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INDIA-E  June 2002

INDIA-E June 2002

Subject:

India Network Economic News - June 28, 2002

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Date:

Fri, 28 Jun 2002 10:40:44 -0400

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******************************************************************
India Network Economic News - June 28, 2002 Volume 14 Issue 116
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----------------------------
Today's News Items
------------------
#1. Sensex gains by 36 points
#2. Repo rate cut may spark interest rate cut
#3. Rupee consolidates gains
#4. Govt Effects Bureaucratic Reshuffle
#5. Exchange rates
------------------------------------

#1. Sensex gains by 36 points

Mumbai: Equities staged a smart recovery aiding the Sensex to break the
four-session losing string and gain about 36 points at close on the Bombay
Stock Exchange on Thursday on fairly heavy buying support from punters as
well as institutional investors.

The Sensex opened remarkably up at 3199.03 and gradually moved upwards to
the intra-day high at 3221.60 before closing at 3217.15 as against
Wednesdays close of 3180.99, netting a rise of 36.26 points.

#2. Repo rate cut may spark interest rate cut
REUTERS [ FRIDAY, JUNE 28, 2002  1:32:17 AM ]

MUMBAI: The Reserve Bank of India on Thursday lowered a key short term
interest rate, reviving market hopes of a cut in the benchmark bank rate
but some analysts felt it was too early to make that call. RBI set the
cut-off at 5.75 per cent, down from 6.0 per cent, at its daily repurchase
agreement auction. It was the first reduction since March 5, when the repo
rate was lowered from 6.5 per cent.

The cut sparked hopes that the authorities were hinting at a reduction in
the benchmark bank rate  the rate at which banks borrow money from the
central bank and a pricing tool for bank loans.

"The cut was overdue and is a clear interest rate signal," said K.
Harihar, head of treasury at Development Credit Bank." I expect a 50 basis
point reduction in the bank rate over the next couple of months."

The bank rate which is currently at 6.5 per cent was last lowered in
October last by 50 basis points.

"In the past few months the RBI had not said anything suggesting a rate
cut but after today's repo the market is sensing a hint that it is open to
a reduction," said a dealer at a private bank.


Early Days

But some analysts felt the reduction only reflected easy money conditions
and was not a pointer to lower rates.

"This is to check the market ahead of July's auction and to align the
short term yields," said a senior dealer at a US-based bank. "Why should
the RBI keep borrowing at six per cent when there is so much liquidity."

The central bank is expected to auction government securities of Rs 7000
crore next week as per its issuance calendar.

"It signals there is liquidity in the market and that short term rates are
not in line...I don't see a bank rate cut happening so soon," said Ashish
Parthasarthy, trading head at HDFC Bank.

Overnight call money rates fell to close at 5.25-5.50 per cent after the
announcement, off 5.8-6.0 per cent in the morning and compared with
Wednesday's 5.5-5.75 per cent.

"It is to discourage parking funds with the RBI," said Bank of America
research head M R Madhavan. "It is basically done to provide additional
liquidity in the hope that it will flow to lending channels."

Despite a pick up in certain sectors like steel, cement and automobiles, a
broad-based recovery in the economy appeared distant, analysts said.

India's core sector grew by a cracking 5.5 per cent on year in May boosted
by increasing demand for steel and cement, data released last week showed,
but the growth in May last year was a paltry 1.7 per cent.

Analysts said there had been rising expectations of a repo rate cut after
the central bank began partly rejecting heavy repo bids in the past few
days.

The central bank's repo auction on Wednesday received 16 bids for Rs 23250
crore, while it accepted all bids only partially for Rs 11626 crore. Bond
prices rose after the repo rate cut with the maximum gains at the longer
end of the yield curve.

The 9.81 per cent 2013 bond, one of the big gainers, was dealt as high as
Rs 117 earning a yield of 7.50 per cent, compared with Wednesday's last
dealt level of Rs 115.05 yielding 7.75 per cent.

#3. Rupee consolidates gains

MUMBAI JUNE 27. The rupee consolidated gains against the U.S. currency
today on the back of healthy exporter dollar sales and reflecting the
dollar's weakness in the overseas markets, but ended off intraday high
following dollar demand from public sector banks. In generally lacklustre
trading at the interbank foreign exchange market, the rupee closed at
48.8450/8550 a dollar, higher from the previous finish of 48.86/87 after
testing intraday high of 48.83/84. It, however, opened weak at
48.8750/8850.

#4. Govt Effects Bureaucratic Reshuffle

Our Economic Bureau

New Delhi, June 27:  In a bureaucratic reshuffle, the government on
Thursday appointed Ajit Kumar Jain as additional secretary, ministry of
power and PC Rawal additional secretary, department of telecommunications.
R Poornalingam, additional secretary (power) will move to Cabinet
secretariat in the same rank. Sarita Prasad, chairperson, National
Authority for Chemical Weapons Convention will replace Mr Rawal in the
ministry of social justice and empowerment.

Somnath Pal, joint secretary, department of revenue will move to Trifed as
managing director in the rank and pay of additional secretary.

Priyadarshi Thakur, managing director, Nafed has been upgraded as
additional secretary. Prem Singh Rana, joint secretary, department of land
resources has been promoted as additional secretary.

Binod Kumar, joint director, LBSNAA has been promoted as special director
in the rank and pay of additional secretary. Mr DK Sankaran, has been
promoted as additional secretary, department of atomic energy. He will
replace RM Prem Kumar, who will move as secretary, National Commission for
Scheduled Castes and Scheduled Tribes.

Meenakshi Datta Ghosh, joint secretary, department of health, has been
promoted as additional secretary in the same ministry. S Lakshminarayan,
joint secretary, department of information technology has been promoted as
additional secretary in the same department. Vinod Kumar Malhotra has been
promoted as additional secretary in the department of industrial policy
and promotion.

Suresh Chandra, joint secretary and financial adviser, ministry of
chemicals and fertilisers will move as development commissioner for small
scale industries in the rank and pay of additional secretary. Sunila
Basant, has been promoted as additional secretary in the department of
administrative reforms and public grievances.

P Jyoti Rao has been promoted as additional secretary and financial
adviser, department of agriculture and cooperation. Anand Bordia, has been
promoted as additional secretary, department of pension and pensioners
welfare.

#5. Exchange rates



=========================================================
      Currencies                    Direct rates
                              TT Buying      TT Selling
=========================================================
Indicative rates in rupees a unit at 4 p.m. on June 27
U.S. Dollar                     48.66          48.97
Sterling                        73.89          74.41
Euro                            47.81          48.13
Singapore Dollar                27.56          27.74
Japan yen (per 100)             40.59          40.85
Swiss Franc                     32.54          32.76
Australian Dollar               27.41          27.61
New Zealand dollar              23.71          23.91
Hong Kong dollar                 6.24           6.28
Malaysian Ringitt               12.80          12.89
Canadian dollar                 32.10          32.32
Swedish Kroner                   5.26           4.30
Kuwaiti Dinar                  160.95         162.03
UAE dirham                      13.24          13.34
Bahrain Dinar                  129.02         129.95
Qatary Riyal                    13.36          13.46
Saudi Riyal                     12.97          13.06
Omani Riyal                    126.05         127.51
=========================================================
Source: Indian Bank

------------------------------------------
End of India Network Economic News Digest
==========================================

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