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 45.20 and 44.95 during the major part of fortnight well supported by the central Bank despite huge inflows and arbitrage in NDF market. But due to the cash shortage that was created in the Market due to the intervention, the Central Bank had to refrain from intervention and rupee rallied to 44.65 in the last two days of the previous fortnight. Expect Rupee to strengthen further to 44.25 levels. The forwards expected to track the spot rupee movement and the probability of seeing discounts upto 6 months is not ruled out.
Phenomenal bullish momentum propelled the EUR to a new all-time high of 1.3330. While we cannot rule out another upside squeeze this week, after three months of dramatic rallies. EUR will probably find it difficult to move above 1.3500.
Against the Indian rupee the Euro is expected to trade between 58 and 59.50
The strongest weekly close since September 1992, yet still below pivotal resistance at 1.9000. GBP is expected to struggle with this area all week and may be throughout next month. Sharp swings either side of this level are likely with downside dips probably limited to 1.8600 and upside rallies to 1.9300. A weekly close clearly above 1.9000 should mark the start of the next serious rally.
Against rupee the sterling is expected to trade between 83.00 and 86.00
Across the board USD selling sent $/Yen down to a low of 102.00. Expect it to consolidate above here early this week, with any bounce limited to 104.50/105.00. Then it will probably move down towards the last nine year low of 101.25.
Against the rupee the Jap.Yen is expected to trade between 42.50 and 44
Other News Items
EXPORTS UP
The gems and Jewellery Sector led by the Jewellery segment has done well on the export front in the seven month period April-October 2004. Total exports of the sector during the period are $8.1 bn against $6.05 bn in the corresponding period of the previous year; an increase of 34%. The value of cut and polished diamond exports have increased by 28% in the same period to $6.051 billion ($4.731 bn). Jewellery exports were up82% at $1709.16 m ($934.23 m ) while coloured gemstone exports registered a growth of 19% at $101.03 m ($85.02 m).
(Source - The Hindu dated 21/11/2004)
The upbeat mood in the domestic textile fraternity is amply reflected in the industry's rapidly increasing offtake from the Technology Upgradation Fund Scheme (TUFS), launched by the Government to give a leg up to the industry in view of the textile quota phase out from 1/1/2005. Till 30/09/2004 Banks and Financial Institutions had sanctioned loans amounting to Rs.9,051.28 cr to projects under the Scheme, with a project cost of Rs.20,007 Cr. Of this, Rs.7,468 Cr. has been disbursed for projects worth Rs.15,565 Cr.
(Source - The Hindu dated 19/11/2004).
Foreign Exchange earnings from Tourism during the ten months period from January - October 2004 were US$ 3853 m up by 38% over the corresponding period last year. This amount exceeds the forex receipts of USD 3602 m earned during the calendar year Jan.-Dec. 2003. In rupee terms for the 10 month period forex receipts have reported a 33% growth to Rs.17,473 Cr. from Rs.13,103 Cr. According to the department of tourism, the state of Rajasthan has had the largest number of foreign tourist arrivals during the calendar year 2004. During the first half of 2004, Rajasthan had 400,000 foreign tourists and 5.5 million domestic visitors.
(Source - Economic Times dt.22/11/04).
The Govt is considering hiking the interest subsidy provided to textile units under the Techonology Upgradation Fund Scheme to 8% from 5% at present. The offtake from Rs.250 bn (US$5.55 bn) TUFS Scheme has been just Rs.60 bn in the last five years. The Govt is planning to increase the offtake and for this purpose. has lowered the threshold for taking assistance for spinning units from 25,000 to 12,000 spindles, and for other units the minimum size for subsidy has been reduced from 12,000 to 8,000 spindles. The Govt. is also open to subsidizing the exports of cotton from India if domestic prices fall due to glut in the market.
(Source - Asia Pulse Pte. Limited dated 24/11/04)
FEMA Updates
As per Regulation 3 of Notification No. FEMA 23/2000-RB dated May 3, 2000, every exporter of goods or software in physical form or through any other form shall furnish a Declaration in GR/SDF/PP/Softex form affirming that the full export value of goods or the software has been or will be paid in the specified manner. Vide clause (d) of Regulation 4 ibid, submission of this Declaration is waived if the exporter declares that the goods/software is not more than Rs.25, 000/- in value.
With a view to further liberalising and simplifying the procedures for exporters, RBI has revised the above limit to USD 25,000 and accordingly it has been decided to waive the submission of Declaration in Form GR/SDF/PP/SOFTEX in respect of export of goods and software of value not exceeding USD 25,000 or its equivalent. The exporters shall, however, be liable to realise the amount of foreign exchange, which becomes due or accrues on account of such exports, and to repatriate the same to India in accordance with the provisions of FEMA Regulations.
(A.P. (DIR Series) Circular No.61 DT. January 31, 2004)
(w.e.f. 03.12.2004) FCNRD (w.e.f.
03.12.2004)USD GBP EUR NRE 1 to 2 years 2.72 4.63 2.07 3.50 2 to 3 years 3.15 4.58 2.29 3.90 3 years 3.42 4.59 2.52 4.20 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
Issue12/2004 Dt 16 11 2004
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