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INDIAN BANK
HO/INTERNATIONAL DIVISION
and
Treasury
& Investments
66 Rajaji Salai, Chennai - 600 001
Website : www.indianbank.in
FOREX NEWSLETTER
(FORTNIGHTLY) |
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| FOREX
NEWSLETTER
March 15, 2008 |
MARKET
OUTLOOK FOR THE NEXT FORTNIGHT
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News Items
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Third quarter review of annual
statement on monetary poliy for 2007-08 |
>
Bank Rate, Reverse Repo Rate, Repo Rate and Cash Reserve Ratio
(CRR) kept unchanged.
>
The flexibility to conduct overnight or longer term repo including
the right to accept or reject tenders under the liquidity adjustment
facility (LAF), wholly or partially, is retained.
>
Overall real GDP growth projection for 2007-08 at around 8.5
per cent is retained.
> The policy endeavour would be
to contain inflation close to 5.0 per cent in 2007-08 while
conditioning expectations in the range of 4.0-4.5 per cent.
> While non-food credit has decelerated,
growth in money supply and aggregate deposits of scheduled commercial
banks continue to expand well above indicative projections.
> High growth in reserve money
is driven by large accretion to RBI’s net foreign exchange
assets.
> Barring the emergence of any
adverse and unexpected developments in various sectors of the
economy and keeping in view the current assessment of the economy
including the outlook for growth and inflation, the overall
stance of monetary policy in the period ahead will broadly continue
to be:
>> To reinforce the emphasis on price stability and well-anchored
inflation expectations while ensuring a monetary and interest
rate environment conducive to continuation of the growth momentum
and orderly conditions in financial markets.
>> To emphasise credit quality as well as credit delivery,
in particular, for employment-intensive sectors, while pursuing
financial inclusion.
>> To monitor the evolving heightened global uncertainties
and domestic situation impinging on inflation expectations,
financial stability and growth momentum in order to respond
swiftly with both conventional and unconventional measures,
as appropriate
> Over the period ahead, liquidity
management will continue to assume priority in the conduct of
monetary policy and developments having implications for liquidity
management would warrant appropriate and timely action. The
Reserve Bank will continue with its policy of active demand
management of liquidity through appropriate use of the CRR stipulations
and open market operations (OMO) including the MSS and the LAF,
using all the policy instruments at its disposal flexibly, as
and when the situation warrants.
(Source: RBI website)
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| CAPITAL GOODS PRODUCTION GROWTH SLOWS |
| INDUSTRIAL OUTPUT INDEX GROWS AT 5.3% |
The Index of Industrial Production (IIP) data for January 2008 showed that the overall industrial output index
grew at 5.3% as against 11.6 per cent growth in January 2007, brought down by the decline in all the major segments like mining,
manufacturing and electricity generation.
Cumulative April-January 2007-08 data are slightly better with the mining sector growth at 4.6 per cent, manufacturing sector at
9.2 per cent and electricity generation growing at 6.3 per cent. Overall IIP for April-January 2007-08 was 8.7 per cent against
11.2 per cent in the comparable period of the preceding year. However, the performance of the capital goods sector was a bit
disappointing. After growing at a healthy rate of 24.5 per cent in November 2007 and a good turnout at 16.6 per cent in December,
the capital goods sector growth slumped to just 2.1 per cent in January 2008.
In the consumer goods sector, while the overall growth was 7 per cent against 8.2 per cent in January 2007, consumer durables sank
to a negative growth of 3.1 per cent against 5.3 per cent in January 200. Consumer non-durables reported better results at 10.1
per cent for January 2008 against 9.1 per cent in the previous year for the same month.
( Source: Businessline)
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MID-CAP COMPANIES TAP "SUB-PRIME" OPPORTUNITIES IN US |
With the sub-prime melt-down knocking off profitability of firms in the US, opportunities are opening up for
Indian mid-cap companies to acquire their counterparts in the US, especially those finding it difficult to meet working capital
requirements as well as distressed assets being put on the block. There has been an appreciable spurt in acquisitions abroad,
especially in the US, by Indian mid-cap firms in the last few months and the trend is visible across sectors.
The Bangalore-based Kavveri Telecom Products and Pradot Technologies Pvt Ltd, the Ahmedabad-based Azure Styx Infotech, the
Hyderabad- based FXLabs Studios, the Indore-based Plethico Pharmaceuticals, the Aluva-based Kerala Ayurveda Ltd and the
Vadodara-based Minal Jewels figure among the mid-cap firms that have bought out US companies post-November 2007.
According to Virtus Global Partners' estimates, deal sizes of less than $25 million accounted for 76 per cent of the
US-bound acquisitions by volume in 2007, followed by transactions in the $25million - 50million range ( eight per cent).
Deal sizes in the $50 million - 100 million, $100million - 500 million, and greater than $500 million range each accounted
for less than six per cent of the 2007 transactions, an analyst said. "There will be more acquisitions this year as the
US market faces a slowdown," said a market analyst.
( Source:
Businessline )
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INFLATION RATE UP ON COSTLIER PRIMARY ARTICLES |
The annual Wholesale Price Index-based
inflation rose 5.11 per cent during the week ended March 1,
higher than the previous week’s annual rise of 5.02 per
cent. The rise in the year-on-year inflation rate was on account
of a further spike in prices in the Primary Articles group.
The annual rate of inflation stood at 6.51 per cent during the
corresponding period a year ago. On a disaggregated basis, the
Primary Articles’ group index rose 0.3 per cent even as
the index for Food Articles declined by 0.1 per cent. The index
for Non-Food Articles group rose by 1.2 per cent.
( Source: Businessline
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FOREX RESERVES RISE $2.2 b |
The country’s foreign exchange reserves
increased by $2.225 billion to $303.460 billion for the week
ended March 7 on account of revaluation of currency assets.
The foreign currency assets grew by $2.221 billion at $293.471
billion. Foreign currency assets, as expressed in dollars, include
the effect of appreciation or depreciation in non-US currencies
(euro, sterling and yen) held in reserves.
( Source: Businessline
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US JOB LOSSES NOT NECESSARILY A RECESSION SIGN: IMF |
The US economy will see “very,very
sluggish growth” in the first but it cannot be concluded
after two months of job losses that it is toppling into recession,
a top International Monetary Fund official has said. Mr John
Lipsky, the IMF’s first deputy managing director, said
that notwithstanding the loss of 63,000 jobs in February and
22,000 in January, he did not think there was other corroborating
evidence like accelerating layoffs to paint a picture of severe
downturn. He said that given the slowing in the pace of US productivity,
which measures output per hour worked, it was not surprising
that an economy already “growing substantially below trend”
creates very few new jobs. He said there clearly were “real
risks” for the country’s economic prospects but
the actions that policy-makers need to take are roughly the
same whether it’s in recession or not.
( Source: Businessline
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FOREX
VIEW FOR THE FORTNIGHT ENDING 31-03-08
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EURO
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DAILY |
1.5510 |
1.5770 |
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