(Nov 13): Billionaire Elon Musk and entrepreneur Vivek Ramaswamy will lead a new Department of Government Efficiency tasked to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies”, US President-elect Donald Trump announced on Tuesday.

On the campaign trail, Trump said the government efficiency effort would develop a plan to eliminate “fraud and improper payments”, conducting a “complete financial and performance audit” of the federal government. On Tuesday, Trump said the panel would partner with the White House’s Office of Management and Budget and said their work will conclude no later than July 4, 2026 — the nation’s 250th anniversary.

The structure may allow Musk to avoid resigning from his companies including Tesla Inc, the world’s largest electric vehicle manufacturer, and SpaceX, which dominates the worldwide rocket launch market — and federal conflict-of-interest rules that could have mandated divestiture. 

But it’s not clear what the size or structure will be, or how Musk and Ramaswamy will drive the dramatic overhaul of the government they have promised. The effort, which abbreviates to 'Doge', is a play on one of Musk’s favorite internet memes, and Musk has been an advocate of a the digital token Dogecoin. In a post to his social media network X, Musk suggested the government efficiency panel would offer merch.

Musk predicted he could cut at least US$2 trillion (RM8.90 trillion) from the US federal budget at Trump’s rally last month at Madison Square Garden, though that would exceed the amount Congress spends annually on government agency operations, including defense. It would likely require making significant cuts to popular entitlement programs such as Social Security, Medicare, Medicaid and veterans’ benefits.

Last fiscal year, the government spent more than US$6.75 trillion, with more than US$5.3 trillion of that coming from Social Security, healthcare, defence and veterans’ benefits — all of which are politically fraught and notoriously difficult to convince Congress to cut — as well as interest on the debt.

“This will send shockwaves through the system, and anyone involved in Government waste, which is a lot of people,” Musk said on Tuesday in a statement provided by the Trump transition effort.

Musk, 53, saw his net worth top US$300 billion shortly after the election — the first time he’d surpassed that mark in almost three years. He is the only person to ever have a fortune in excess of US$300 billion, according to Bloomberg’s wealth index. Tesla shares, which were trading about 1.5% lower in the after-hours session before Trump’s announcement, pared losses slightly after the news.

Musk is likely to serve as a special government employee, the formal designation for individuals outside of government brought in for short periods to lend their expertise.Ramaswamy, an Ohio businessman, mounted a bid for the GOP nomination himself but largely echoed and amplified Trump’s position.

Prominent allies

During his run, Ramaswamy, 39, was loathe to criticise Trump, praising the Republican standard-bearer and endorsing many of the policies the incoming president has espoused, including scaling back the size of the federal government and pulling back from foreign alliances.

Ramaswamy also backed ending US aid to Ukraine, called at one point for a wall along the US-Canada border to halt the spread of fentanyl and has been an advocate for the cryptocurrency industry, calling for rolling back regulations and implementing drastic cuts to the Securities and Exchange Commission.

His staunch support for Trump, fuelled by some breakout moments in primary debates that saw him attack some of the president-elect’s top rivals for the nomination, helped him build his standing among conservative voters. Ramaswamy would go on to be a fervent surrogate for the president-elect, earning Trump’s praise. 

While Trump ruled him out as a running mate, he weighed him as a possible Cabinet pick as early as March, according to people familiar with the matter at the time.

On the trail, Trump praised Ramaswamy as “smart”, and expressed hope that he would be part of a second-term administration. 

“We can put him in charge of one of these big monsters, and he will do a better job than anybody you can think of,” Trump said at a campaign rally in October.

Source: Theedgemarkets

The Indian Rupee (INR) trades in negative territory on Wednesday after reaching a fresh all-time low in the previous session. The local currency is under pressure due to substantial foreign institutional outflows and heightened US Dollar (USD) demand. Despite a strengthening Greenback and outflows from local stocks, the downside for the INR might be limited amid routine interventions from the Reserve Bank of India (RBI) to sell the USD to stabilize the currency. Later on Wednesday, traders will closely monitor the US October Consumer Price Index (CPI), along with the speeches from John Williams, Lorie Logan, Jeffrey Schmid and Alberto Musalem. 

Indian Rupee seems vulnerable ahead of key US CPI inflation data

India's retail inflation, based on the Consumer Price Index (CPI), rose to a 14-month high at 6.21% YoY in October versus 5.49% prior, higher than the 5.81% expected. 

India’s food inflation jumped to 10.87% from 9.24% in September 2024 and 6.61% in October 2023, according to the latest official data released on Tuesday. 

Indian Industrial Production grew by 3.1% YoY in September from a decline of 0.1% in August. This figure came in better than the estimation of 2.5%. 

Foreign investors withdrew nearly $3 billion from local stocks in November, adding to the $11 billion of outflows in October.

Minneapolis Fed President Neel Kashkari said on Tuesday that the Fed feels confident about its long-running battle with transitory inflation, but it’s premature to declare outright victory. Kashkari further stated that the US central bank won't model Trump policies' effect on the economy until they become clear.

Richmond Fed President Tom Barkin noted on Tuesday that while inflation appears to be coming down, it might still get stuck above the Fed's target levels.

USD/INR’s positive outlook remains in play in the longer term

The Indian Rupee softens on the day. The constructive view of the USD/INR pair remains unchanged on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) exceeds 70, indicating an overbought condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation. 

The immediate resistance level for USD/INR emerges at 84.50. A break above this level could draw in enough bullish pressure to the 85.00 psychological level.

In the bearish event, sustained trading below the resistance-turned-support level at 84.30 could expose the 84.05-84.10 region, representing the lower limit of the trend channel and the high of October 11. The next downside filter to watch is 83.85, the 100-day EMA.

Indian Rupee FAQs

What are the key factors driving the Indian Rupee?

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

How do the decisions of the Reserve Bank of India impact the Indian Rupee?

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

What macroeconomic factors influence the value of the Indian Rupee?

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

How does inflation impact the Indian Rupee?

Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

Source: FXSTREET

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First Impressions: The WPI rose 0.8% in the September quarter, on par with Westpac’s forecast and below the market consensus of 0.9%. The market range was from 0.8% to 1.0%. On an annual basis, wages are up 3.5%yr, down from 4.1%yr in June and the peak of 4.2%yr in December 2023. Wage inflation has continued to moderate through 2024, with the six-month annualised pace holding at 3.2%yr compared to 4.9%yr in December 2023. There are no changes to Westpac’s wage forecasts.

In the September quarter, the Wage Price Index (WPI) rose 0.8% (3.5%yr), on par with Westpac’s forecast but a touch softer than the market consensus of 0.9%. It is also below the RBA’s expectation which pointed to a 0.9%qtr rise in both the September and December quarters of 2024. Wage inflation peaked at 4.3%yr in December 2023 and has been drifting lower through 2024, with the six-month annualised pace dropping from 4.9%yr in December 2023 to 3.2%yr in September 2024.

The more critical private sector wages rose 0.8% and this time, was also matched by a 0.8% increase in public sector wages.

The ABS provides (in non-seasonally adjusted terms) the contributions to the quarterly increase in the WPI from Awards, Enterprise Bargaining and Individual Arrangements. Comparing September 2024 to September 2023, the contribution from Enterprise Bargaining has softened to a contribution of 0.46ppt compared to 0.66ppt a year earlier. Individual Arrangements continue their downtrend, contributing 0.59ppt compared to a September 2023 print of 0.74ppt. Meanwhile, the Awards/Minimum Wage contribution was just 0.36ppt compared to 0.63ppt a year earlier.

As the Wage Price Index came in just as Westpac expected, we see no reason to change our end 2024 forecast of 3.2%yr and the June 2025 forecast of 2.9%yr. The RBA is currently forecasting annual wages growth to print 3.4%yr for end 2024 and hold at that rate through to June 2025.

Korea added less than 100,000 jobs in October for the first time in four months primarily due to a slowdown in the wholesale, retail and construction sectors, data showed Wednesday.

The number of employed people aged 15 years and older came to 28.85 million as of end-October, up 83,000 from a year earlier, according to the data compiled by Statistics Korea.

In July, monthly job additions exceeded 100,000 for the first time in three months, reaching 172,000. This was followed by increases of 123,000 new jobs in August and 144,000 in September.

October's on-year increase marks the smallest monthly gain since May, when the country reported an 80,000-job increase.

The slower job growth in October was mainly due to job losses in sectors like wholesale and retail, as well as construction, despite gains in health care, education, and science and technology.

Employment in the wholesale and retail sectors dropped by 148,000 compared with the same month last year, continuing a downward trend for the eighth consecutive month.

The monthly decline is also the largest since July 2021, when 186,000 wholesale and retail jobs were lost.

The number of people employed in the construction sector fell by 93,000 in October, marking six straight months of decline, according to Statistics Korea.

"The decrease in retail jobs appears to have extended to wholesale sectors as well," Suh Woon-ju, a Statistics Korea official, said in a press briefing.

In contrast, new hiring in the public health and social welfare field gained 97,000 on-year last month, and jobs in the science and technology service sector went up by 77,000.

October's job growth was also led by more positions for older adults.

Jobs for those aged 60 and older rose by 257,000 on-year, and those for people in their 30s and 50s climbed 67,000 and 12,000, respectively.

But those in their 20s had 175,000 fewer jobs last month, and people in their 40s also saw jobs decline by 72,000 on-year, the agency said, adding the overall number of people in the two age groups has also fallen. (Yonhap)

Source: Koreatimes