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Issue : 14/2004 16th DEC 2004
Currency Outlook
USD/INR 44.05/06 EUR/USD 1.3368/70

US Dollar traded between 43.60 and 44.80 and it was a two way volatile move . Huge inflows and global bearing dollar outlook sent dollar reeling to 43.60 before the central Bank intervened to bring it back to 44.80 before closing the last fortnight at 44.05/06. Last week's sentiment is expected to continue and we might see rupee testing 43.60 again. The forwards expected to track the spot rupee movement and 6m forwards might test 1.50 percent again.

Last week's pull-back from 1.3470 ahead of 1.3500 has led to assume that this year's low for the dollar has been met. Thin markets ahead of Christmas holidays may support the dollar and EUR may find it difficult to move decisively above 1.3500.

Against the Indian rupee the Euro is expected to trade between 58 and 59.50
GBP/USD 1.9342/44 USD/JPY 104.42/45

From a high at 1.9508 last week, and levels rarely seen in the last twenty years, the pound has pulled back much to the relief of many. There is a chance that it could nudge back up towards 1.9600 before more serious consolidation takes place. Dips towards 1.9000/1.8800 are seen as buying opportunities for the next rally.

Against rupee the sterling is expected to trade between 84.00 and 86.00.

Thin markets and extreme price levels may lead to consolidation phase and the pair might break levels briefly and be subject to very sharp intra day moves before a meaningful probe of critical support at 101.25 begins.

Against the rupee the Jap.Yen is expected to trade between 41.50 and 43.
Other News Items
SOFTWARE SECTOR SET TO NET $16 b IN EXPORTS :
 		GOVERNMENT STEPS IN TO HELP TEXTILE INDUSTRY :

The Indian Software industry is on course to achieving about 30 to 32% growth in exports this fiscal to cross the $16 billion (around Rs.69,920 crore) mark inspite of several concerns including infrastructure bottlenecks in major cities. Human resource challenges, huge fluctuation in dollar rates, relatively higher bandwidth costs and security related legislations are other concerns, according to the Nasscom President, Dr. Kiran Karnik. (Source - Business Line dated 08/12/2004)

The Centre has taken a slew of measures to provide an enabling environment for the crisis ridden textile industry ahead of phase out of quotas on international textiles trade from 1st January next year. The Govt's initiatives are crucial as the textile industry will get exposed to increased competition in the global market after January 1st 2005. From 01/01/2005 all quotas on international textile trade will be phased out and the textile sector will fully integrate into the GATT discipline of WTO. (Source - Financial Express dated 5/12/2004).
LIBERAL SPECIAL ECONOMIC ZONE (SEC) BILL SHORTLY NEGATIVE TRADE BALANCE WITH RUSSIA APPEARS TO BE DEEPENING :


The Govt. will come up with a legislation which will have a fiscal package, including a 20 year income tax holiday for SEZ by end December. Commerce Secretary Mr.S.N. Menon said while addressing the India Economic Summit that the Govt. proposed to further simplify the procedures for attracting foreign direct investment (FDI) which will not require approval of FIPB. The legislation also provides for tax benefits like exemption from customs/excise duty besides complete freedom to developers to allocate space as well as infrastructure and services on commercial terms. The Govt. had given an in-principle approval to 33 SEZs while 5 others were in consideration. (Source - Economic times dated 08/12/2004).


India's merchandise exports are showing unprecedented buoyancy with over 25% growth so far this fiscal. However our already negative trade balance with Russia is increasing. In 2003-04, India's exports to Russia declined by 4.42% to Rs.3,256 crore, while imports zoomed 53%, to Rs.4,409 crore, precipitating a trade deficit of Rs.1,153 crore. The widening trade deficit is attributable to the steep increase in imports of certain commodities like iron and steel, coal, coke, pig iron, etc. (Source - Financial Express dated 02/12/2004)
CENTRE TAKING STEPS TO CHECK DOWNWARD TREND IN DOMESTIC MULBERRY SILK FROM THREAT OF CHINESE SILK :
Govt is taking several measures to counter the threat of cheaper silk from China. Steps are also being taken to check the reduction in the domestic production of Mulberry raw silk during the last two years. The Minister for textiles informed Rajya Sabha that the decline had been due to continuous drought conditions prevailing in traditional sericulture States from 2002-03 and 2003-04. The steps taken by the Govt include stepping up of R&D efforts to improve quality, quantity, productivity ; seed support and technical assistance from Central Silk Board ; technology upgradation with financial assistance from Centre and State ; organized supply chains etc. (Source - Hindustan Times dated 09/12/2004).
FCNR & NRE Interest Rates

 

(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

 

Archives

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
Issue13/2004 Dt 01 12 2004

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