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Forex Markets Developments-VRK100-Apr. 1st to Nov.13th, 2009-14112009

Forex Markets Developments-VRK100-Apr. 1st to Nov.13th, 2009-14112009

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This document is prepared by RAMA KRISHNA VADLAMUDI, BKC, BOMBAY, INDIA. DEVELOPMENTS IN FOREIGN EXCHANGE MARKETS BETWEEN APRIL 2009 and Nov. 13th, 2009. This article chronicles several important developments that have occurred in the financial markets the world over during this six-month period with particular reference to India. For example, several policy initiatives have been taken by Reserve Bank of India during the reference period. All these have been codified and brought under a single document for the benefit of general readers and experts. This is an easy reference guide to students of financial markets. To aid them, the developments have been detailed month-wise. Please have a look at them:
This document is prepared by RAMA KRISHNA VADLAMUDI, BKC, BOMBAY, INDIA. DEVELOPMENTS IN FOREIGN EXCHANGE MARKETS BETWEEN APRIL 2009 and Nov. 13th, 2009. This article chronicles several important developments that have occurred in the financial markets the world over during this six-month period with particular reference to India. For example, several policy initiatives have been taken by Reserve Bank of India during the reference period. All these have been codified and brought under a single document for the benefit of general readers and experts. This is an easy reference guide to students of financial markets. To aid them, the developments have been detailed month-wise. Please have a look at them:

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Published by: RamaKrishna Vadlamudi on Nov 14, 2009
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Rama Krishna Vadlamudi NOVEMBER 14 
th 
, 2009 
DEVELOPMENTS IN FOREIGN EXCHANGE MARKETS BETWEEN APRIL2009 and Nov. 13 
th 
, 2009. This article chronicles several important developments that have occurred in the financial markets the world over during this six-month period with particular reference to India. For example, several policy initiatives have been taken by Reserve Bank of India during the reference period. All these have been codified and brought under a single document for the benefit of general readers and experts. This is an easy reference guide to students of financial markets. To aid them, the developments have been detailed month- wise. Please have a look at them: 
But before that, please look at the best of my stuff on…
THE BEST OF MY STUFF ON…
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http://www.scribd.com/vrk100
 
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2 246 
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5. Good and Services Tax-GST-an introduction
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4. Interest Rate Futures-NSE launches IRFs
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6. Nifty Bees-Exchange Traded Fund
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TOTAL READS CROSSED 14,800! 
From A Total of 54 Documents
 
Rama Krishna Vadlamudi, MUMBAI. www.scribd.com/vrk100 Nov. 14 
th 
, 2009 
Page 2 of 9
APRIL 2009 
The European Central Bank (ECB) has on April 2
nd
cut its lending rate by25 bp to 1.25 per cent. This is the sixth time ECB has lowered its key ratesince October 2008, when it stood at 4.25 per cent.
US unemployment rate has increased to 8.5 per cent in March 2009, thehighest level since 1983
The Indian Government would buy bonds worth USD 10 billion as its contributiontowards increasing the capital base of IMF by USD 500 billion announced at theG-20 meeting in London early this month. India’s share in close to 2% in theFund and as such it is contributing 2% of the new capital base to the IMF.
MAY 2009 
India’s merchandise exports declined 33 per cent in March 2009 to touch USD11.52 billion, the lower performance in three months of fourth quarter of financialyear 2008-09. This is the sixth month in a row that exports registered a decline.For the full year 2008-09, merchandise export grew at only 3.4 per cent in dollarterms to touch USD 168.70 billion. This is the first time in a decade thatmerchandise exports recorded a single-digit growth.
The current problem with the US is that US citizens have increased their savingsin times of a an economic crisis. This is further aggravating the slowing USeconomy.
The European Central Bank has cut its main interest rate by 25 bp to one percent which is a record low since the ECB’s inception in 1998
 
Federal funds rate and discount rate
: The US federal funds rate, in a practicalsense, is similar to inter-bank call money borrowings whereby banks/financialinstitutions lend their overnight surplus funds to other needy banks. The officialdefinition of fed funds rate is: the interest rate at which depository institutions(usually banks) lend balances at the Federal Reserve to other depositoryinstitutions overnight. The current fed funds rate is 0% to 0.25%.The discountrate is the rate charged to commercial banks and other depository institutions onshort-term loans (usually overnight) they receive from their regional FederalReserve Bank’s discount window. The
Discount Window
is an instrument ofmonetary policy that allows eligible institutions to borrow money, usually on ashort-term basis, to meet temporary shortages of liquidity caused by internal orexternal disruptions. The current discount rate is 0.50% (for primary credit).Because primary credit is the Federal Reserve's main discount window program,the Federal Reserve at times uses the term
"discount rate"
to refer to the
 
Rama Krishna Vadlamudi, MUMBAI. www.scribd.com/vrk100 Nov. 14 
th 
, 2009 
Page 3 of 9
primary credit rate. On March 17, 2008, the primary credit program wastemporarily changed to allow primary credit loans for terms of up to 90 days.Also, the spread of the primary credit rate over the FOMC's target federal fundsrate has been reduced to 25 basis points. These changes will remain until theFederal Reserve determines that market liquidity has improved. All loans must besecured by collateral acceptable to the Federal Reserve Bank.
JUNE 2009 
India’s exports shrank by 33.2 per cent in April 2009 (USD 10.74 billion),while imports (USD 16.08 billion) registered a fall of 36.6 per cent
 
EXIT STRATEGY
: Central Banks around the world, it seems, have beenlooking for an “Exit Strategy” – that refers to the process of withdrawal ofmassive fiscal and monetary stimulus packages that governments andcentral banks were forced to inject into their flagging economies. Ifinflation resurfaces, central banks will be hard pressed to withdrawliquidity from the system.
Car giant General Motors (GM) has filed for bankruptcy protection,marking the biggest failure of an industrial company in US history. Thewidely expected move comes after GM had seen its losses widenfollowing a steep fall in sales in recent years. General Motor’s move intobankruptcy protection is backed by the US government, which is expectedto take a 60% stake in the company.
 
BRIC SUMMIT
: The world's newest economic grouping has ended its firstmajor summit by calling for a more diversified international monetarysystem. But the leaders of Brazil, Russia, India and China stopped short ofcriticising the world's dominant currency, the US dollar. The group alsorepeated calls for greater representation at major institutions, such as theWorld Bank.
For the first time in nearly two years India’s current account recorded asurplus in the March 2009 quarter; with the surplus being USD 4.7 billion
JULY 2009 
General Motors (GM) says it has emerged from bankruptcy protectionafter creating a "new GM" made up of the carmaker's best assets. Theleaner GM will own four key brands including Cadillac and will be 60.8%owned by the US government. Canada, which provided $9.1bn in loans,will have an 11.7% stake. A United Auto Workers union retiree healthcaretrust fund will hold 17.5%.

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