Press review - page 2

European Central Bank President Mario Draghi said on Thursday that the 17-nation economy is set to see gradual recovery later this year as there are already some signs of improvement.

Speaking at the post-decision press conference in Frankfurt, Draghi said, "Euro area economic activity should stabilize and recover in the course of the year, albeit at a subdued pace."

(Reuters) - A majority of the House of Representatives has signed a letter urging President Barack Obama to insist on new rules against currency manipulation in a proposed trade agreement with Japan and 10 other countries in the Asia-Pacific region.

"As the United States continues to negotiate the Trans-Pacific Partnership, it is imperative that the agreement address currency manipulation," the letter released on Thursday said. It was signed by 226 lawmakers, including 177 Democrats and 49 Republicans.

The euro climbed to roughly one-month highs against the dollar on Thursday after the European Central Bank said the bank ruled out cutting its overnight deposit rate below zero for now. In a press briefing after the ECB held interest rates steady at 0.50 percent, ECB President Mario Draghi said that while the bank was technically ready for negative deposit rates, or the rate it pays commercial banks to hold their money, there was no reason to act right now.

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"The U.S. jobs figures were strong, but not strong enough to increase expectations that the Fed will taper QE3," said Junya Tanase, executive director of forex at JPMorgan in Tokyo.

The dollar extended its recovery against the yen in Asia on Monday, moving well away from a two-month low plumbed in the previous session, while the Australian dollar slumped after disappointing data from China, its biggest export market.

Retail sales in China rose 12.9 percent in May from a year earlier, in line with projections, and accelerating slightly from a 12.8 percent increase in April, data released by the National Bureau of Statistics showed on Sunday. The growth is sales was below the government’s full-year target of 14.5 percent. Despite subdued domestic demand, the May figures should come as a boost to China’s leaders, who have been trying to shift the country’s economic model to emphasize consumer demand as the key driver of growth. After more than a decade of double digit growth generated by investment and exports, last year, consumption contributed to about 51.8 percent of the country’s GDP growth number.

Credit ratings agency Standard & Poor's upgraded its outlook for the U.S. credit rating to "stable" from "negative" on Monday, reducing the likelihood of a near-term downgrade. S&P said the stable outlook reflects receding downside risks to the 'AA+' rating on the U.S., which have reduced the likelihood of a ratings downgrade to less than one in three.

Many Indian companies with sizeable forex loan exposure and no recourse to hedges could end up making provisions in the first quarter ending June 30 as the rupee's slide eats into profitability. Power generating companies, cement makers and telecom companies are likely to be the main losers, although losses incurred on forex loans used for capital assets are allowed to be capitalised over a longer tenure.

"Hedging is very expensive. If you hedge, the advantage of the dollar loan is gone," says Subba Rao, who's between jobs, and was till recently affiliated to a leading infrastructure conglomerate with interests in power generation and airports. Large companies do hedge their forex exposure. Companies in conglomerates such as Aditya Birla Group and Tata group hedge proactively as they are conservative groups. "It is difficult to say, generalising will be difficult," says Arora.