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 45.78 and 46.21 during the past fortnight. Rupee has been weakening in the past four trading sessions after a persistent surge in crude oil prices to $50 a barrel. Month end demand, FC loan repayments also added to the rupee weakness. Inflation continue to be a cause of concern. However with the month end demand receding and oil prices to ease from these levels expect the rupee to trade in a range of 45.80/46.35 in the ensuing fortnight. A break of 46.20 might put pressure on the rupee to touch 46.35 levels else the downtrend is intact. Forward premia might track the spot rupee movements and trade in a range of 1.80% - 2.50%. in the upcoming fortnight

Euro likely to trade in a range of 1.2200 - 1.2450 during the ensuing fortnight. Immediate support for EUR comes in at 1.2280 and strong support at 1.2200 which is difficult to break. Minor resistance at 1.2365 and any break of this Zone might prompt a rally to 1.2450 in the near term. Against the Indian rupee the Euro is expected to trade between 56.15 and 57.75.

GBP is expected to trade in the range of 1.7800- 1.8400 in the upcoming fortnight. Support exists for the GBP at 1.77500 with bias to buy the dips building on the bourses. Break above 1.8160 might evoke a sharp rally to 1.8350 for a medium term target of 1.8500. Against rupee the sterling is expected to trade between 81.50 and 83.75

Dollar/Yen getting bought on the bourses mainly on increased oil prices in international markets as Japan is a major importer of Oil. The pair has formed its top at 111.71 and the rally was stalled at that level. Resistance seen at 111.80 and with oil prices receding USD/JPY might seek lower levels to 109.60. Expect a trading range of 109.50/111.60 in the ensuing fortnight. Against Indian Rupee the JPY is expected to move between 41.25 and 42.50 during the upcoming fortnight

Other News Items

The country's exports logged a growth of 28.13% in dollar terms at $562.53 million in August with the cumulative export growth running at 26.08% during April-August 2004. This is far ahead of the 12% export growth target for the whole fiscal year. During April-August'04, the exports were $27.551billion against $21.852 billion in the corresponding period last year. The country's imports during April-Aug.2004 were $ 37.137 billion as against $ 28.474 billion in the same period last year. (Source-B/Line18/9).

India has emerged as the top supplier in major product categories like Terry towels, cotton sheets and pillowcases in the 'cut-throat' US home textiles market, leaving erstwhile leaders such as China, Portugal, Brazil and Turkey to bite the dust. In the terry towels category, India has captured a market share of around 19% and our growth rate has been recorded at 55% during the last three years. (Source-B/Line dt.20/9/04).

India is among the top four destinations attracting foreign direct investment (FDI) in Asia. This was highlighted at the United Nations Conference on Trade and Development (Unctad). FDI flow into India touched $4.26 b in 2003 compared to $3.44 b in 2002 recording an increase of 24%. (Source - Financial Exp. Dt.22/9/04)..

Buoyed by the 26% export growth rate in the first five months of 2004-05, Commerce and Industry Minister Mr.Kamal Nath has said that India's Exports could reach the $75 b mark for the current fiscal. The export target for 2004-05 is pegged at 16 %. In order to boost investor confidence about the stability of the Policy of Special Economic Zone (SEZ) , an SEZ Act is being introduced shortly, Mr Nath said. (Source- Fin. Exp.dt.24/9/04).

FEMA Updates

It has been decided by the Government of India to lift the restriction imposed on investment in Indian companies by Sri Lankan citizens. Accordingly, persons resident outside India, (other than a citizen of Bangladesh or Pakistan) including citizens of Sri Lanka would henceforth be eligible to purchase shares or convertible debentures of an Indian Company under Foreign Direct Investment scheme subject to specified terms and conditions.

(AP (DIR Series) Circular No.11 dated September 13, 2004)

 

An NRI or PIO is permitted to

A) Acquire any immovable property in India other than agricultural land/farm house/plantation property -

• By way of inward remittance or
• By way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a Person of Indian Origin resident outside India or
• By way of inheritance from a person resident in India or a person resident outside India.

B) Transfer any immovable property to a resident Indian citizen.

• Sale proceeds of immovable property can be repatriated subject to the following conditions:
• The property was acquired as per Foreign Exchange Law in force at the time of acquisition by him or the provisions of FEMA regulations.
• The amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in FCNR account or (b) the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held in NRE account for acquisition of the property.
• In case of residential property, repatriation is restriction to not more than two such properties.
• A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan is not permitted to acquire or transfer immovable property in India, other than on lease, not exceeding five years, without prior permission of the Reserve Bank.
  

Residents are permitted to borrow a sum not exceeding USD 250,000 or its equivalent from close relatives residing outside India, subject to the conditions that:

i) the minimum maturity period of the loan is one year;
ii) the loan is free of interest; and
iii) the amount of loan is received by way of inward remittances in free foreign exchange through normal banking channels or by debit to the NRE/FCNR (B) account of the non-resident lender

(w.e.f 27.09.04)				(w.e.f 10.09.04)
	USD	GBP	EUR	NRE
1 to 2 years	2.22	4.90	2.15	2.30
2 to 3 years	2.70	4.92	2.49	2.80
3 years	3.04	4.94	2.76	3.20
SB NRE (w.e.f 01.07.04)1.90

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

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