigmatic shift in thinking - freedom from a licence raj constraining domestic capital from freely flowing in and out. We have to overcome the present mindset and show more faith and respect for the Indian talent and entrepreneurial spirit.

(The author is an IAS officer. Views are personal.)

Forex Trading Strategy: Japanese Yen

Forex Trading Strategy: Japanese Yen

Global Forex Trading, Global Forex Trading

Published 08/23/2008 - 9:08 a.m.

Yen rallies in currency tradingForex trading strategy should consider that the Japanese yen is on the rise right now. The yen is rallying in currency trading on the FX market as risk aversion sets in. Most of the worries have to do with the U.S. financial markets. Concerns stemming from the financial sector are creating a situation in which investors are concerened about taking risks. This means that the yen carry trade is unwinding. The Guardian reports on forex trading strategy and the Japanese yen: "There is some jitteriness in financial markets and in equity markets ... and that tends to mean the yen is a bit better supported against some of the more risky currencies," said Phyllis Papadavid, currency strategist at Societe Generale in London. "Especially with some of the stories surrounding U.S. banks ... there is that sense of risk aversion seeping into the markets." See Also Japanese Yen in Currency Trading Forex trading strategy for a variety of currencies

Forex reserves down by $3.8 billion

Forex reserves down by $3.8 billion
22 Aug, 2008, 2221 hrs IST, PTI

MUMBAI: Declining foreign currency assets (FCAs) caused a further fall in India's foreign exchange reserves for the fifth consecutive week, pulling it down below the USD 300-billion mark.

Reserves dropped by another USD 3.8 billion to USD 296.210 for the week ended August 15 from USD 300.01 billion in the previous week, the Reserve Bank said in its weekly report today.

During the period under review, the FCAs fell by USD 3.785 billion to USD 285.975 billion from USD 289.760 billion in the previous week, RBI said.

FCAs expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as Euro, Sterling and Yen held in reserves.

The gold reserves remained static at USD 9.735 billion during the period while the special drawing rights sharply declined to USD 4 million, the apex bank said.

India's reserve position in the International Monetary Fund (IMF) dipped by USD 8 million to USD 496 million from USD 504 million in the previous week, RBI said.

FOREX-Plunging oil, gloomy British data fuel dollar rally

Fri Aug 22, 2008 4:07pm EDT

(ADVISORY: Please note that there is reduced FX coverage in Europe on Monday owing to a public holiday in the UK. Full European coverage will resume on Tuesday.)

* Dollar rallies, UK GDP backs slower global growth view

* Crude prices drop more than $6, cheering stocks

* Bernanke says dollar stability to slow inflation (Adds details, updates prices, changes byline)

By Lucia Mutikani

NEW YORK, Aug 22 (Reuters) - The dollar surged on Friday, recovering from the previous day's losses, as gloomy British growth data backed views of a slowing global economy and raised prospects of interest rate cuts outside the United States.

A $6.59 drop in U.S. crude oil prices to below $115 per barrel, which contributed to a rally on Wall Street, and comments by influential investor Warren Buffett that he has no bets against the dollar also added to the U.S. currency's upward momentum.

"UK GDP data weighed on the pound and sequentially on the euro, the Aussie dollar and the Kiwi dollar, which are the central banks looked at as potentially cutting interest rates," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.

Data showed the British economy stalled on the second quarter, suggesting a recession might be looming, and added to an overall bleak picture of a slowing European economy. It raised the possibility of European Central Bank and Bank of England monetary easing.

The euro dropped to a session low of $1.4760, edging toward a six-month low hit earlier this week at $1.4631, according to Reuters data. It was last trading at $1.4772, down 0.9 percent.

Despite Friday's losses, the euro was on track for its best weekly gain against the dollar since mid-July.

The dollar jumped 1.5 percent to 110.03 yen , while sterling slumped 1.5 percent to 1.8508 against the greenback . The dollar was on pace for its best one-day gain against the yen in more than two months at current prices.

The gains hoisted the dollar index to an intraday peak of 76.866 .DXY, not far from its 2008 peak at 77.413 hit early this week. The index, which measures the dollar's value against a basket of six currencies, was last up 1.0 percent at 76.789.

DOLLAR IN RECOVERY MODE

The dollar briefly trimmed gains against the euro in a knee-jerk reaction to Federal Reserve Chairman Ben Bernanke's comments that a stable dollar and falling commodities should help slow inflation this year and next. For details, see [ID:nN22434443].

Bernanke's remarks at an annual Fed symposium in Jackson Hole, Wyoming, prompted analysts to reduce expectations of a U.S. interest rate increase this year, which could diminish the dollar's appeal to investors.

But analysts said even without an interest rate hike this year, the dollar would probably continue to recover.

"In talking about the headwinds to the U.S. economy and then indicating how they had cut interest rates so aggressively ... the Fed feels it has done a lot of work," said RBC Capital Markets' Watt.

"If you contrast that with what is going on with UK GDP numbers and how much work that still has to be done by a number of the other central banks, it just entrenches the positive U.S. dollar view," Watt said.

The dollar has soared this month as dealers have unwound trades that bet on the global economy weathering the U.S. downturn and the credit crisis. Investors, as a result, sold the euro, British pound, Australian dollar and commodities.

Analysts said the dollar remained on track for a medium-term recovery after a seven-year downtrend.

Persistent problems at U.S. mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), and speculation over the future ofinvestment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) could make the road to recovery a bit bumpy, they warned.

"In the current environment of financial market instability, traders needed Bernanke to reassure them that they will take care of the financials first and worry about inflation later, which was exactly what Bernanke delivered," said Kathy Lien, director of currency research at GFT Forex in New York.

"However don't be mistaken, the Fed is still looking to raise interest rates in 2009," Lien wrote in a note.

The Australian dollar dived 1.6 percent to US$0.8665 , while the Kiwi dollar tumbled 1.8 percent to US$0.7086 . (Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Jonathan Oatis)

Forex reserves dip below $300 bn

Forex reserves dip below $300 bn

Bs Reporter / Mumbai August 23, 2008, 2:23 IST

After six months, India’s foreign exchange (forex) reserves have dropped below the $300-billion mark.

During the week ended August 15, forex reserves fell by $3.8 billion to $296.21 billion mainly on account of an appreciation of the dollar against other currencies. Foreign exchange reserves went above the $300-billion mark in February this year and touched an all-time high of $316.17 billion in the week ended May 23.

Reserves have, however, declined for the last six weeks. Even during the previous week, foreign exchange reserves fell by $5.6 billion and the decrease was attributed to selling by foreign institutional investors due to volatility in the Indian stock markets.

The latest figures from the Reserve Bank of India (RBI) showed that the country’s foreign currency assets declined by $3.7 billion to $285.98 billion.

Global Forex Trading, Global Forex Trading

Forex Trading Strategy: Japanese Yen

Global Forex Trading, Global Forex Trading

Published 08/23/2008 - 9:08 a.m.

Yen rallies in currency tradingForex trading strategy should consider that the Japanese yen is on the rise right now. The yen is rallying in currency trading on the FX market as risk aversion sets in. Most of the worries have to do with the U.S. financial markets. Concerns stemming from the financial sector are creating a situation in which investors are concerened about taking risks. This means that the yen carry trade is unwinding. The Guardian reports on forex trading strategy and the Japanese yen: "There is some jitteriness in financial markets and in equity markets ... and that tends to mean the yen is a bit better supported against some of the more risky currencies," said Phyllis Papadavid, currency strategist at Societe Generale in London. "Especially with some of the stories surrounding U.S. banks ... there is that sense of risk aversion seeping into the markets." See Also Japanese Yen in Currency Trading Forex trading strategy for a variety of currencies