ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

S K VergheseSubscribe to S K Verghese

Siren Song of Rupee Convertibility

S K Verghese Making the rupee convertible before a substantial improvement in the balance of payments, in inflation and in the fiscal deficit is a sure recipe for disaster.

International Banking Developments-Are They Contributing to Industrial Decline

International Banking Developments Are They Contributing to Industrial Decline? S K Verghese Global Banking Strategy: Financial Markets and Industrial Decay by Herve de Carmoy; Basil Blackwell, 1990; pp 239,

Financial Innovation and Lessons for India

Financial Innovation and Lessons for India S K Verghese It is necessary to take a close look at the main features of the current wave of financial innovation and evaluate objectively what it has achieved and at what cost. It is also important to identify the lessons the financial change and innovation in foreign markets offer to countries like India in shaping our future financial policies.

Establishing an Off shore Financial Centre in India-Proposal Revisited

/t is appropriate to reassess the scope and nature of India's external financial market links in the light of the mujor changes that have taken place in the international financial markets as well as in India's own external financial position and to see whether any change in our policy on establishing an offshore financial centre in India is called for. This paper discusses whether the recent financial market developments have made it more opportune for India to establish an offshore centre and whether the potential costs-benefits of such a centw have become more favourable today than they were in the early 80s.

Liberalisation of Japanese Financial Markets

THE momentum of the wave of innovation, liberalisation and globalisation of financial markets, which began in the early 80s, continues unabated even today. Normally innovative impulses and techniques originate in the relatively free domestic markets of the US and later spread to the eurocurrency markets and to the domestic markets of the major countries. In some respects the recent financial developments have improved the facilities by offering a broad range of financial instruments and also hedging facilities both to borrowers and' lenders to protect against exchange and interest rate volatility. But the mortality rate of most financial instruments is so high that it raises the question whether most of them have been actually required or whether they are just fads. Besides, what is perhaps inadequately recognised is that the very features of the current financial markets themselves contribute greatly to the violent fluctuations in interest and exchange rates by promoting massive capital flows between countries. Today the capital flows and the fund and foreign exchange transactions that are taking place in the markets are far beyond the genuine requirements of world trade and investments. The financial markets have assumed a life of their own. Genuine financial services for trade and production activities have been marginalised, although the raison d'etre of the financial markets and financial intermediation is to act as a handmaiden of production. In the present conditions, internationalisation and liberalisation of domestic financial markets have the potential danger of increasing the instability of both the financial and the real sectors of the economy.

India s Mounting External Debt and-Servicing Burden

India's Mounting External Debt and Servicing Burden S K Verghese Wilson Varghese An attempt is made in this paper to estimate the current magnitude of India's external debt and debt service obligations, the evolution of the debt over time and the factors that have contributed to the growth of the debt and service burden. The policy options available to India at the present juncture to keep the debt and debt service burden within manageable limits are also briefly examined.

Developments in International Banking and Prospects of Indian Banks Overseas Business

In the context of major changes taking place in interrnational banking and in the international financial markets, the institutional structure and technical expertise of Indian banks operating overseas will have to be revamped and made more responsive to market developments. This paper first traces recent developments in international banking and finance and then assesses the past performance of Indian banks overseas and their future prospects. The author concludes that unless prompt measures are taken to consolidate the overseas operations of all Indian banks in order to develop a few viable banking units abroad, there is a danger of being overwhelmed by the revolutionary changes taking place in the international banking world.

Impact of Recent Stock Market Upheavals

Upheavals DURING the last two years signs of an emerging upheaval in the financial and foreign exchange markets have been evident. The trouble started in the FRN segment of the bond market in the last quarter of 1986. The potent instability in the foreign exchange markets was kept under lid by the Louvre agreement, though somewhat loose, to maintain exchange rates within unpublicised broad target zones. The turmoil erupted in the stock markets and then spread to foreign exchange markets. Since then the markets have been zig-zaging amidst widespread expectations of major economic and financial upheavals. In fact, immediately after the stock market crisis most analysts, including the OECD, have lowered their GNP growth projections, particularly for the US. The implications of the recent upheavals on the financial systems are beting variously interpreted. Some analysts expect a sharp reversal in the recent trends in innovation and globalisation while others expect an intensification of the process of supervision and controls on banking and finance which are already underway.

Magnitude and Nature of Recent Depreciation of Rupee

Depreciation of Rupee S K Verghese All indices of (he trade-weighted exchange rate (TWER) of the rupee show that the bit-by-bit depreciation of the value of the rupee has resulted in a significant cumulative depreciation of about 30-35 per cent in the nominal exchange rate of the rupee during 1982-86. The government's objective in effecting the small, step-by-step devaluation appears to have been to offset the higher rates of inflation in India relative to those of our trade partners.

Functioning of Foreign Exchange and Financial Markets-Some Key Issues

Functioning of Foreign Exchange and Financial Markets Some Key Issues S K Verghese While recognising the need for encouraging flexibility and dynamism in the financial markets, the author wonders how much of what is happening in the name of innovation and sophistication is simple froth and how much of it Is actual improvement to help serve the interest of the real sectors of the world economy.

Management of Exchange Rate of Rupee since Its Basket Link

Management of Exchange Rate of Rupee since Its Basket Link S K Verghese Exchange rates of the major currencies have been floating for over a decade now, This period has witnessed high volatility and persistent misalignments of the principal currencies. The implications of exchange rate instability for balance of payments, costs and prices, and above all investment, have been matters of intense debate among financial analysts and policy-makers. The growing volatility of exchange rates and instability in exchange markets have posed special problems to all countries, but these problems are specially intractable for developing countries.

Management of Exchange Rate of Rupee since Its Basket Link

since Its Basket Link S K Verghese Exchange rates of the major currencies have been floating for over a decade now. This period has witnessed high volatility and persistent misalignments of the principal currencies. The implications of exchange rate instability for balance of payments, costs and prices, and above alt investment, have been matters of intense debate among financial analysts and policy-makers. The growing volatility of exchange rates and the instability in exchange markets have posed special problems to all countries, but these problems are specially intractable for developing countries.

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