COVER STORY
Rising Rupee vs Falling Premiums
-- K Seethapathi T Jyotsna
India is going through an unprecedented phase of burgeoning foreign exchange reserves-a hardening rupee, crashing forward premiums, a low interest rate outlook, and excessive liquidity in the system. Indian exports that are dollar-denominated are the worst affected. Foreign Institutional Investors and Non-Resident Indians are investing heavily in the Indian money markets to take advantage of the interest rate differential and the falling forward premia. To see what's in store for India, read on.
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COVER STORY
The Rising Rupee
-- Arindam Banerjee
Its party time; the domestic currency has started flexing its muscles. The rupee has been, for quite some time, showing a consistent appreciation in its value as compared with the currency major, the US dollar. However, the basic question that still remains unanswered is, why are we concerned (if at all) with this appreciation? This article tries to address some of the key areas pertaining to this phenomenon of rising rupee, and tries to derive some insights from the same.
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TREASURY
The Value of Rupee in the Near Future
-- S Ganesan and B Chitra
Change of value takes place not only with humanity but also with currencies. The rupee has been appreciating against dollar for the past few months. The speed and quantum of the rupee's appreciation was really an unexpected event. The change in currency value radically alters the stake for everyone-companies, investors and Government. This influences both the exports and imports of our country. It becomes a drastic challenge for Indian exporters and influences their profit level heavily. This appreciation occurred due to a variety of reasons including rapid increase in India's foreign exchange reserves and a weak dollar. This appreciation has more influence on exports and on Indian economy. Exporters and Government should take proper action to handle this situation.
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TREASURY
Straight Through Processing: Ushering in a New Era
-- Amit Singh Sisodiya
The introduction of Straight Through Processing is going to revolutionize the way the Indian capital market has been functioning. It will not only facilitate speedy processing but also help enhance depth and transparency.
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TREASURY
Steel Futures:Hedging the Future
-- N Janardhan Rao
Given the recent volatility in steel prices globally, the introduction of steel futures, as a hedging mechanism, could not have happened at a better time. This also makes India the first country to introduce steel futures.
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RISK
Inflation: A Broader Perspective
-- Sanjeev Kumar
As an investor, you must look at your real rate of return. Unfortunately, investors often look only at the nominal return and forget about their purchasing power altogether. This article briefly discusses the importance of inflation risk and the various instruments that are available in the market for hedging inflation risk.
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RISK
Liquidity Management in Banks in India
-- P Rajeshwar Rao
One of the most important activities conducted by banks is liquidity management. Regulators all over the world feel that banks should have adequate liquidity in their operations. The basic step towards liquidity management is to put in place an effective liquidity management policy. Arrangement of back-up liquidity surpluses in the form of lines of credit and liquidity support from the Reserve Bank could help banks from shortage of liquidity.
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FOREX
Forex Market:The Indian Scenario
-- Vivek Jain
In the last couple of years, the Indian forex markets have noticed heightened activities and extreme volatilities on account of persisting weakness in the dollar. The burgeoning forex reserves crossing $116 bn mark, two digit GDP growth, growing current account surplus and continuous appreciation of the Indian rupee against the dollar have justified 'India Shining' to a certain extent. The following article highlights some of the issues behind erratic movements taking place in the Indian forex markets and the role of the RBI to knob the prevailing trend in the markets.
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