Ans 4

Japan

Japan will invest 35 billion dollars over the next five years in infrastructure and smart
cities in India.
Japan also promised to double its Foreign Direct Investment in the next five years.
Project of bullet trains in India, hoping that there will be a Japanese bullet train in
Mumbai soon
Signed a deal on joint production of rare earth materials which is used in making
electronic goods
Nuclear energy pact:o Japan wants explicit guarantees from India, which has not signed the nuclear
Non-Proliferation Treaty, to limit atomic tests and allow closer inspection of its
facilities to ensure that spent fuel is not used to make bombs.
o Japanese firms also want clarity on nuclear disaster compensation, especially in
the wake of the March 2011 Fukushima catastrophe.
Suzuki Motor Corporation (SMC), the parent company of Maruti Suzuki, will spend Rs
18,500 crore (US$ 3.02 billion) to establish a new factory in Gujarat. SMC plans to
establish a 100 per cent subsidiary, Suzuki Motor Gujarat (SMG), to manufacture cars on
a strictly no-loss, no-profit basis for Maruti Suzuki.

China

Indian and Chinese companies signed 24 agreements valued at $3.43 billion in sectors
including aircraft leasing and financing, telecom, chemicals, wind power components,
textiles and seafood.
Industrial & Commercial Bank of China Ltd. yesterday signed a deal to provide $2.6
billion in financing for IndiGo to buy and leaseback more than 30 Airbus A320 planes
CSR Corp. won a 300 million Yuan ($49 million) contract to provide cars and
maintenance for a metro line in Mumbai
Chinese telecom equipment maker ZTE Corporation plans to establish a Global Network
Operating Centre (GNOC) in India. The centre will seek to manage the networks of
multiple telecom carriers in Asia and Africa.

US

Foreign direct investment from the U.S. into India has shrunk in recent yearsto around
$800 million in the year ended March 31, from a peak of $1.9 billion four years earlier
US-based Leapfrog Investment has bought a minority stake in Chennai-based financial
services provider IFMR Capital Finance for US$ 29 million. This marks Leapfrog's third
investment in India, after having earlier backed insurance distribution firm Mahindra
Insurance Brokers and Shriram CCL.

US-based Nike has made a proposal to the Department of Industrial Policy and
Promotion (DIPP) to set up fully-owned stores in India. Nike is one of the world's largest
suppliers of athletic shoes and apparel globally, with a market capitalisation of US$ 68
billion.

US-based Milacron Llc plans to invest US$ 30 million in the next three years in its India
operations Ferromatik Milacron India Pvt Ltd (FMI. FMI manufactures plastic
moulding machines at its plants in Ahmedabad in Gujarat and Coimbatore in Tamil Nadu.

Government Initiatives
Cleared a proposal which allows 100 per cent FDI in railway infrastructure, excluding
operations. Though the move does not allow foreign firms to operate trains, it allows them to do
other things such as create the network and supply trains for bullet trains etc.The Union Cabinet
has cleared a bill to raise the foreign investment ceiling in private insurance companies from 26
per cent to 49 per cent, with the proviso that the management and control of the companies must
be with Indians.
The Reserve Bank of India (RBI) has allowed a number of foreign investors to invest, on
repatriation basis, in non-convertible/ redeemable preference shares or debentures which are
issued by Indian companies and are listed on established stock exchanges in the country.

Ans 8
The exchange rate is a key financial variable that affects decisions made by foreign exchange
investors, exporters, importers, bankers, businesses, financial institutions, policymakers and
tourists in the developed as well as developing world.
Exchange rate fluctuations affect the value of international investment portfolios,
competitiveness of exports and imports, value of international reserves, currency value of debt
payments, and the cost to tourists in terms of the value of their currency.
Movements in exchange rates thus have important implications for the economys business
cycle, trade and capital flows and are therefore crucial for understanding financial developments
and changes in economic policy.
Various aspects of economic policy with respect to the exchange rate, and second, modeling and
forecasting the exchange rate. Accordingly, the study analyses Indias exchange rate story and
discusses the structure of the foreign exchange market in India in terms of participants,
instruments and trading platform as also turnover in the Indian foreign exchange market and
forward premia.

To model the exchange rate, the monetary model is expanded to include variables that may have
been important in determining exchange rate movements in India such as forward premia, capital
flows, order flows and central bank intervention.
An important aspect of the policy response in India to the various episodes of volatility has been
market intervention combined with monetary and administrative measures to meet the threats to
financial stability while complementary or parallel recourse has been taken to communications
through speeches and press releases.
In line with the exchange rate policy, it has also been observed that the Indian rupee is moving
along with the economic fundamentals in the post-reform period. Moving forward, as India
progresses towards full capital account convertibility and gets more and more integrated with the
rest of the world, managing periods of volatility is bound to pose greater challenges in view of
the impossible trinity of independent monetary policy, open capital account and exchange rate
management.
Preserving stability in the market would require more flexibility, adaptability and innovations
with regard to the strategy for liquidity management as well as exchange rate management. With
the likely turnover in the foreign exchange market rising in future, further development of the
foreign exchange market will be crucial to manage the associated risks.

The foreign exchange market in India today is equipped with several derivative instruments.
In India, the liquidity impact of large capital inflows was traditionally managed mainly through
the repo and reverse repo auctions under the day-to-day Liquidity Adjustment Facility (LAF).
In addition, changes in policies are made from time to time to modulate the debt-creating capital
flows depending on the financing needs of the corporate sector and vulnerability of the domestic
economy to external shocks.
Large capital inflows create important challenges for policymakers because of their potential to
generate overheating, loss of competitiveness, and increased vulnerability to crisis.
While some countries have allowed the exchange rate to appreciate, in many cases monetary
authorities have intervened heavily in forex markets to resist currency appreciation. EMEs have
sought to neutralize the monetary impact of intervention through sterilization. Cross-country
experiences reveal that in the recent period most of the EMEs have adopted a more flexible
exchange rate regime.
Thus periodically evaluate the value of rupee and adjust its exchange rate accordingly to avoid
the volatility.