Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : ICICI Ltd - (Nyse: IC) -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (361)	3/10/2000 12:11:00 PM
From: Mohan Marette	Respond to of 494

INTERVIEW: ABN-Amro Exec:Rupee Won't Weaken Much Next FY abnamroindia.com Friday, March 10 7:57 PM SGT BOMBAY (Dow Jones)--Despite worries of a rising crude oil import bill, Subir Biswas, country treasurer at ABN-Amro Bank, doesn't expect the rupee to slip much in the next fiscal year starting April 1, given the expected huge dollar inflows from software exports. "At best the dollar will be at 45.0 rupees by the year-end. Even that is a very optimistic figure; one shouldn't look beyond that," he said in an interview with Dow Jones Newswires. The rupee was at INR43.58 at 1015 GMT Friday. Worries about the exchange rate have been increasing with the sharp rise in global crude oil prices. Oil is India's largest import item, and Oil Minister Ram Naik has gone on record saying that India's oil import bill would rise to $13 billion in the current fiscal year ending March 31, 2000, compared with $5.88 billion last fiscal year. "We have seen the worst on crude oil," Biswas said. "If we have faced the current year without a major depreciation, next year isn't a worry," he said. As for exports, the boom in software exports has only begun and "the real big benefit is yet to come," he said. According to the National Association of Software and Services Companies, or Nasscom, the Indian information technology sector is expected to earn $8.85 billion in revenue in the year ending March 31, 2001, up from an estimated $5.7 billion in the current fiscal year, and $3.9 billion last fiscal year. Apart from this, Biswas said, there is less pressure on the Indian rupee because of lower inflation. In the coming fiscal year, "the natural sequence is for the rupee not to depreciate," he said. In fact there will be some "tinkering not to make it too stable" because the rupee may actually appreciate, he added. Rates Won't Fall Much Further On the interest rate front, Biswas said rates will fall but not at the same pace as they did in the current fiscal year. "I don't see it (interest rates) having reached the bottom yet," Biswas said. He noted that interest rates elsewhere in the world have started moving upward. "We (in India) are somewhere where we cannot fall much further," he said. But rates have to fall, Biswas said, "because there will be every effort made by the government and lot of pressure put on the Reserve Bank of India to cut rates." The government has to reduce rates because it overshoots its budgeted borrowing target every year. In the fiscal year ended March 31, 1999, the government borrowed INR992.01 billion, up 25% from its budgeted gross borrowing of INR793.76 billion, and in the current fiscal year the government will likely end up with a gross borrowing of INR1.036 trillion, up 23% from the budgeted borrowing of INR840.14 billion. Added to this, Biwas said, the government has to pay a lot of interest on its past borrowings and so can't afford not to cut interest costs. The Reserve Bank will actively use the cash reserve ratio - the percentage of net liabilities that banks must keep in cash with the central bank - to complete its huge borrowing, he said. It will likely infuse liquidity first and come out with a bond issue like it did last year, he added. Biswas said he isn't so sure about a cut in the bank rate - the benchmark rate at which the RBI lends to other banks. "The Reserve Bank has basically to time a rate cut," he said. Biswas said that although the Reserve Bank can't cut the statutory liquidity ratio, or SLR, immediately because of regulations, it will work toward that goal. Reserve Bank Deputy Governor Y.V. Reddy indicated as much at a seminar last week when he said that he expects an amendment to lower the statutory minimum requirement in respect to the cash reserve ratio and the statutory liquidity ratio. The SLR is the percentage of net liabilities that banks must keep in the form of government securities. Banks already hold more than their minimum requirement. A lower SLR will mean that banks will have enough money to meet corporate demand when the economy picks up. "If corporate demand isn't satisfied, interest rates will not fall," Biswas said.