22

FX Markets and FX Markets and RegulationsRegulations

Treasury Marketing UnitTreasury Marketing Unit

FX Market - Spot rupeeFX Market - Spot rupee• Market between 9:00 - 16:00 hrs IST

•Illiquid in the last half hour.

• Market lots of USD 1-3 MM. Typical deal size of USD 2 MM.

• Participants - Foreign Banks, State run Banks, Financial Institutions and Public and Pvt. sector Corporations

• Spot daily turnover - USD 0.5-1 MMM

D O L L A R / R U P E E S P O T v / s 6 M P R E M I A : 1 9 9 7 - 1 9 9 9

6 M P R E M I A

S P O T C L O S E

0 . 0 0 %

5 . 0 0 %

1 0 . 0 0 %

1 5 . 0 0 %

2 0 . 0 0 %

2 5 . 0 0 %

Aug

-97

Nov

-97

Feb-

98

May

-98

Aug

-98

Nov

-98

Feb-

99

May

-99

Aug

-99

3 0 . 0 0

3 5 . 0 0

4 0 . 0 0

4 5 . 0 0

FX Market - Regulatory FX Market - Regulatory environmentenvironment• No capital account convertibility.

•Foreign exchange transactions through Authorized Dealers (Citibank is an Authorised dealer)

•Outward remittances of fcy must be backed by acceptable current account transaction. Inwards freely permitted.

•Only Authorised dealers allowed to take proprietary positions in the foreign exchange markets.

•Only residents allowed to access domestic forward markets to cover genuine foreign exchange exposures

•Exceptions ….

FX Markets - The regulatory FX Markets - The regulatory environmentenvironment

Exceptions …

•Can cover Dividend flows to parent after they are declared.

•Hedge for Foreign Direct Investment after 1992. To apply through Authorised Dealers like Citibank. Case by case approach of the RBI. We have obtained permissions in the past.

FX Markets - The regulatory FX Markets - The regulatory environmentenvironment

Why Citibank?Why Citibank?

Track record: Largest number of FDI transactions into India

Foreign exchange presence:• Rated best Bank for Indian Rupee by Euromoney.• Largest position limit granted by RBI after State Bank of India.

Corporate Sales and Distribution Network• Can access the entire market. Have 80 of the Top 100 corporates.• Rated top Bank for Corporate Foreign Exchange and Derivatives

Why Citibank?Why Citibank?Regulatory interface: Excellent equation with the RBI. Have obtained approvals in the past. Regulatory expertise : Experienced team handling regulatory liaison, documentation etc.

Time value of funds and Ease of remittance

Rupee investments: Money Market presence, Largest Interbank players; 100% owned subsidiary has flexibility to offer better rates for rupee investments

• Although the information contained herein is believed to be reliable, Citibank makes no representation as to the accuracy or completeness of any information contained herein or otherwise provided by Citibank.

• The ultimate decision to proceed with any transaction rests solely with the customer. Citibank N.A. is not acting as your advisor. Therefore, prior to entering into any proposed transaction, you should determine the economic risks and merits, as well as the legal, tax and accounting characterizations and consequences of the transaction, and that you are able to assume these RISKS.

• The contents of this presentation are proprietary in nature, and may not disseminated in whole or in part without Citibank's written consent.

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