Google the world's first 100 billion dollar brand

LONDON: They changed the lexicon for the word, search. Now the phrase "I'll just Google it" has helped make the internet search giant become World of web browsers Top Indian outsourcing cos Nine trends for IT in 2009 Cities that are IT hubs world's first $100 billion brand beating other household names like Microsoft, and Coca Cola to McDonald's. The analysts of the Brandz Top 100 Most Valuable Global Brands by consultants Millward Brown found that the company's value of $101.4 billion puts it 25 percent more valuable than computer software king Microsoft at $77.3 billion, reported Daily Mail Thursday. Coca Cola ($68.5 billion) managed the third place in the list. Technology companies make up the bulk of the top 10 with IBM (fourth at $67.5 billion), Apple (sixth at $63.9 billion) and China Mobile (seventh at $62.2 billion), along with consumables like cigarette brand Marlboro (10th at 50.1 billion) and burger chain McDonald's (fifth at $67.3 billion). Energy major GE (eight at $59.9 billion) and telecom giant Vodafone (ninth at $50.2 billion) complete the top 10 valuable brands in the world. Google, formed at Stanford University by students Larry Page and Sergey Brin in 1997, went up 16 percent in brand value in the past year to just break the $100 billion mark.

Foreign Exchange Market in India

Foreign Exchange Market in India works under the central government in India and executes wide powers to control transactions in foreign exchange.

The Foreign Exchange Management Act, 1999 or FEMA regulates the whole foreign exchange market in India. Before this act was introduced, the foreign exchange market in India was regulated by the reserve bank of India through the Exchange Control Department, by the FERA or Foreign Exchange Regulation Act, 1947. After independence, FERA was introduced as a temporary measure to regulate the inflow of the foreign capital. But with the economic and industrial development, the need for conservation of foreign currency was urgently felt and on the recommendation of the Public Accounts Committee, the Indian government passed the Foreign Exchange Regulation Act, 1973 and gradually, this act became famous as FEMA.

Until 1992 all foreign investments in India and the repatriation of foreign capital required previous approval of the government. The Foreign-Exchange Regulation Act rarely allowed foreign majority holdings for foreign exchange in India. However, a new foreign investment policy announced in July 1991, declared automatic approval for foreign exchange in India for thirty-four industries. These industries were designated with high priority, up to an equivalent limit of 51 percent. The foreign exchange market in India is regulated by the reserve bank of India through the Exchange Control Department.

Initially the government required that a company`s routine approval must rely on identical exports and dividend repatriation, but in May 1992 this requirement of foreign exchange in India was lifted, with an exception to low-priority sectors. In 1994 foreign and nonresident Indian investors were permitted to repatriate not only their profits but also their capital for foreign exchange in India. Indian exporters are enjoying the freedom to use their export earnings as they find it suitable. However, transfer of capital abroad by Indian nationals is only allowed in particular circumstances, such as emigration. Foreign exchange in India is automatically made accessible for imports for which import licenses are widely issued.

Indian authorities are able to manage the exchange rate easily, only because foreign exchange transactions in India are so securely controlled. From 1975 to 1992 the rupee was coupled to a trade-weighted basket of currencies. In February 1992, the Indian government started to make the rupee convertible, and in March 1993 a single floating exchange rate in the market of foreign exchange in India was implemented. In July 1995, Rs 31.81 was worth US$1, as compared to Rs 7.86 in 1980, Rs 12.37 in 1985, and Rs17.50 in 1990.

Since the onset of liberalization, foreign exchange markets in India have witnessed explosive growth in trading capacity. The importance of the exchange rate of foreign exchange in India for the Indian economy has also been far greater than ever before. While the Indian government has clearly adopted a flexible exchange rate regime, in practice the rupee is one of most resourceful trackers of the US dollar.

Predictions of capital flow-driven currency crisis have held India back from capital account convertibility, as stated by experts. The rupee`s deviations from Covered Interest Parity as compared to the dollar) display relatively long-lived swings. An inevitable side effect of the foreign exchange rate policy in India has been the ballooning of foreign exchange reserves to over a hundred billion dollars. In an unparalleled move, the government is considering to use part of these reserves to sponsor infrastructure investments in the country.

The foreign exchange market India is growing very rapidly, since the annual turnover of the market is more than $400 billion. This foreign exchange transaction in India does not include the inter-bank transactions. According to the record of foreign exchange in India, RBI released these transactions. The average monthly turnover in the merchant segment was $40.5 billion in 2003-04 and the inter-bank transaction was $134.2 for the same period. The average total monthly turnover in the sector of foreign exchange in India was about $174.7 billion for the same period. The transactions are made on spot and also on forward basis, which include currency swaps and interest rate swaps.

The Indian foreign exchange market is made up of the buyers, sellers, market mediators and the monetary authority of India. The main center of foreign exchange in India is Mumbai, the commercial capital of the country. There are several other centers for foreign exchange transactions in India including the major cities of Kolkata, New Delhi, Chennai, Bangalore, Pondicherry and Cochin. With the development of technologies, all the foreign exchange markets of India work collectively and in much easier process.

Foreign Exchange Dealers Association is a voluntary association that also provides some help in regulating the market. The Authorized Dealers and the attributed brokers are qualified to participate in the foreign Exchange markets of India. When the foreign exchange trade is going on between Authorized Dealers and RBI or between the Authorized Dealers and the overseas banks, the brokers usually do not have any role to play. Besides the Authorized Dealers and brokers, there are some others who are provided with the limited rights to accept the foreign currency or travelers` cheque, they are the authorized moneychangers, travel agents, certain hotels and government shops. The IDBI and Exim bank are also permitted at specific times to hold foreign currency.

The Foreign Exchange Market in India is a flourishing ground of profit and higher initiatives are taken by the central government in order to strengthen the foundation.

Impact of the Global Financial Crisis on India Collateral Damage and Response:

Global outlook

1. The global economic outlook deteriorated sharply over the last quarter. In a sign of the ferocity of the down turn, the IMF made a marked downward revision of its estimate for global growth in 2009 in purchasing power parity terms – from its forecast of 3.0 per cent made in October 2008 to 0.5 per cent in January 2009. In market exchange rate terms, the downturn is sharper – global GDP is projected to actually shrink by 0.6 per cent. With all the advanced economies – the United States, Europe and Japan - having firmly gone into recession, the contagion of the crisis from the financial sector to the real sector has been unforgiving and total. Recent evidence suggests that contractionary forces are strong: demand has slumped, production is plunging, job losses are rising and credit markets remain in seizure. Most worryingly, world trade – the main channel through which the downturn will get transmitted on the way forward – is projected to contract by 2.8 per cent in 2009.
   
   
2. Policy making around the world is in clearly uncharted territory. Governments and central banks across countries have responded to the crisis through big, aggressive and unconventional measures. There is a contentious debate on whether these measures are adequate and appropriate, and when, if at all, they will start to show results. There has also been a separate debate on how abandoning the rule book driven by the tyranny of the short-term, is compromising medium-term sustainability. What is clearly beyond debate though is that this Great Recession of 2008/09 is going to be deeper and the recovery longer than earlier thought.
   
   

   Emerging economies
   
   

3. Contrary to the 'decoupling theory', emerging economies too have been hit by the crisis. The decoupling theory, which was intellectually fashionable even as late as a year ago, held that even if advanced economies went into a downturn, emerging economies will remain unscathed because of their substantial foreign exchange reserves, improved policy framework, robust corporate balance sheets and relatively healthy banking sector. In a rapidly globalizing world, the 'decoupling theory' was never totally persuasive. Given the evidence of the last few months – capital flow reversals, sharp widening of spreads on sovereign and corporate debt and abrupt currency depreciations - the 'decoupling theory' stands totally invalidated. Reinforcing the notion that in a globalized world no country can be an island, growth prospects of emerging economies have been undermined by the cascading financial crisis with, of course, considerable variation across countries.
   
   

   Questions that will be addressed
   
   

4. India too has been impacted by the crisis – and by much more than it was suspected earlier. What I propose to do in the rest of my speech is to address the following four questions:
   1. Why has India been hit by the crisis?
   2. How has India been hit by the crisis?
   3. How have we responded to the challenge?
   4. What is the outlook for India?
      
   
   
   

   Why Has India Been Hit By the Crisis?
   
   

5. There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments.
   
   
6. The first argument goes as follows. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis.
   
   
7. The second reason for dismay is that India's recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited?
   
   
8. The answer to both the above frequently-asked questions lies in globalization. Let me explain. First, India's integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies more than just exports. Going by the common measure of globalization, India's two-way trade (merchandize exports plus imports), as a proportion of GDP, grew from 21.2 per cent in 1997-98, the year of the Asian crisis, to 34.7 per cent in 2007-08.
   
   
9. Second, India's financial integration with the world has been as deep as India's trade globalization, if not deeper. If we take an expanded measure of globalization, that is the ratio of total external transactions (gross current account flows plus gross capital flows) to GDP, this ratio has more than doubled from 46.8 per cent in 1997-98 to 117.4 per cent in 2007-08.
   
   
10. Importantly, the Indian corporate sector's access to external funding has markedly increased in the last five years. Some numbers will help illustrate the point. In the five-year period 2003-08, the share of investment in India's GDP rose by 11 percentage points. Corporate savings financed roughly half of this, but a significant portion of the balance financing came from external sources. While funds were available domestically, they were expensive relative to foreign funding. On the other hand, in a global market awash with liquidity and on the promise of India's growth potential, foreign investors were willing to take risks and provide funds at a lower cost. Last year (2007/08), for example, India received capital inflows amounting to over 9 per cent of GDP as against a current account deficit in the balance of payments of just 1.5 per cent of GDP. These capital flows, in excess of the current account deficit, evidence the importance of external financing and the depth of India's financial integration.
    
    
11. So, the reason India has been hit by the crisis, despite mitigating factors, is clearly India's rapid and growing integration into the global economy.
    
    

    How Has India Been Hit By the Crisis?
    
    

12. The contagion of the crisis has spread to India through all the channels – the financial channel, the real channel, and importantly, as happens in all financial crises, the confidence channel.
    
    
13. Let us first look at the financial channel. India's financial markets - equity markets, money markets, forex markets and credit markets - had all come under pressure from a number of directions. First, as a consequence of the global liquidity squeeze, Indian banks and corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. Also, in their frantic search for substitute financing, corporates withdrew their investments from domestic money market mutual funds putting redemption pressure on the mutual funds and down the line on non-banking financial companies (NBFCs) where the MFs had invested a significant portion of their funds. This substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. Second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. Simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. Both these factors put downward pressure on the rupee. Third, the Reserve Bank's intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening.
    
    
14. Now let me turn to the real channel. Here, the transmission of the global cues to the domestic economy has been quite straight forward – through the slump in demand for exports. The United States, European Union and the Middle East, which account for three quarters of India's goods and services trade are in a synchronized down turn. Service export growth is also likely to slow in the near term as the recession deepens and financial services firms – traditionally large users of outsourcing services – are restructured. Remittances from migrant workers too are likely to slow as the Middle East adjusts to lower crude prices and advanced economies go into a recession.
    
    
15. Beyond the financial and real channels of transmission as above, the crisis also spread through the confidence channel. In sharp contrast to global financial markets, which went into a seizure on account of a crisis of confidence, Indian financial markets continued to function in an orderly manner. Nevertheless, the tightened global liquidity situation in the period immediately following the Lehman failure in mid-September 2008, coming as it did on top of a turn in the credit cycle, increased the risk aversion of the financial system and made banks cautious about lending.
    
    
16. The purport of the above explanation is to show how, despite not being part of the financial sector problem, India has been affected by the crisis through the pernicious feedback loops between external shocks and domestic vulnerabilities by way of the financial, real and confidence channels.
    
    

    How Have We Responded to the Challenge?
    
    

17. Let me now turn to how we responded to the crisis. The failure of Lehman Brothers in mid-September was followed in quick succession by several other large financial institutions coming under severe stress. This made financial markets around the world uncertain and unsettled. This contagion, as I explained above, spread to emerging economies, and to India too. Both the government and the Reserve Bank of India responded to the challenge in close coordination and consultation. The main plank of the government response was fiscal stimulus while the Reserve Bank's action comprised monetary accommodation and counter cyclical regulatory forbearance.
    
    
    

    Monetary policy response
    

    
    
18. The Reserve Bank's policy response was aimed at containing the contagion from the outside - to keep the domestic money and credit markets functioning normally and see that the liquidity stress did not trigger solvency cascades. In particular, we targeted three objectives: first, to maintain a comfortable rupee liquidity position; second, to augment foreign exchange liquidity; and third, to maintain a policy framework that would keep credit delivery on track so as to arrest the moderation in growth. This marked a reversal of Reserve Bank's policy stance from monetary tightening in response to heightened inflationary pressures of the previous period to monetary easing in response to easing inflationary pressures and moderation in growth in the current cycle. Our measures to meet the above objectives came in several policy packages starting mid-September 2008, on occasion in response to unanticipated global developments and at other times in anticipation of the impact of potential global developments on the Indian markets.
    
    
19. Our policy packages included, like in the case of other central banks, both conventional and unconventional measures. On the conventional side, we reduced the policy interest rates aggressively and rapidly, reduced the quantum of bank reserves impounded by the central bank and expanded and liberalized the refinance facilities for export credit. Measures aimed at managing forex liquidity included an upward adjustment of the interest rate ceiling on the foreign currency deposits by non-resident Indians, substantially relaxing the external commercial borrowings (ECB) regime for corporates, and allowing non-banking financial companies and housing finance companies access to foreign borrowing.
    
    
20. The important among the many unconventional measures taken by the Reserve Bank of India are a rupee-dollar swap facility for Indian banks to give them comfort in managing their short-term foreign funding requirements, an exclusive refinance window as also a special purpose vehicle for supporting non-banking financial companies, and expanding the lendable resources available to apex finance institutions for refinancing credit extended to small industries, housing and exports.
    
    

    Government's fiscal stimulus
    

    
    
21. Over the last five years, both the central and state governments in India have made a serious effort to reverse the fiscal excesses of the past. At the heart of these efforts was the Fiscal Responsibility and Budget Management (FRBM) Act which mandated a calibrated road map to fiscal sustainability. However, recognizing the depth and extraordinary impact of this crisis, the central government invoked the emergency provisions of the FRBM Act to seek relaxation from the fiscal targets and launched two fiscal stimulus packages in December 2008 and January 2009. These fiscal stimulus packages, together amounting to about 3 per cent of GDP, included additional public spending, particularly capital expenditure, government guaranteed funds for infrastructure spending, cuts in indirect taxes, expanded guarantee cover for credit to micro and small enterprises, and additional support to exporters. These stimulus packages came on top of an already announced expanded safety-net for rural poor, a farm loan waiver package and salary increases for government staff, all of which too should stimulate demand.
    
    
    

    Impact of monetary measures
    

    
    
22. Taken together, the measures put in place since mid-September 2008 have ensured that the Indian financial markets continue to function in an orderly manner. The cumulative amount of primary liquidity potentially available to the financial system through these measures is over US$ 75 bln or 7 per cent of GDP. This sizeable easing has ensured a comfortable liquidity position starting mid-November 2008 as evidenced by a number of indicators including the weighted-average call money rate, the overnight money market rate and the yield on the 10-year benchmark government security. Taking the signal from the policy rate cut, many of the big banks have reduced their benchmark prime lending rates. Bank credit has expanded too, faster than it did last year. However, Reserve Bank’s rough calculations show that the overall flow of resources to the commercial sector is less than what it was last year. This is because, even though bank credit has expanded, it has not fully offset the decline in non-bank flow of resources to the commercial sector.
    
    

    Evaluating the response
    

    
    
23. In evaluating the response to the crisis, it is important to remember that although the origins of the crisis are common around the world, the crisis has impacted different economies differently. Importantly, in advanced economies where it originated, the crisis spread from the financial sector to the real sector. In emerging economies, the transmission of external shocks to domestic vulnerabilities has typically been from the real sector to the financial sector. Countries have accordingly responded to the crisis depending on their specific country circumstances. Thus, even as policy responses across countries are broadly similar, their precise design, quantum, sequencing and timing have varied. In particular, while policy responses in advanced economies have had to contend with both the unfolding financial crisis and deepening recession, in India, our response has been predominantly driven by the need to arrest moderation in economic growth.
    
    

    What is the outlook for India?
    
    

24. The outlook for India going forward is mixed. There is evidence of economic activity slowing down. Real GDP growth has moderated in the first half of 2008/09. The services sector too, which has been our prime growth engine for the last five years, is slowing, mainly in construction, transport and communication, trade, hotels and restaurants sub-sectors. For the first time in seven years, exports have declined in absolute terms for three months in a row during October-December 2008. Recent data indicate that the demand for bank credit is slackening despite comfortable liquidity in the system. Higher input costs and dampened demand have dented corporate margins while the uncertainty surrounding the crisis has affected business confidence. The index of industrial production has shown negative growth for two recent months and investment demand is decelerating. All these factors suggest that growth moderation may be steeper and more extended than earlier projected.
    
    
25. In addressing the fall out of the crisis, India has several advantages. Some of these are recent developments. Most notably, headline inflation, as measured by the wholesale price index, has fallen sharply, and recent trends suggest a faster-than-expected reduction in inflation. Clearly, falling commodity prices have been the key drivers behind the disinflation; however, some contribution has also come from slowing domestic demand. The decline in inflation should support consumption demand and reduce input costs for corporates. Furthermore, the decline in global crude prices and naphtha prices will reduce the size of subsidies to oil and fertilizer companies, opening up fiscal space for infrastructure spending. From the external sector perspective, it is projected that imports will shrink more than exports keeping the current account deficit modest.
    
    
26. There are also several structural factors that have come to India's aid. First, notwithstanding the severity and multiplicity of the adverse shocks, India's financial markets have shown admirable resilience. This is in large part because India's banking system remains sound, healthy, well capitalized and prudently regulated. Second, our comfortable reserve position provides confidence to overseas investors. Third, since a large majority of Indians do not participate in equity and asset markets, the negative impact of the wealth loss effect that is plaguing the advanced economies should be quite muted. Consequently, consumption demand should hold up well. Fourth, because of India's mandated priority sector lending, institutional credit for agriculture will be unaffected by the credit squeeze. The farm loan waiver package implemented by the Government should further insulate the agriculture sector from the crisis. Finally, over the years, India has built an extensive network of social safety-net programmes, including the flagship rural employment guarantee programme, which should protect the poor and the returning migrant workers from the extreme impact of the global crisis.
    
    

    RBI's Policy Stance
    

    
    
27. Going forward, the Reserve Bank's policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. There are indications that pressures on mutual funds have eased and that NBFCs too are making the necessary adjustments to balance their assets and liabilities. Despite the contraction in export demand, we will be able to manage our balance of payments. It is the Reserve Bank's expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. In particular, the special refinance windows opened by the Reserve Bank for the MSME (micro, small and medium enterprises) sector, housing sector and export sector should see credit flowing to these sectors. Also the SPV set up for extending assistance to NBFCs should enable NBFC lending to pick up steam once again. The government's fiscal stimulus should be able to supplement these efforts from both supply and demand sides.
    
    

    When the turn around comes
    
    

28. Over the last five years, India clocked an unprecedented nine per cent growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. This was no accident or happenstance. True, the benign global environment, easy liquidity and low interest rates helped, but at the heart of India's growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. These fundamental strengths continue to be in place. Nevertheless, the global crisis will dent India's growth trajectory as investments and exports slow. Clearly, there is a period of painful adjustment ahead of us. However, once the global economy begins to recover, India's turn around will be sharper and swifter, backed by our strong fundamentals and the untapped growth potential. Meanwhile, the challenge for the government and the RBI is to manage the adjustment with as little pain as possible.

Forex Association of India

Managers, Foreign Exchange Dealers and Foreign Exchange Brokers who are actively involved in Foreign Exchange Trading and Foreign Exchange Risk Management. The members of the Association are drawn from Foreign Exchange Dealing Rooms of all Nationalised Banks, Foreign Banks, Private Sector Banks, Reserve Bank of India and some Corporate Dealing Rooms.

Foreign Exchange Dealers in India represent Authorized Dealers i.e. commercial banks. They are front line users of the Foreign Exchange Market and their primary function is to be "price providers" to other users, viz., importers and exporters, and investors with inward and outward capital flows.

Forex Association of India is a self-financing body. The Association tries to ensure that the markets are transparent and Foreign Exchange transactions are conducted in as professional a manner as possible. It is an informal forum for exchanging news and views on the latest developments, both financial and technological, amongst professionals.
Some of the activities of the Association are:

• Organising seminars on various subjects such as Technical Analysis, Derivative Products - Options, futures, Interest Rate Swaps, etc.
• Organising meetings periodically to discuss problems and issues facing the Forex community. In this regard the Association has formed a "Market Watch Committee" which would discuss problems and present views and suggestions to the Regulators.
• Organising training programmes for members to prepare them for the ACI Diploma Examination. For this, the "Education Committee" has been formed.
• Organising National Forex assembly every four years for its members.

The Association has successfully hosted

• International Junior Forex in 1985.
• 15th Asia Pacific Forex Assembly in 1993.
• 2nd South Asian Forex Dealers' assembly in 1998.
• 21st Asia pacific congress,2000

Value At Risk

Probability of Non-Occurance		68.30%	90.00%	95.50%	99.70%
Confidence Level		84.00%	95.00%	97.50%	99.90%
	1 DAY	49.8850	49.8950	49.8800	49.9100
		49.8500	49.8400	49.8550	49.8250
	10 DAYS	49.9150	49.9950	50.0150	50.0650
		49.8200	49.7400	49.7200	49.6700
	15 DAYS	49.9500	50.0200	50.0350	50.1150
		49.7850	49.7150	49.7000	49.6200
Spot Rate basis : 49.865			Volatility per annum : 1.5%

Value at Risk (VaR) is a Risk Management and a Management Concept and is defined as an estimate of potential loss in a position or asset or portfolio of assets over a given holding period at a given level of certainty. Thus VaR measures the probability of loss for a given period of time over which the position is held while the given time period could vary from one day to a week to a month or a year. This VaR will change if the holding period of an instrument/position is changed which of course depends on the liquidity of the instrument/market. Thus, VaR measures potential loss and not potential gain. This Loss might arise out of an unexpected happening but the maximum amount of loss that might be sustained can be determined mathematically at varying degrees of certainty for a given range of volatility per annum. These varying levels of confidence use different Standard Deviations and are depicted in the chart below :

STANDARD DEVIATION PROBABILITY OF NON-OCCURANCE LEVEL OF CONFIDENCE 1 68.3% 84% 1.65 90% 95% 2 95.5% 97.5% 3 99.7% 99.9%

A Table is compiled below showing the Risk of a Loss in U.S.Dollar Vs. Indian Rupee if it held on for a period of One Day, 10 Days and 15 Days at all the aforementioned levels of confidence. This Table is dynamic and continually calculates both the upside and downside rates that the USD/INR might attain at the specified probability and at the present volatility of the currency. The Base Rate on which it is calculated is mentioned on top of the Table and the Volatility is automatically generated from our Real-Time Prices.