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|September 21, 1998||
Euro is coming, gear up, forex dealers told
Indian bankers and the Foreign Exchange Dealers Association should initiate immediate steps to train all authorised dealers in foreign exchange to equip themselves for handling the Euro currency in the transitional period before it comes into force on January 1, 1999.
Since the Euro will become an international reserve currency and would compete with the US dollars as a convertible currency for settlement of international trade, imparting training to the dealers becomes imperative, says the PHD Chamber of Commerce and Industry in a note on the Euro currency -- Implications for Indian banks.
The Euro currency would have the potential to become second or third largest means of international exchange, feels the chamber. There would also be structural changes in the existing European Monetary Unit in the EU and Indian bankers need to gear up with an In-depth appreciation of this change as the Euro will open up new commercial opportunities for Asian business and markets.
The Euro will create the opportunity for a more balanced international monetary system by reducing volatility and bringing more stability in exchange rates. The world at present is totally dominated by the US dollar. This structural imbalance can be overc ome with the introduction of Euro, says the chamber.
Asian businessmen and investors like banks stand to benefit from the Euro. The creation of unified and liquid European capital market will make it easier for Indian investors like banks to diversify their holdings, says PHDCCI.
The other likely gains from single Euro currency will be: reduction of transaction costs for international traders dealing with two or more European countries. For exporters, it will be easier to direct consignments meant for one country to another.
Indian bankers will have effective cash and fund management as they will maintain their nostro accounts only in one single currency -- Euro -- and they can efficiently have strategic planning for deployment and acquisition of forex funds.
The Euro would also help bankers to increase their profits and the exporters and importers would greatly benefit by minimising their losses on account of forex rate fluctuations of different currencies and cross-currency charges and will result in saving of exchange margins by cost-effectiveness.
Thus, the Euro will also open new vistas in international trade and would hasten the process of globalisation, feels the chamber.
As the European Union is India's largest trading partner, accounting for more than 30 per cent of international exports/imports and India's economic policies have changed from being inward-looking into an outward-looking, market- oriented approach, the formation of economic and monetary union will have wide-ranging impact on our trade and economic relations with the EU countries.
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