INDIAN BANK
HO/INTERNATIONAL DIVISION
66 Rajaji Salai,
Chennai - 600 001
Website : www.indian-bank.com
FOREX
NEWSLETTER
(FORTNIGHTLY)
Currency Outlook
US Dollar traded between 45.00 and 45.50 during the past fortnight. Rupee has been strong for most part of the fortnight on high call money markets, robust capital flows, dollar weakness in the global markets. We expect the trend to sustain and the rupee would continue to strengthen against the dollar. A mild support for the rupee exists at 45.00 break thereof might push it to 44.80 levels. In the ensuing fortnight the rupee is likely trade in a range of 44.80/45.25. The forwards expected to track the spot rupee movement and trade a range of 2.25% - 2.75%
Dollar concerns especially on the trade gap front continues to haunt the dollar. Support for the Euro exists at 1.2850 and if this holds the bullishness for the currency might reinstate itself and touch the immediate psychological barrier of 1.3000. A convincing break of 1.3000 might possibly result in an upside to 1.3070/1.3100. Against the Indian rupee the Euro is expected to trade between 57.60 and 59.00.
GBP is expected to trade in the range of 1.8250 - 1.8500 in the upcoming fortnight. Support exists for the GBP at 1.8300 and expected to hold. Break thereof might test 1.8250 levels where it is expected to rebound and touch the target level of 1.8650.
Against rupee the sterling is expected to trade between 81.75 and 84.00.
GDP numbers released last week of Japan was less than market expectations indicating stagnation and weakness in the Japanese Economy. Hence despite the bearish trend for the dollar world over, USD/JPY rallied above 106 but came down later on profit booking. Support exists at 105.00 and stop loss orders also placed near 105.00 break thereof might touch 104.50 levels. Expected trading range 104.70/106.20.
Against the rupee the Jap.Yen is expected to trade between 42.00/43.50
Other News Items
In a bid to enhance India's share of global services exports, the Govt. is working out a package to unleash reforms in the sector. Some suggestions have been mooted by the commerce Ministry and sent to various Ministries for their views. These reforms and regulations are aimed at enhancing quality, efficiency and delivery of services with a view to increase exports.(Source - Reuters dated 1/11/2004)
Software exports from Tamil Nadu grew to nearly Rs.80 billion ($1.65 billion) by March 31 this year, according to state IT Secretary Vivek Harinarain. By Mar.2005, this figure is expected to touch the Rs.100 billion mark. The Software and IT enabled services sector will generate about 300,000 new jobs by 2008. T.N.contributes 17% of India's total software exports. As many as 250 new IT Companies have set up shop in the state in the last two years. (Source - Hindustan Times dated 2/11/2004).
For a textile industry just out of a tough phase, technical textiles are being touted as the next best thing to happen. Its applications are wide ranging - used in kitchen products, diapers and even light combat aircraft. The Textile Commissioner and Chairman of the Export Committee on Technical Textiles (ECTT), Mr.Subodh Kumar, said that globally the technical textiles growth was estimated at 17 billion kg with a value of $93 billion in 2000 and was expected to grow to 24 billion kg with a value of $127 billion by 2010. The market size in India is assessed at Rs.27,377 crore in 2003-04 and is expected to increase to Rs.41,938 Crore in 2007-08. (Source - Business Line dt.11/11/2004).
India,along with China is emerging as the leather production and leather hub for the $85 billion world leather industry. With over 10% of the raw material base of hides and skins, India is clearly becoming a dominant player in the world leather market as the producer of high quality leather footwear and garments and more recently as a processing and design hub for leather goods. (Source - Business Line dt. 13/11/2004).
The Federal Reserve on Wednesday, 10/11/04 nudged US interest rates up a quarter percentage point for the fourth time this year from 1.75% to 2.0%.
(Source - Reuters news dt.10/11/2004).
Textile manufacturers at Karur are aiming at increasing exports in the next five years to the tune of Rs.5,000 crores. From Karur table linen, kitchen linen and furnishings are exported. The annual exports from Karur now were worth about Rs.1,500 crores (including nearly Rs.1,000 crores in indirect exports). The main markets were the United States and the European Union. The exporters were also exploring opportunities in South African and South American Countries. A textile park proposal at Karur has been mooted especially for small scale units. It was also identified as one of the towns of export excellence and hence more infrastructure development would be taken up, according to Mr.M.Siva Kannan, Secretary, Karur Textile Manufacturers Exporters' Assocation.
(Source - The Hindu dated 14/11/2004).
With markets opening up from 1st January 2005, the fortunes of Gujarat Textile Sector is brightening again with nearly 55 industrial entrepreneurs memorandums (IEMs) filed by corporates during the first seven months of this year. While these 55 IEMs filed till 31/7/2004, promises new investment of Rs.2,530 crore in textile sector alone, the year also has been witnessing 35 projects under implementation thus bringing in Rs.2,094 crore of new investments, highest since 1999.
While major names such as Arvind Mills, Welspun India are setting up new facilities to cater to the Overseas Markets post WTO, smaller ones such as Alok Industries, Bell Textiles is entering into specialized textile products as opportunities for new textile products are increasing with many sectors such as automobile providing new opportunities. (Source - Business Standard dt.11/11/2004).
FEMA Updates
In order to promote investment activity and to further liberalise the procedures relating to trade credits for imports, RBI has accorded general permission to ADs to issue guarantees/LoUs/LoCs in favour of overseas supplier, bank and financial institution, up to USD 20 million per transaction for a period up to one year for import of all non-capital goods permissible under Foreign Trade Policy (except gold) and up to three years for import of capital goods, subject to prudential guidelines issued by Reserve Bank from time to time.
(A.P.(DIR Series) Circular No. 24 dated 01.11.2004)
Following the announcement by the Government in the Foreign Trade Policy in September 2004, RBI has decided that 100 per cent Export Oriented Units (EOUs) and units set up under the Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) Schemes would be allowed to realise and repatriate the full value of export proceeds within a period of twelve months from the date of export.
This relaxation will be available in respect of exports made on or after September 1, 2004.
(A.P.(DIR Series) Circular No. 25 dated 01.11.2004)
Reserve Bank has permitted Banks to grant permission to their importer/exporter constituents for enhancement of the outstanding limit of forward contracts under this facility from 50 per cent to 100 per cent of the eligible limit, subject to certain conditions.
(A.P.(DIR Series) Circular No. 26 dated 01.11.2004)
(w.e.f.02.11.2004) FCNRD (w.e.f.
02.11.2004)USD GBP EUR NRE 1 to 2 years 2.30 4.76 2.08 3.10 2 to 3 years 2.68 4.71 2.35 3.40 3 years 3.00 4.74 2.61 3.80 SB NRE (w.e.f.01.10.2004) 2.20
Issue 1/2004 Dt.01 06 2004
Issue 2/2004 Dt.16 06 2004
Issue 3/2004 Dt.01 07 2004
Issue 4/2004 Dt.16 07 2004
Issue 5/2004 Dt.02 08 2004
Issue 6/2004 Dt.16 08 2004
Issue 7/2004 Dt.01 09 2004
Issue 8/2004 Dt.16 09 2004
Issue 9/2004 Dt.01 10 2004
Issue10/2004 Dt16 10 2004
Issue11/2004 Dt01 11 2004
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