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To: PaulM who wrote (25423)	1/5/1999 5:59:00 PM
From: goldsnow	Respond to of 116790

India Gold-Duty to hit imports, help smuggling 06:49 a.m. Jan 05, 1999 Eastern By Naveen Thukral AHMEDABAD, India, Jan 5 (Reuters) - India's decision to raise the customs duty on gold will curb imports, encourage smuggling and push up prices, officials and traders said on Tuesday. ''It will reduce imports through the official channel and the difference in the domestic and international prices will encourage people to smuggle gold,'' the president of Chokshi Mahajan (Bullion Merchants Association of Ahmedabad), Girish Kumar, told Reuters in Ahmedabad, the country's leading gold importing centre. The government decided on Monday to raise the gold import customs duty to 400 rupees ($9.40) per 10 grams from 250 rupees, with effect from Tuesday. The government said it had taken the step to moderate the flow of gold into the country and to garner additional revenue. Kumar said he now expected imports to decline by 30 to 40 percent over the next three months from current levels. Between January and November 1998, 575 tonnes of gold were imported through official channels, a rise of around 28 percent over the same period of 1997, a government statement said. India, which imports almost all its gold, strengthened its position as the world's largest gold consuming country in 1997, with demand surging 45 percent to an all-time high of 737 tonnes, World Gold Council (WGC) data shows. Kumar said gold prices in the domestic market had increased following the government's announcement. ''Today in Ahmedabad the gold is selling around 4,400 rupees per 10 grams, up from 4,250.'' For decades, India kept strict controls on gold imports, a policy widely believed to have only encouraged large-scale smuggling. It eased controls on gold imports after 1991. Hasmukhbhai Gadhecha, a leading bullion importer, said the government will not benefit from the duty increase because of the expected slowdown in imports. ''I think it will immediately -- that is within a month -- reduce the imports through the official channel by 20 percent,'' he said. ''The hike in the import duty will have an indirect effect on the export of gold jewellery from India with an increase in the bank guarantee,'' said Pankaj Shah, secretary of the Gold Jewellery Exports Association. As a rule, exporters must deposit a certain rate as a bank guarantee. This rate increased to 40 rupees per gram from 25 rupees on Monday. This in turn could reduce jewellery exports, Shah said. With the increase in the import duty the arrivals of gold through unofficial channels will increase to approximately 10-15 percent compared with one-two percent in 1998, said Umesh Chamdia, manager, K.J. Investors Services, a leading consultant for bullion and foreign exchange. An official from Corporation Bank, a large gold importing banks, said the import duty rise had come as a surprise. He said the bank expected gold to be put under the special import licence (SIL) scheme around the time of the presentation of the general budget for 1999/2000 (April-March) next month. ''The immediate impact of this will be less sales from the banks. Market will slow down purchases and our imports will also come down. But things will get back to normal after two weeks.'' ($1 - 42.5 rupees) (Additional reporting by Srikesh Menon in Bombay) Copyright 1999 Reuters Limited.

To: PaulM who wrote (25423)	1/5/1999 6:10:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116790

Dollar in yen trouble The yen is see-sawing again on the world's currency markets The US dollar has hit a 27-month low against the yen. One dollar now buys only ¥110.40, a far cry from last year's high of nearly ¥150. After sharp falls on Asia's currency markets the dollar fell even further in European trading. Traders report that the central banks of China and Japan intervene when the yen slides below 111 yen to the dollar, while US funds and Japanese exporters sell when it goes above that level. The weak dollar is bound to hurt the Japanese export industry and economists warn that this threatens to destroy any chance of a recovery in the world's second largest economy this year. The Japanese government appears to blame Europe's single currency, the euro, for the turmoil. The strong debut of the euro has clearly startled the Tokyo government. Japan's Trade Minister, Kaoru Yosano, said he was concerned that the launch of the euro could make the yen a "local currency". Until recently, the yen was vying with the Deutschmark for the number two spot on the world's currency markets - behind the US dollar. The euro could force the yen into third place, relegating it to a role as dominant currency in parts of Asia but not anywhere else. On Wednesday, Japan's Prime Minister Keizo Obuchi, will embark on a week-long tour of Europe, and the euro and its impact on the yen will be top of his agenda. Asked whether Japan had waited too long to put the yen on the world stage , Mr Obuchi said: "To be candid, what you say is right. We have been dominated by the dollar-oriented economy." He acknowledged that the euro was likely to be one of the two key currencies and said that Japan felt a "sense of urgency" in making the yen a fully-fledged third pillar of a monetary system which was no longer totally dollar-dominated. Economic threats At the same time the government worries that the euro will make the yen too expensive for the liking of Japanese exporters. If investors dump the dollar in favour of euros, the dollar could weaken against other currencies as well. Finance Minister Kiichi Myazawa has already suggested that the yen's regained strength could be partly due to the birth of the euro. Yukihiko Hashimoto, of Tokyo-based Sanwa bank, supports this view: "The euro's robust debut confirmed the fact that the majority of market players feels uneasy about holding dollars." Another concern is the state of the US economy. Japanese finance ministry officials say that it looks "fairly bubble like". They are particularly concerned about the level of US share prices and fear a market crash with disastrous consequences for Asia's economy. As a result, Tokyo's share market fell for the second day in a row, with the Nikkei index of leading shares losing 1.4%. Traders said that investors were worried about the prospects of Japan's export industries. Euro tour Government officials say that Mr Obuchi is likely to use his tour of Europe to call for measures to bring more stability to the global currency system. There are suggestions that Japan could propose the creation of a tri-polar currency system with a loose grid of exchange rates among the yen, the euro and the dollar. This would establish the yen on par with the dollar and the euro and might relieve pressure on Japan's export industry. A spokesman for the prime minister, Akitaka Saiki, said: "We will send out a message that Japan has done and will do what is necessary to strengthen (the status of) or globalise the yen." During recent months Japan has taken several steps to promote international investment in the yen, offering tax exemptions for non-resident investors and selling government bonds directly on the market. news.bbc.co.uk