RBI WANTS INFO ON BANKS’ MF EXPOSURE CUT Posted by FOREX MARKETING , Sunday, December 20, 2009 at 9:45 PM, in

Move Follows A Jump in Banks’ MF Investments in Nov Even After RBI’s Concerns

THE RESERVE BANK Of India (RBI) has sought details from banks on action taken to curtail investments in mutual funds, said three senior treasure heads, requesting anonymity.

Early this week, RBI wrote to all commercial banks quizzing them about their exposure to mutual funds and the steps taken to reduce such exposure. It may be recalled that after presenting the half-yearly credit policy in October, RBI governor D Subbarao had expressed concern over banks parking surplus money in mutual funds. The concern is largely because over 90% of the money parked by banks in mutual funds comes back to banking systems in the form of borrowings (made by banks) from the overnight market.

Terming this as ‘circular trading’ RBI had asked banks to set an internal limit on their exposure to mutual funds.

In its later letter to banks, RBI has also advised them to set an internal limit approved by the board and asked for exposure details in mutual funds for the March-september 2009 period and the latest exposure.

“It can be called as some sort of moral suasion for banks to refrain from investing in mutual funds,” pointed out a treasury head.

ET had reported in October 2009 that RBI has asked banks to improve their corporate governance norms regarding investments in mutual funds, which followed by a decision that banks will impose an internal limit. During the meeting with bank CEOs, the RBI governor had indicated that the regulators would refrain from fixing an upper limit for banks’ investment in mutual funds, because it might lead to micro management. The mutual fund industry sees banks as valuable customers since they make up almost on-thirds of their total fixed income assets.

Several banks have fixed a sublimit to the total investment portifolio which is in the range of 5-20% of their investment portfolio. However, the concern emerges from the recent data released by RBI shows that even after discouraging banks from investing in mutual funds, the overall investments by the banking sector in mutual funds have increased in N ovember.

According to the latest RBI data, banks’ investments in MF schemes rose Rs.4,173 crore to Rs.1,64,656 crore during the fortningh ended November 20. Banks claim that investment in mutual funds is largely due to lower demand for credit.

KERALA PLANS INDIA’S FIRST ISLAMIC BOND Posted by FOREX MARKETING , at 9:44 PM, in

KERALA, the communist-ruled state that relies on Middle East remittances for a quarter of its economy, plans to sell the nations’s first Islamic bonds next year to help pay for infrastructure projects. “The way we see it, it’s another form of venture capital,” finance minister Thomas Isaac said in an interview at Thiruvananthapuram. “We need longgestation funds to build airports, hig-speed trains and expressways. Islamic finance promises unexplored potential in that context.”

Kerala is helping start A1-Barakah Financial Services to sell the rupee denominated bonds and create in vestment funds that comply with Shariah law’s ban on interest, Issac said. The venture will tap Indian Muslims and money sent home by workers living in Gulf countries even as a debt crisis in Dubai threatens to shrink the remittances, he said.

Islamic finance may help India raise the $500 billion it needs to spend on infrastructure by 2014 as it seeks to sustain the second-fastest pace of growth among major economies, according to national government estimates. Islamic bond sales almost doubled to a record $31 billion in 2007 on Arab oil earnings before plunging last year as the collapse of Lehman Brothers Holdings shuttered credit markets, according to data compiled by Bloomberg.

Islamic bonds, also known as sukuk, are asset-based securities that pay a profit rate to investors to comply with Shariah’s prohibition of interest and speculation. “India, if opened up for Islamic banking is the big prize,” Afaq Khan, Dubai-based chief executive officer of Standard Chartered’s Islamic banking unit, said in a telephone interview. “its large Muslim population and strong growth promise excellent opportunities for releasing a lot of funds into the documented economy.” Muslims make up approximately a quarter of Kerala’s population and 13.4% of India’s 1.1 billion people, according to government data. Only Indonesia and Pakistan have more inhabitants who adhere to the religion.

IDEA GETS 2.5 MILLION NEW USERS Posted by FOREX MARKETING , at 9:42 PM, in

INDIA’s mobile phone operators continued to add subscribers at a fast pace amid concerns about shrinking revenues and profits. India’s largest service provider Bharti Airtel added 2.8 million users in November, the most by any operator in the month, revealed data published by the Cellular Operator’s Association of India (COAI) - the industry body of mobile service providers using GSM platform.

COAI members together added 11 million users in the month, up 3 % compared with about 10.7 million in October. Vodafone Essar which led the additions in October. Vodafone Essar, which led the additions in October with 2.9 million new users, slipped to the second position with 2.7 million additions in novermber. The Country’s fourth largest mobile phone operator, idea cellular, recorded its best performance in terms of monthly additions with 2.5 million new users. Tata Teleservices topped the October additions it is GSM and CDMA operations are taken into account. In October, the monthly additions in the GSM space were led by Vodafone Essar, pubshing back bharti Airtel to the third pobisstion. The COAI figures for November do not include number of users added by Tata Teleservices and Reliance Communications, which operates on both GSM and CDMA platforms. Bharati Airtel remained the largest relecom operator in the country with over 116 m subscribers on its network as on Novermber 2009. Vodafone Essar now has a subscriber hase of 88.6 million while idea Cellular has a subscriber base of 55.9 million.

Challenges Of Manual Forex Trading Posted by FOREX MARKETING , Wednesday, December 16, 2009 at 6:37 AM, in

It takes twelve years of discipline to come a doctor, eight years of schooling to become a lawyer and five years of extensive training to become an engineer. However, most people think that they can become good traders by taking one or two trading courses or by taking several winning trades in the Forex market.

Forex currency trading is complex and is extremely demanding! Most retail traders fail 80-90% of the times in their venture. All traders try to make large sums of money using the high leverage provided by the brokers. Leverage is a double edge sword where you can make a lot of money quickly, or you can lose a lot of money even quicker. Many new traders lose their initial investment within the first two month trading and in most case struggle to win the lost money back, by investing more. Trading without proper techniques and money management is similar to gambling. Think about a new doctor, he may have the education training but still requires two years of residency. Most traders lack the education, patient, and neglect the rules of money management.

Most traders who enter the Forex market are being drawn to the promise and hope of easy money. They are drawn by small starting capital and yet the being able to trade large amount of money due to enormous leverage offered by the industry. Novice traders trade without any kind of effective trading plan, and they may be pushed by their instructors to open real trading account using their instructors as introducing brokers. Most of the traders have no proper idea about good trading software, how to use the charts, or perform a detailed technical analysis of the currency pair they are trading. Novice traders should not be opening real account after one or two years of demo trading and many practicing trades. During the demo trading period, it is recommended that notice traders should follow automated trading software in parallel. A good trading software is the one that completely focuses on risk management, and is simple to operate and easy to understand by even an inexperienced trader.

Whether it is a novice trader, or any experienced person trading in Forex market, they would make basic money management mistakes, and it is here that they fall miserably. Many-a-times the retail traders make emotional attachment to their trades resulting into large losses. And this happens more with the novice traders who lack the experience of controlling their greed, fear and disciplines. After experiencing regular bouts of loss, new traders ultimately lose the interest, and finally give up.

In the attractive sounding Forex Market, things are not easy as they seemed. Sudden changes create the windfall or downfall for the retail traders. A trader can make easy and huge gains in a short period of time, but it is his consistence performance over six to twelve months that will determines his success. This fundamental also applies to Forex trading software and managed Forex accounts using manual trading or automated trading. All trading systems must be followed for at least six months before committing further investment. If you assume that Forex trading experience can be accumulated in a few months with several trading courses or real time trading chat rooms, it will be a hard learned lesson. It is after six to twelve months that everything begins to go topsy-turvy.

The Role The Forex Market Plays in Regards to Currency Brokers Posted by FOREX MARKETING , Sunday, December 13, 2009 at 6:59 PM, in

Many have asked the common question of the role that the Forex market plays in terms of Currency Brokers. When one trades in the stock market, the market that is used will very depending on the country where your shares are based in. For example a company in the UK will most probably be found in the FTSE market. Now when looking at the market in terms of currency trading, everyone trades in the Forex market. The Forex market is the universal currency trading market that is used all over the world.

When you do decide to go ahead with Currency Brokers, you will most probably have a discussion session of the Forex market and how it works. All major currencies are traded on the Forex which Currency Brokers will highlight for you. The trading occurs for five days a week through out the entire day and night. Trading closes on the weekends as expected.

Now it was a common trend for many people to try their luck in Forex by trading themselves. This was fine when the market was fairly stable, however with the current economic downturn; this has led the market to become quite volatile. As a result it is important that you get an expert to deal with your currency trading which is a service provided by Currency Brokers.

To make the most of Currency Brokers in the current economical climate, it is very important that you take your time in finding one that has a proven track record. After all you want to give your money to invest to someone that you know has given results in the past. The last thing you want is giving your money to someone to invest that has around about the same experience as yourself.