kishori j udeshi : development of forex markets in india - review and prospects keynote address by ms kishori j udeshi, deputy governor of the reserve bank of india, at 15th forex assembly organised by forex association of india, colombo, sri lanka, 20 august 2004. grateful acknowledgement for inputs provided by smt. shyamala gopinath, executive director and shri. g. mahalingam, general manager, department of external investments and operations. * * * i am delighted to be in colombo today to address the 15th national forex assembly. india and sri lanka have had very close and friendly neighbourly relations especially culturally, for centuries indeed millennia. on behalf of reserve bank of india, i bring greetings to you all and express appreciation of the warm hospitality of the host country. rbi has always actively participated in the meetings of national forex assembly at governor or deputy governor level. i am delighted to carry forward the tradition. being an exclusive gathering of forex market participants in the region, i thought i would use this forum to share some of my thoughts on fora market developments in india. i am aware that each country has unique situations and policies. but in forex such as these, we could exchange experiences for mutual benefit. my brief address has been structured as follows : first, i will trace the important landmarks in the evolution of forex market in india spanning over roughly three decades. thereafter, i will proceed to dwell on measures for market liberalization and development including disclosure and transparency initiatives. thereafter there would be a coverage of institutional development. i will conclude this address outlining the tasks that lie ahead of us and scope for further interaction among the participants. evolution of foreign exchange market in india the indian forex market owes its origin to the important step that rbi took in 1978 to allow banks to undertake intra - day trading in foreign exchange. as a consequence, the stipulation of maintaining “ square ” or “ near square ” position was to be complied with only at the close of business each day. during the period 1975 - 1992, the exchange rate of rupee was officially determined by the rbi in terms of a weighted basket of currencies of india ’ s major trading partners and there were significant restrictions on the current account transactions. the initiation of economic reforms in july 1991 saw significant two - step downward adjustment in the exchange rate of the rupee on july 1 and 3, 1991 with a view to placing it at an

willem f duisenberg : presentation of the ecb ’ s annual report 2001 to the european parliament introductory statement by dr willem f duisenberg, president of the european central bank, to the european parliament, strasbourg, 2 july 2002 * * * six months ago we witnessed a milestone in european history : the launch of “ the euro, our money ”, in its visible form. european citizens are now able to perceive - and benefit from - the tangible reality of the euro, and the rapid substitution of legacy currencies at the beginning of this year bears witness to the successful launch of the euro banknotes and coins. the year 2001 provided a particularly challenging environment for the monetary policy of the ecb. the worsening economic outlook was accompanied by short - term upward pressures on prices from various sources, which complicated the conduct of monetary policy. this task was made more difficult by the extreme uncertainty which followed the terrorist attacks in the united states on 11 september. as usual, the monetary policy response of the ecb to such a situation had to look beyond short - term developments, focusing on the risks to price stability over the medium term. from this perspective, we could see that medium - term inflationary pressures were in fact receding. the ecb took account of this by reducing interest rates four times in 2001, by a total of 150 basis points. as a consequence, the minimum bid rate on the main refinancing operations of the ecb - the most important among our key interest rates - reached 3. 25 % in november 2001. the key ecb interest rates have remained unchanged since november and short and long - term real interest rates have been, in a historical perspective, very low. the average annual inflation rate in 2001, as measured by the hicp, was 2. 5 %. inflation in 2001 was affected by the lagged effects of the increases in import prices in 2000, and by the new impact of livestock diseases on unprocessed food prices. we are not satisfied with such an outcome, which is not in line with price stability. however, it has to be recognised that the factors which contributed to shaping this outcome could not be controlled by the ecb. in fact, monetary policy only affects inflation with a lag and cannot control it in the short term. we are satisfied that our policy in 2001 was very well understood by our observers and by the markets. in fact, the level of bond yields, as well as various other indicators of inflation expectations