The News Review:

- Forex - US dollar steady as market awaits US rate decision
- Forex - US dollar steady as market awaits US rate decision
- Forex - US dollar lower on concerns Fed may cut rates further
- Export status for forex earning services?
- All about currency derivatives

Forex - US dollar steady as market awaits US rate decision
Forbes - Apr 30, 2008
dollar was steady, holding on to recent gains, while market players stayed sidelined ahead of tonight’s interest rate decision by the U. Federal Open Market Committee (FOMC).

Forex - US dollar steady as market awaits US rate decision
Forbes - Apr 30, 2008
dollar retained a firm tone ahead of today’s expected interest rate cut from the U. Federal Reserve and some more optimistic sentiment regarding the U.

Forex - US dollar lower on concerns Fed may cut rates further
Forbes - Apr 30, 2008
dollar edged lower in late Sydney morning trade on Thursday after the Federal Reserveleft open the possibility of further rate cuts after another quarter-point reduction overnight. Trading was thin with most markets in Asia closed for a public holiday apart from Japan andAustralia. Traders said the statement accompanying the Federal Open Market Committee’s decision to cut the federal funds target rate to 2. 0 percent did not decisively signal an end to the central bank’s easing campaign. ‘Market pricing suggests the statement left more room for easing than had been expected,’ said Rob Henderson, chief economist at NAB Capital Markets. He said the Fed funds futures had built in more chances of a near-term easing and had reduced the possibility of further tightening from late 2008 into 2009. ‘Importantly, the statement that ‘downside risks to growth remain’ was removed, the clearest indication that the Fed has moved to a more neutral policy bias,’ said Henderson.

Export status for forex earning services?
Economic Times - Apr 30, 2008
However, the issue of taxation of
services, more so of tax treatment to be provided to cross-border services is
far too complex. Internationally, the basic rule followed for charging tax on
services is that services are supplied where the supplier ?belongs?. Even if the service is actually performed in an entirely different place it does
not affect the place of supply. Of course, the place of supply for certain
services is governed by special rules.

All about currency derivatives
Hindu - Apr 30, 2008
First tell us about currency derivatives and what purpose should they serve. Devoid of jargon a currency derivatives can be described as contracts between the seller and buyer, whose values are to be derived from the underlying assets, the currency amounts. These are basically risk management tools in forex and money markets used for hedging risks and act as insurance against unforeseen and unpredictable currency and interest rate movements. Any individual or corporate expecting to receive or pay certain amounts in foreign currencies at future date can use these products to opt for a fixed rate - at which the currencies can be exchanged now it self. Risks arising out of borrowings in foreign currency due to currency rate and interest rate movements can be contained. If receivables or payments or expenditure are denominated or to be incurred in multiple currencies, derivative can be used for matching the inflows and outflows. Is it risk-free?

Market risks can’t be avoided but have to be managed… While there could be some gains depending on the markets and market movement and the type of derivative selected, losses are contained. Entering into contracts not baked by genuine business cash flows in relevant currencies amounts to speculation and can lead to losses. What is the difference between forex derivatives and currency derivatives?

There is a thin line dividing the two. Derivatives based on currency exchange rates are forward contracts (or forward rate agreements), options and swaps and are popularly know as forex derivatives. Those meant to hedge interest rate risks and cash mismatches in different currencies such as currency swaps, options are known as currency derivatives. There are interest rate forward rate agreements and swaps for managing the interest rate movements risk with in same currency. On the lines of commodity futures, there are currency and interest rate futures, which are nothing but standardised forward contracts.