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

(15/01/07 - 31/01/07)

THIS PAIR IS LIKELY TO REMAIN WITHIN THE BROAD RANGE OF 44.00 TO 44.70. CENTRAL BANK SUPPORT AND OIL/ DEFENCE RELATED BUYING CHECKS INR APPRECIATION AROUND 44.00/44.10 LEVELS WHEREAS CORPORATE INTEREST KEEPS A TAB ON INR FALLING BEYOND 44.70.
EXPECT THE NEXT FORTNIGHT TO REMAIN WITHIN THE SAME RANGE .

EUR TO REMAIN WITHIN THE RANGE OF 1.2820 TO 1.3080 DURING THE ENSUING FORTNIGHT. STRONG TECHNICAL SUPPORT AT 1.2820 AND RESISTANCE AROUND 1.3080 SEEN DURING THE SAID PERIOD. INTEREST HIKE EXPECTATION MAY KEEP THIS PAIR BID MARGINALLY ONCE AGAIN DURING THE NEXT FORTNIGHT.
EUR/INR TO MOVE WITHIN 56.50 TO 58.20.

UNEXPECTED RATE HIKE HAS PUT GBP IN A STRONG PLATFORM AND THE CURRENCY MAY ONCE AGAIN RESUME ITS JOURNEY TOWARDS 1..9850 LEVELS. STRONG TECHNICAL SUPPORT SEEN AROUND 1.9340.
GBP/INR TO MOVE WITHIN 86.35 TO 88.00.

WANING OF INTEREST RATE HIKE EXPECTATION HAS WEAKENED JPY. IN THE ENSUING FORTNIGHT WE MAY SEE A HIGH OF 121.50 AND EXPECT A CORRECTION TOWARDS 118.50 LEVELS.
RESUMPTION OF CARRY TRADE MIGHT CREATE DEMAND FOR JPY ONCE AGAIN.
JPY/INR IS LIKELY TO BE WITHIN 36.50 TO 37.40.

Other News Items

The car of the future will owe its smartness to Indian engineers. Indian engineers at Daimler Chrysler’s research and development lab are working on “intelligent night view”, a next-generation application that will let the driver catch up on his sleep while the car negotiates the night traffic.

This feature builds on “night view”, where the car is fitted with infrared head lights and an infrared camera feeds high resolution images to a TV screen fitted on the dashboard, so the driver can easily steer with his new-found “night vision”. When coupled with the ongoing work on contour mapping algorithms, which will let the car identify moving objects such as pedestrians and cyclists, this application will result in accurate and accident-free drive.

The Executive Vice President of Daimler Chrysler Group said that this needs high technology software systems and the skills in India will help fulfill the requirement of future technology.

(Courtesy: The Businessline)

Reflecting the overall robust economic growth witnessed by the country, domestic car sales clocked a healthy 23% growth in December 2006, while commercial vehicles hot up by 49.6 %.

According to Society of Indian Automobile Manufacturers, domestic passenger car sales during December 2006 stood at 81,026 units as aginst 65,853 units in the same month a year ago. The growth in car sales, despite being the last month of the year, in which most of the customers tend to postpone purchases, was a reflection of overall economic growth of the country.

(Courtesy: The Businessline)

INFLATION TREND ON EXPECTED LINES - RBI GOVERNOR

The RBI Governor, Dr Y V Reddy allayed inflation fears saying the current numbers were on expected lines. As of now, the RBI is sticking to it’s earlier inlation estimate of 5 - 5.5 per cent for the current fiscal. He further added that the liquidity conditions were not volatile and described the hike in cash reserve ratio as a “fairly non-disruptive adjustment”.

(Courtesy: The Businessline )

PRIVATE EQUITY INVESTMENT IN INDIA TRIPLED IN 2006

Private equity investment in India more than tripled in 2006 as global heavyweights such a Kohlberg Kravis Roberts & Co and the UK based 3i bought into growing companies.

Private equity fund investment in 2006 was $ 7.26 billion, up from $ 2.26 billion a year earlier. Two of the most significant investments in the year were KKR’s acquisition of Flextronics International Ltd for about $ 900 million, and Providence Equity Partners Inc buying into telecom firm, Idea Cellular Ltd.

The growth momentum is expected to continue with big investors such a Carlyle and Blackstone Group showing interest. The 2006 deals were led by the technology sector with 87 deals for $ 1.47 billion, up from 46 deals for $ 434 million in 2005. However, private investment in listed companies fell to 22 per cent of total deals, from 34 percent a year earlier, as the BSE’s main index surged 47 per cent.

(Courtesy: The Businessline )

RBI RELAXES NORMS FOR PROJECTS, SERVICE EXPORTS

The RBI simplified the procedures for project and service exports, such as deployment of temporary cash surpluses and inter-project transfer of machinery and funds. These will provide more flexibility to the exporters. These measures were subject to monitoring by banks.

Exporters will now be allowed to use the machinery or equipment used for a turnkey or construction abroad, for executing a contract into another country. Currently, exporters are required to dispose of the equipment, machinery, vehicles purchased abroad or arrange their import into India after completion of the contracts. If it has to be used for another overseas project, the market value should be recovered from the second project.

Exporters have also been permitted to deploy their temporary cash surpluses, generated outside India, in instruments such as deposits with overseas branches or subsidiaries of a bank in India, a triple ‘A’ rate short term paper abroad, including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less.

(Courtesy: The Businessline )

FCNRD(w.e.f. 01.02.2007)						NRE(w.e.f. 01.02.2007)
PERIOD	USD	GBP	EUR	CAD	AUD	NRE
1 Year & above but less than 2 years	5.18	5.62	3.84	4.11	6.31	5.93
2 Years & above but less than 3 years	5.10	5.56	3.97	4.11	6.25	5.85
3 Years & above but less than 4 years	5.05	5.51	3.98	4.11	6.24	5.80
4 Years & above but less than 5 years	5.05	5.47	3.98	4.14	6.28	5.80
5 years only	5.06	5.41	3.99	4.18	6.26	5.80
SB NRE - 3.50 % at par with domestic savings deposit

 

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