Rupee gains
Mumbai: The rupee gained by about 13 paise due to strong dollar supplies. The home currency opened at 40.82 and closed at 40.70, against the previous close of 40.83 on Thursday.

According to dealers, RBI was not seen in the market.

Traders said the rupee was expected to trade in the range of 40.50-40.70 next week.

Forwards: The six-month forward premia is at 2.53 per cent (2.91 per cent) and 12-month premia is at 2.57 per cent (2.83 per cent).

Bonds: The bond prices ended almost flat. The yield on the 10-year paper closed at 8.18 per cent on Friday. The total traded volumes on the order matching system were Rs5,780 crore (Rs4,835 crore).

G-secs: The 7.49 per cent 10-year-2017 paper opened at Rs95.40 (8.18 per cent YTM) and closed at Rs95.37 (8.18 per cent YTM) on Friday similar to the previous close of Rs95.37 (8.18 per cent YTM).

The 8.07 per cent 10-year-2017 paper opened at Rs99.50 (8.15 per cent YTM) and closed at Rs99.52 (8.14 per cent YTM) against the previous close of Rs99.50 (8.15 per cent YTM).

Call rates: The inter-bank call rates closed lower at 6-6.25 per cent on Friday against the previous close of 7.5-8 per cent. The call today opened at 9-9.5 per cent and saw an intra-day low of 3.25 per cent before closing the day at 6-6.25 per cent.

Reverse repo: The Reserve Bank of India did not receive any bids in the first four-day reverse repo auction. In the first four-day repo auction, the RBI received and accepted 16 bids for Rs9,520 crore. In the second four-day reverse repo auction, it received 13 bids for Rs4,005 crore while it accepted bids to the tune of Rs1,000 crore. In the second four-day repo auction, the central bank received and accepted one bid for Rs375 crore.

The CBLO: The CBLO market saw 393 trades aggregating Rs21,431.50 crore in the 0.5-8.5 per cent range.
Back to News Review index page  

Government acquires RBI's stake in SBI
New Delhi: The Government has acquired the Reserve Bank of India's entire 59.73 per cent stake in State Bank of India (SBI) for about Rs35,531.33 crore.

For the sake of greater transparency, the valuation of RBI's stake in SBI worked out as per SEBI guidelines taking February 28, 2007 as the 'reference date' as this was the day on which the decision of the Government to acquire RBI stake in SBI was announced by the Finance Minister, Mr P. Chidambaram, in his Budget speech.

The Government has acquired 31,43,39,200 equity shares of SBI with a face value of Rs10 each at Rs1,130.35 per share at a total amount of Rs35,531,33,14,720.

The Government has also decided to acquire RBI's 72.5 per cent stake in Nabard and 100 per cent stake in National Housing Bank by June 2008.

In its Monetary and Credit Policy for the year 2001-02, the RBI announced its intention to transfer the ownership of shares in SBI, NHB and Nabard in favour of the Government.

SBI's shares closed at Rs1,525.80 on the National Stock Exchange on Friday, which is Rs54.70 higher than the previous day close of Rs1,471.10.
Back to News Review index page  

Forex reserves increase by $1.53 bn
Mumbai: Forex reserves have increased by $1.534 billion to $212.549 billion for the week ended June 22 on revaluation of non-dollar currencies against the dollar and RBI's intervention in the forex market. The reserves had increased by $1.468 billion to $211.015 billion for the week ended June 15.

Foreign currency assets rose $1.532 billion to $205.178 billion, said the RBI's Weekly Statistical Supplement.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

Gold reserves and SDRs remained the same at $6.911 billion and $1 million, respectively. The country's reserve position in the IMF rose $2 million to $459 million.
Back to News Review index page  

Fiscal deficit falls in April-May
New Delhi: The fiscal deficit for April and May the first two months of financial year 2007-08 stood at 41.2 per cent (Rs62,135 crore) of the Budget target, a 7 percentage point decline from the previous year's fiscal deficit for the same period (April-May).

The decline could be attributed to the fall in both plan- and non-plan expenditure. While non-plan expenditure declined to 14.2 per cent, a fall of almost 2 percentage points over the same period last year, plan expenditure fell by more than 5 percentage points. The total expenditure fell by 3 percentage points to 13.3 per cent (Rs90,750 crore) during the first two months of the fiscal.

The total receipts for the first two months stood at Rs28,615 crore or 5.4 per cent of the fiscal target, as against 4.8 per cent in the corresponding period last year.

The Fiscal Responsibility and Budget Management (FRBM) Act mandates that the government reduce the fiscal deficit by an amount equivalent to 0.3 per cent or more of the GDP at the end of each financial year, starting 2004-05.
Back to News Review index page  

RBI may allow individuals to hedge dollar spending
Mumbai: The Reserve Bank of India (RBI) has set up an internal working group for examining issues related to the launch of currency futures in India and has asked MNC banks to make presentations, highlighting the feasibility of such products in India.

Besides individuals, RBI is looking at allowing corporates and mutual funds to trade in currency futures. A currency future is a derivative contract to exchange one currency for another at a specified future date. The price would be the exchange rate prevailing on the last trading date. Typically, the US dollar is involved in the transaction.

At present, there are two ways through which exporters and importers can seek a hedge against volatile currency movements-one, by way of forward cover and two, via the option route.

A currency future is no different from a forward contract except that in case of the former, the amount and maturity of the contract is standardised. However, for this to work in India, the RBI may have to allow even speculative trade and cannot insist on the contract to be accompanied by an underlying commercial exposure.
Back to News Review index page  

IRDA lays down floor rates for rural insurance
Kolkata: The Insurance Regulatory and Development Authority (IRDA) has defined rural and social insurance products in terms of the minimum and maximum sum assured. The regulator also intends to include microinsurance under its definition. With this insurers will no longer be able to get away with selling low-value, low-premium covers to rural folk to meet the rural and social criteria prescribed.

IRDA has written to insurers saying that rural products will have to offer a minimum sum assured of Rs5,000 for general insurance and life insurance policies. However, health insurance for family and personal accident per person will have to be a minimum of Rs10,000. There will be no upper limit on the sum assured.

Both life and non-life insurers are required to insure 20,000 lives from the social sector in the fifth year of operations. The social sector includes the informal and unorganised sectors, economically vulnerable and backward classes from the rural and urban areas.

IRDA's letter also mentions that microinsurance will now be considered part of the rural/social policies. Irda has also asked insurers to regularly keep it updated with the number of policies insurers have sold.

Currently, life insurance companies are required to sell 7 per cent, 9 per cent, 12 per cent, 14 per cent and 16 per cent of their policies in rural areas in the first, second, third, fourth and fifth financial years, respectively.

Non-life insurers need to earn 5 per cent of their gross written premium from the rural years after the third year of operation.
Back to News Review index page