Rupee gains
Mumbai: The rupee gained by about 14 paise against the dollar on Friday mainly due to the announcement by the Central Bank of China of widening the daily trading band of yuan against the dollar by 0.5 per cent (against 0.3 per cent) effectively from May 21.

Dealers said a strong Chinese yuan may strengthen the yen which might lead to further strengthening of the rupee.

The rupee closed at 40.71/72, up from the previous close of 40.85/87. The rupee opened at 40.89/90 and saw an intra-day low of 40.92 before closing at 40.71/72. Market participants expect the rupee to trade in the 40.50 - 41 range in the coming week.

In forwards, the six-month premia closed at 4.51 per cent (4.52 per cent) and the 12-month ended at 3.97 per cent (3.97 per cent).

Bonds: Bond prices fell by around 20 paise as profit booking extended for the second day. Traded volumes on the order matching system were at Rs1,720 crore (Rs2,425 crore). Dealers said domestic inflation, at 5.44 per cent for the week ended May 5, was higher than the expected 5.3 per cent. Inflation was at 5.66 per cent in the previous week. Traders fear RBI could resort to another round of monetary tightening measures.

The announcement of a Rs8,000-crore auction on May 25 also turned market participants cautious.

G-secs: The 8.07 per cent 10 year- 2017 paper opened at Rs99.85 (8.09 per cent YTM) and closed at Rs99.43 (8.15 per cent YTM), against the previous close of Rs99.65 (8.12 per cent YTM).

The 7.49 per cent 10 year-2017 paper opened at Rs95.50 (8.16 per cent YTM) and closed at Rs95.22 (8.20 per cent YTM) against Thursday's Rs95.53 (8.15 per cent YTM).

Call rates: Call rates were flat at 8 - 8.25 per cent on Friday.

Reverse repo: In the first three - day repo auction, it received and accepted 22 bids for Rs14,150 crore. There was no reverse repo bid. In the second three - day repo auction, it received and accepted 10 bids for Rs5,530 crore. In the second three - day reverse repo auction, the apex bank received and accepted one bid for Rs10 crore.

CBLO: The CBLO market saw 381 trades aggregating Rs23,470.20 crore in the 7.50 - 8 per cent range.
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Travellers can keep forex for six months: RBI
Mumbai: The Reserve Bank of India (RBI) has said that travellers can keep unspent foreign exchange to six months up from three months earlier.

This is mainly because foreign exchange reserves of the country have increased to more than $200 billion, which many say is due to the appreciation of the Indian rupee.

RBI has also fixed the time limit for return of unspent or unused foreign exchange by individuals for any other purpose like inheritance, settlement or gift at six months.

Earlier, there were different time limits for returning foreign exchange depending upon the form and purpose for which it was taken.

While travellers were required to return the unused foreign currency within 90 days, the time-limit was 180 days if the forex was obtained in the form of travellers cheque.
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FM bans ECBs for township projects
New Delhi: The finance ministry has banned the use of external commercial borrowings (ECBs) for a section of the real estate sector in order to contain inflation and manage foreign exchange inflows.

It also made borrowing for such projects less attractive by reducing the upper limits on interest.

Earlier although ECBs are not permitted for the real estate sector, such borrowing was allowed for integrated townships of 100 acres or more.

Citing an upgrade to the country's sovereign credit ratings, the ministry also decided to reduce the all-in-cost ceilings for ECBs (see chart).

The changes, applicable to ECBs under the automatic as well as approval route, will be effective from the date the RBI notifies the amendments to Foreign Exchange Management Act, 1999.
This ban is likely to adversely affect the country's booming real estate business.

FDI up to 100 per cent, under the automatic route, is allowed for the development of integrated townships including housing projects, commercial premises, hotels and resorts, among others.
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Federal Bank Q4 net rises by 96 pc
Mumbai: Federal Bank has reported a 95.6 per cent growth in net profit at Rs99.25 crore for the fourth quarter ended March 31, against Rs50.73 crore for the corresponding quarter last fiscal. Total income of bank rose 38.38 per cent to Rs636.63 crore for the three months ended March 31, as against Rs460.04 crore for the same period in 2006, Federal Bank informed the Bombay Stock Exchange (BSE).

The Board of Directors of the bank has recommended a dividend of 40 per cent on equity shares.

For the complete year ended March 31, the bank posted a net profit of Rs292.73 crore, up 30 per cent, as compared to Rs225.21 crore for the 12 month period ended March 31, 2006.

Total income also increased by over 27 per cent to Rs2,104.04 crore as compared to Rs1,653.48 crore in 2006, the bank said.

Shares of the Federal Bank were last trading at Rs276.85, up 2.42 per cent on the BSE.
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RBI eases rules for oil majors
Mumbai: The RBI has allowed Navaratna public sector undertakings to invest in unincorporated entities in oil sector (such as exploration and drilling for oil and natural gas) under the automatic route.

An official said the RBI approval and the new initiative would ease the payment process for oil companies to some extent. He, however, added that this might not have a significant material impact.
Navaranta PSUs had to get prior approval of the RBI to make investment in unincorporated entities. RBI has decided to liberalise procedure (for Navaratna PSUs) since investment proposals get already cleared by competent authorities including board of directors, Secretary's panel and Cabinet Committee on Economic Affairs (CCEA).

Bank now allow remittance towards investment in unincorporated entities by oil companies after ensuring the approval by competent authority is in place.

The state-owned companies like ONGC through ONGC Videsh Ltd (OVL), Oil India, Indian Oil Corporation and Hindustan Corporation are making investments, worth billion of dollars, in overseas oil and gas fields and downstream units to get secure access to scarce non-renewable energy resources. These investments come with rights on sourcing oil and gas for use in India.
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Forex reserves fall by $18 mn
Mumbai: Forex reserves have dropped by $18 million to $203.991 billion for the week-ended May 11 on weakening of non-dollar currencies against the dollar. Forex reserves had gone down $126 million to $204.009 billion for the week ended May 4.

Total foreign currency assets decreased $7 million to $196.493 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.
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