INDIAN BANK
HO/INTERNATIONAL DIVISION
66 Rajaji Salai, Chennai - 600 001
Website : www.indian-bank.com
FOREX NEWSLETTER
(FORTNIGHTLY)

MARKET OUTLOOK FOR THE NEXT FORTNIGHT

(01/06/07 - 15/06/07)

News Items

The country's share in world trade covering merchandise plus service sector trade might well double from 1.1 per cent in 2004 to cross the two per cent mark in 2009, the Union Minister for Commerce and Industry has said.

According to the latest data published in the World Trade Statistics by the Geneva based World Trade Organisation (WTO), India's share in total world trade, which includes trade in both merchandise and services sector has gone up from 1.1 per cent in 2004 - ie, the initial year of the five-year Foreign Trade Policy (2004-09) to 1.5 per cent in 2006.

The country's share in global merchandise trade might increase from 1.2 per cent in 2006 to 1.5 per cent in 2009.

An action plan to eliminate power shortages by 2012 has been formulated by a conference of Chief Ministers convened by the Prime Minister. The plan includes launching of a campaign by all States against power thefts, along with setting up special courts for disposal of such cases, creating a professionally-managed National Power Project Management Board attached to the Central Ministry of Power, setting up a Standing Group of Power Ministers to look into all issues affecting the sector, and a sub-committee of this group to work out the financing aspect of creating additional power generating capacity in the country.

The Prime Minister said that the Centre will provide financial assistance for upgrading transmission and distributing systems. As losses come down to the agreed levels, the performing states will be rewarded appropriately. For this purpose, the Accelerated Power Development and Reforms Programme is being revised and contours of this revised scheme will be announced within two months, the Prime Minister said. He further added that the capacity addition plans of the Centre and the States in the Eleventh Plan (2007-2012) were over 3 times the achievement of the Tenth Plan. A professionally managed National Power Project Management Board is to be set up, which would keep track of all projects which are to be completed during the Eleventh Plan, and will assist State and Central utilities in ensuring that project implementation milestones are met for each project.

In order to review the implementation of the resolutions adopted at the meeting, a Standing Group of Power Ministers under the Chairmanship of the Union Power Minister has been proposed, which would meet once in a quarter.

CENTRE COMMITS RS 25,000 CRORES FOR FARM STRATEGIES

The National Development Council proposed a slew of measures to pep up agricultural growth. These include a new additional central assistance commitment of Rs 25,000 crore over the next four years for State-specific farm strategies, a food security mission to augment production of wheat by 8 million tonnes (mt), rice by 10mt and pulses by 2 mt and a signal to the States to come up with improved models of subsidy delivery.

The Planning Commission Deputy Chairman said it was resolved that farm development strategies must be reoriented to meet the needs of the farmers and endorsed the 4 per cent growth for the agricultural sector in the 11th Plan. Taking into account all endowments and constraints, the states should have credible strategies for achieving the targeted goal.

SPICES EXPORTS REVENUE RISES 36% IN 2006-07

Exports of spices from the country fetched a revenue of Rs: 3575.75 crores through shipment of 3,73,750 tonnes during 2006-07 against the previous earnings of Rs:2627.62 crores and 3,50,363 tonnes in volume. The achievements in 2006-07 is higher by 36 per cent in terms of value and seven per cent in volume. In terms of dollar, it is $ 792.95 million, the Chairman of the Spices Board said at a press meet.

The export target fixed for 2006-07 was 3,06,000 tonnes valued at Rs: 2500 crore and this had exceeded by 22 per cent in terms of volume and 43 per cent in terms of value. Pepper, chilli and cumin are the significant contributors, which almost doubled its performance during the year compared to last year.

The US, the single largest market for pepper, imported 13,886 tonnes of pepper from India in 2006-07 against 6,596 tonnes in 2005-06. Other major markets were the UK, Germany, Italy, Canada and Australia. It was reported that the production in China was less than previous year. This resulted in a short supply in the international market, which in turn made chilli much hotter in the international market. The export figures show that China has even imported around 900 tonnes of chilli from India during 2006-07. Export of cumin to Vietnam increased substantially from 215 tonnes to 4,112 tonnes.

INR = INR in the ensuing fortnight likely to trade within 40.20 and 41.00. Selling on rallies preferred. FC inflows and liquidity tightening measures may strengthen INR.

EUR = EUR currently looks supported at 1.3400 levels and might move between 1.3680 and 1.3400. ECB's rate hike by 0.25% by June has been discounted by the market. Selling on rallies preferred. Against INR range expected 53.90 to 56.00.

GBP = GBP looks bearish but may possibly be in a corrective mode. Might trade between 1.9675 and 1.9940. Selling on rallies preferred. Further rate hike possibility in GBP is ruled out at the moment. Against INR range expected 79.10 to 81.75.

JPY = Flourishing carry trade and lower yields have kept JPY weak. Range expected 120.50 to 122.20. Buying on dips suggested. Against INR range expected 33.30 to 34.00.

PS: Views expressed here are only indications. The Bank or any of it's officials will not be responsible for any consequences of any decisions taken on the basis of these indications.

FCNR (B) DEPOSITS (w.e.f. 01.06.2007)						NRE(w.e.f.01.06.2007)
PERIOD	USD	GBP	EUR	CAD	AUD	NRE TERM DEPOSITS
1 Year & above but less than 2 years	4.64	5.39	3.71	3.99	5.85	5.39
2 Years & above but less than 3 years	4.57	5.35	3.87	4.10	5.88	5.32
3 Years & above but less than 4 years	4.55	5.32	3.88	4.13	5.90	5.30
4 Years & above but less than 5 years	4.55	5.26	3.88	4.14	5.95	5.30
5 years only	4.57	5.20	3.88	4.15	5.92	5.30
SB NRE - 3.50 % at par with domestic savings deposit

 

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