India likely intervened in forex market to support rupee

Section:

By Sudeep Jain and Nupur Acharya
The Wall Street Journal
Monday, May 14, 2012

http://online.wsj.com/article/SB1000142405270230419270457740368024856961...

MUMBAI -- India's central bank likely intervened in the foreign exchange market today, underscoring its determination to prevent the rupee from weakening below the psychologically important level of 54 to the U.S. dollar, dealers said.

The Reserve Bank of India likely started selling dollars when the greenback was trading around INR53.90, four dealers told Dow Jones Newswires.

The dollar was at INR53.80 as of 1004 GMT after the suspected intervention, down from an intraday high of INR53.91 and compared with INR53.63 late Friday in Asia. The rupee's all-time low against the dollar is 54.2925, which it touched on Dec. 15.

One of the dealers said that recent suspected interventions show that the RBI is averse to the dollar climbing above INR54.

... Dispatch continues below ...



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Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

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For the complete announcement, please visit Prophecy Platinum's Internet site here:

http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...



An RBI spokeswoman was unavailable for comment.

The RBI doesn't say whether it intervened in the currency market and has a stated policy of intervening only to smooth volatility.

But the RBI's recent support for the rupee, at a cost of $20 billion since September last year, looks like an effort to influence the currency's direction, research house Capital Economics said in a note.

The central bank's ability to intervene in the currency market is limited by India's modest foreign exchange reserves.

Recent data show India's foreign-exchange reserves fell by $2.2 billion to $293.2 billion as of May 4, possibly as a result of the RBI's interventions, said analysts.

The RBI's proactive stance toward the rupee found support with a top government adviser.

C. Rangarajan, chairman of the influential Prime Minister's Economic Advisory Council, said the RBI should support the rupee whenever it depreciates following capital outflows.

"If there is a temporary fluctuation in capital flows, that's the time when [foreign exchange] reserves must be used in order to prevent the currency from depreciating too much," Rangarajan said at a conference.

He added that India's wide current-account deficit and muted overseas capital inflows are weighing on the rupee.

The current-account deficit has ballooned in recent quarters as imports have remained high while exports have suffered due to a weak global environment.

Traditionally, capital inflows have been sufficient to fund the current-account deficit. But, India's poor fundamentals, coupled with jitters over proposed changes to India's tax laws, have slowed inflows to a trickle.

This has made the rupee vulnerable to risk-averse selling on any bad news about the euro zone's debt crisis.

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf