| Issue : 1/2005 |
01st
JAN 2005 |
Currency
Outlook
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| USD/INR 43.47/48 |
EUR/USD 1.3552/56 |
US Dollar traded between 43.45 and 44.05 during this fortnight. Copious inflows coupled with significantly weaker dollar in the Overseas markets aided the positive sentiment for the Rupee. Even the recent outburst of natural calamities could not negate the positive trend and rupee is likely to strengthen to 43.25 levels. Expect the rupee to trade in a range of 43.25/43.65 in the ensuing fortnight. Break of 43.25 might give way to 43.00 levels. Forwards have not witnessed commensurate action as seen in spot rupee but still we might see the forwards in a rangebound territory between 1.50 and 2.00 per cent.
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The dollar bearish scenario continued in the cross currency markets with EUR gaining on thin trading on account of Christmas and New Year holidays. Support exists at 1.3500 break thereof might result in a pull back to 1.3460 levels. As long as Euro trades above 1.3600 there is every possibility of the pair touching a historically high level of 1.3850 in the next couple of weeks.
Against the Indian Rupee the Euro is expected to trade in a range of 58.50/60.00.
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| GBP/USD 1.9190/95 |
USD/JPY
102.54/57 |
Despite a weak dollar, Sterling was hammered to 1.9120 levels as a knee jerk reaction to the weak UK data on housing and later the pair managed to reinstate its bullishness. Support exists at 1.9150 break thereof might give way to 1.9100 and 1.9035 levels. Resistance seen at 1.9450.
Against the Indian Rupee, Sterling is expected to trade in a range of 82.60/84.80.
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Tokyo markets are closed till 4th January 05 and activity looks restricted and the pair to trade a range of 101.90 to 103.75 in the upcoming fortnight. Break of support level at 101.90 might lead to 100.
Against the Indian Rupee expect the Japanese Yen to trade in a range of 41.40/42.80.
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Other
News Items
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INDIA TO DOUBLE SHARE IN GLOBAL FOOD TRADE
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RISE IN CASHEW EXPORTS TO USA |
The Government is contemplating a comprehensive food processing policy which will aim at doubling India's share in food trade to 2% by 2015. The primary aim of the policy is to tap the huge potential arising from India's production of vegetables, fruits, foodgrain, milk, fish and poultry. Moreover this industry generates nearly five jobs for every Rs.1 lakh of investment. Food production in India is estimated at $100 billion and it ranks second in production of fruits and vegetables. (Source-Economic Times dated 22/12/2004).
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Exports of cashew Kernels to the US has shown a substantial increase during the current fiscal so far, while the overall exports during April-October 2004 has recorded an increase of 17,720 tonnes in volume and Rs.499.38 crores in value when compared with the last fiscal figures. US continued to be the main market for Indian cashew. Exports upto October this fiscal went upto 35234 tonnes valued at Rs.711.94 crores against 26246 tonnes worth Rs.483.19 crore in the corresponding period last fiscal. (Source - Business Line dated 27/12/2004).
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| CLARITY FOR FOREIGN STAFF DEPUTED TO INDIA |
CHINESE DUMPING HITS DESI FLOWER EXPORTERS HARD |
Non residents deputed to India have to pay tax in India on their salary income. They cannot escape the tax liability in India, even if their salary is paid abroad by the foreign parent company, according to an order of the Authority for Advance Rulings (AAR). At the same time, the AAR has held that reimbursement of the living expenses paid to these non-resident technicians in India, by the Indian subsidiary or joint venture company would be tax exempt in India.
(Source - Economic times dated 30/12/2004).
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The year end exports of the floriculture industry is seen blossoming this season for Christmas and New Year. Flower exporters from the country are busy packing cartons to sell roses at the London Stores. Exports have picked up touching about 1200 tonnes this year up from 1000 tonnes compared to last year.Indian roses seem to have attracted buyers in London and Malaysia, Singapore and Australia. However the sad note is that the Chinese dumping in Japan is hitting desi exporters hard. About 35% of the total volume is being sent to London and 20% to the Gulf countries. Though volumes have increased, prices have not seen much of a change this season and has remained static at about Rs.6 per stem similar to last year's rates. (Source - Financial Express dated 29/12/2004).
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INDIA BOOKS STRONG EXPORTS IN 2004
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TEXTILE SECTOR TO SPIN GAINS POST QUOTA REGIME
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It was "India Shining" on the trade front with exports growing at about 24% to $46.39 billion during the period April-November 2004 as against $37.40 billion during the corresponding period of the last fiscal. Despite odds like rupee appreciation and soaring crude oil prices, India had put up a stupendous performance. Exports maintained a growth momentum looking all set to clock the targeted $75 billion in this fiscal. Imports during April-November 2004 also showed a robust growth of 34.4% to US$64.2 billion, thus increasing the trade deficit to US$17.8 billion from US$ 10.3 billion in the same period last fiscal mainly on account of rising oil prices. (Reuters news dated 31/12/2004).
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India's fast growing textile industry is eyeing major gains with the end Decmber 31 of a nearly four decades old quota system that allowed the developed world to set quotas on imported textiles. Expert say the two Asian economic giants China and India, with their vast pool of crafty workers and low operational costs are expected to dominate the global textile market once the quotas are lifted. Analysts say India is well poised to emerge as the preferred textile and ready made garment outsourcing desination after neighbouring China, the world's largest garment exporter in the next few years. Indian textile manufacturers are bullish about doubling their export growth in the current fiscal year to 20-25% over last year's $13 billion. (Source - Economic times dated 27/12/04)
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FCNR
& NRE Interest Rates
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| (w.e.f. 03.01.2005) FCNRD |
(w.e.f.
03.01.2005) |
| |
USD |
GBP |
EUR |
NRE |
| 1 to 2 years |
2.84 |
4.64 |
2.12 |
3.60 |
| 2 to 3 years |
3.20 |
4.60 |
2.38 |
4.00 |
| 3 years |
3.42 |
4.61 |
2.59 |
4.20 |
| SB NRE (w.e.f.01.01.2005) 2.80 |
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Archives
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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
Issue14/2004 Dt 16 12 2004
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For any clarification please contact
us at ibcoid@satyammail.com
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| Disclaimer : This newsletter is for information purpose only.
Indian Bank or its officials take no responsibility for the accuracy, and
are not liable in any manner.
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