Indian Current Affairs: 10.09.2007

One of you asked me through the shout-box to explain as to why the oaths of office are different for various constitutional functionaries in India. Take a look at my take on the subject in Discover It here.
Mutual funds and overseas investment limits

The total overseas investment by all mutual funds in India is capped at $4 bn. Within this cap, individual funds face a ceiling of $200 mn.
The government is thinking of doubling the overall limit.

It is a form of tailor made transaction for hedging currency risk by foreign exchange earners in the country.
Under this, a corporate can settle the dollar every week, fortnight or month over the next few years, through a series of options.
This is assuming importance in view of the strengthening rupee. The overall picture that is emerging is that the corporate world is thinking that the rupee will strengthen against the dollar in the coming years.
So, to protect their rupee earnings what they will do is, to go for a forward cover. A forward cover is an agreement where the forex earning exporter decides to sell dollars at a future date. If the current exchange rate is say Rs. 40 per dollar, and if the corporate is expecting the rupee to strengthen against the dollar in the future, it would sell dollars now. If it has to receive about $1 lakh dollars two months down the line from its foreign customers, it would sell those dollars at an exchange rate of Rs. 40, right now. If the corporate’s view proves right, it will end up gaining in rupee terms. But if its view turns out be false – that is the rupee weakens against the dollar, it will lose in rupee terms.
STRIPS is a series of forward covers and hedging transactions to protect its future dollar earnings from currency market volatilities.

India’s ambitions of joining the APEC club have to wait till at least 2010. At present there is a moratorium preventing new members joining the group. Australian Prime Minister John Howard confirmed that new memberships would be considered only in 2010.

A solvency margin is the minimum portion of net-owned funds that an insurer is required to have in relation to the business and risk he is exposed to. To ensure maximum safety in a nascent market, the IRDA has asked companies to maintain one and a half times the minimum capital that is required by law.

It is about to be submitted sometime in this month.
Do you remember what this committee was about? Take a look at what we noted earlier.

It is given for the best novel published in the year in the UK, Ireland and the Commonwealth.
It has a cash prize of 50,000 Pounds. Usually announced in October every year.
The process by which the winner is announced: At the end of a lunch in London’s Guildhall.

In a very good article written by TNR Rao, the following comments and suggestions are worth noting:
It is facile to assume that the market for gas is the same as for other commodities or other petroleum products. Unlike these commodities, gas has to flow in a pipeline to buyers and such a pipeline forms a natural monopoly and not a market.
The only way to create a real market for natural gas is to integrate the fragmented monopolies (as each pipeline from a gas source constitutes an island of monopoly). This can be done by mandating that at least two trunk pipelines should connect.
Apart from this, better transparency and competitiveness in prices can be brought about by enforcing the principles of ‘unbundling’ – the practices relating to separation of carriage and content, third party access, common carrier principle etc.
Strengthening the existing gas trading platforms will further promote a market-based price discovery.
Policy deficits have enabled producers to ‘fix’ gas prices. The remedy does not lie in ‘fixing’ gas prices, but in creating a real market for gas, by following the above suggested steps.

At the centre of a black hole, there is a point called singularity where the laws of physics no longer make sense.
A singularity is a point in space-time at which the density of matter and the gravitational field are infinite (forming a black hole). Singularities are points at which the mathematical solution to the space-time equations are undefined.

When hemlines drop, the Dow Jones Industrial Average (the US stock market index) is likely to fall.
Miniskirts were in vogue in the 1960’s. Then the stock markets boomed. By the early 1970’s, the Arab oil embargo forced Americans to endure gas pump lines, the economy suffered and the popular style was the ankle-length maxiskirt.
You will not ask me what are hemlines; do you?

This report has cautioned the developing countries from entering into FTAs (Free Trade Agreements) with developed countries, as it could weaken the multilateral trading system.
But the fact is the FTAs rose from a mere 20 in 1990 to 86 in 2000 and to 159 in 2007. This is largely attributed to the growing frustration among the developing countries over the stalemate in multilateral negotiations under the WTO.
Despite the problems and sensitivities inherent in an FTA, even the WTO considered them to be building blocs of the global free trade area that should ultimately take shape. While waiting for the multilateral negotiations to succeed, developing countries should focus on regional arrangements with economies at the same level of development, building upon the advantages of proximity, similarity of interests, and economic complementarity.

The dollar tumbled to a 15 year low and stock markets plunged on both sides of the Atlantic, after announcement of shocking figures showing drop in employment rate in the US.
House prices are already falling in many American cities and several mortgage lenders have gone bust.

Justin Henin of Belgium won it beating Svetlana Kuznetsova of Russia. This is her 7^th career grand slam title.

Asafa Powell lowered the world record to a great 9.74 seconds in the 100 meters dash.

The Golden Lion was won by Ang Lee (Director) for his movie “Lust, Caution”.
Brad Pitt won the best actor award for his performance in “The Assassination of Jesse James by the Coward Robert Ford”.

Indian Current Affairs