An email helpline has been established by the Reserve Bank of India or RBI to help foreign exchange start-ups with regards to regulations. FOREX traders are now aggressive in cross-border operations.
The RBI released a circular on Tuesday stating the reason for such helpline,”Start-up enterprises usually undertake a wide range of cross-border transactions including those related to investment. Cross-border transactions of resident Indians are subject to the regulatory regime provided by the Foreign Exchange Management Act, 1999”.
Another factor for is that some Indian FOREX start-ups have shifted operations to Singapore where rules are lighter when it comes to taxation and funds. The practice has resulted in growth for cross-border deals which is subject to FEMA regulations since this involves foreign currency.
The rule on the filing of an online export form for each transaction imposed last July is also a deterrent. Traders found the process tedious.
The RBI encouraged start-ups to provide detailed information and let the bank know what issues they are facing so this can be resolved. The helpline can provide guidance and answers to questions effectively.
Monday showed gloom over the dollar. USD value decreased versus the other major currencies as the Euro gained strength as the region awaits the result of the Spanish elections and its effect on Spain’s economic stability.
Traders are now focusing on the commodities that have decreased prices on a global scale and the policies announced by central banks with oil hitting an 11-year slumped.
The greenback index went down from the 2 week high after the US Fed announcement for the first rate increase in nearly a decade last week.
Although hopes are high for the USD to gain control again it would be unlikely due to the shortened days for the holidays. Europe trading will close for Christmas on Friday.
The single currency, Euro, rose following the Spanish election. Traders said this increase in value maybe be due to the bearish bets made for the election in the region’s 4th largest economy.
Euro was 0.5% against the USD at $1.0920.
Over the weekend, the Egyptian Pound was stable both officially and at the black market.
Egypt depends faces a dollar shortage and pressures to devaluate the pound. This could have an effect on energy and food prices since the country depends on imports rather than on its own production.
The Central Bank of Egypt made quite a stir when it decided to strengthen the pound last November 11 versus the USD.
39.4M USD was sold at a cut-off value of 7.7301 to the greenback for the past days ending on Thursday. The black market price was 8.58 to a dollar on Sunday which was the exchange value since Thursday.
The country’s foreign reserves have declined from 36B to $16B in October. The central bank has been controlling dollars through weekly auctions to the banks which allowed a stable value for the Egyptian pound.
Egypt has been deprived for foreign currency every since 2011 when Hosni Mubarak was ousted from office. Influx of tourists and investors has been very slim since that period.
The announcement of the Bank of Japan on stimulus measures affected the USD since the move was not enough to give the dollar a push forward.
The BOJ policy meeting on Friday said that it would widen the asset types that would be bought. This briefly increased the USD rate against the Yen.
But a turnaround happened when the USD slid after it was clear that the BOJ would not expand its money target base under the new stimulus program.
USD was 123.59 Yen just after the announcement but it went down by 0.5% at 121.895 Yen.
Ayako Sera, senior market economist at Sumitomo Mitsui Trust in Tokyo, said that the BOJ was fine tuning its policy which caused the decrease in the greenback value.
The Bank of Japan has decided to budget 300 Billion Yen in order to buy exchange traded funds or ETFs. The bank intends to get shares of companies that are dynamic in the pursuit of capital expenditure. The BOJ extended the maturity of JGBs from 10 years to 12 years starting 2016.
The greenback index is down by 0.4% at 98.910 after it hit a 99.294 overnight which the highest value is for a period of 2 weeks. The US dollar index had a 1.2% gain last Thursday. The USD rate increased widely after the Fed Reserve announcement on Wednesday of a lift on the benchmark rate from zero.
The US dollar escalated and is now on the highest rate for the past 2 weeks after the interest rate hike was announced by the US Federal Reserve. Indications for more interest rate increases in 2016 were also made.
The US Fed increased the interest rate by a quarter of a percentage point on Wednesday. Janet Yellen, the US Fed chair, announced that there will be tightening but on a gradual basis. The median projected target for next year is 1.375%. There is a possibility of a quarter-point interest rate hike next year.
The Norwegian crown increased for more than 1% in contrast with the euro. This happened after the country’s central bank made a decision to lessen interest rates even if there is a decrease in oil prices that is not favourable to the country’s economic growth.
The yuan was at its lowest for a period of 4 months in offshore trading. It was below 0.6% against the USD after the Chinese central bank lowered the currency. The onshore trading did not do well too and hit a 4 ½ year low after the 10th day of trading. This is the worst record so far.