Interaction of transposases with the β Sliding Clamp

INDIA-• Foreign exchange Management Act (FEMA) replaced Foreign Exchange Regulations Act(FERA) in 1999 .

• FEMA gives full freedom to a person resident in India who was earlier resident outside India to hold property outside India when he /she was resident outside India.

• Similar freedom is also given to a resident who inherits such security or immovable property from a person resident outside India.

• Liberalization in Foreign exchange entitlements to people traveling abroad

• Liberalization in Investments by Indian companies outside India.

• LERMS- was introduced in the year 1992keeping in line with the spirit of

liberalization..in LERMS dual exchange rate mechanism was adopted .60% exchange rate was market determined while the balance 40% was determined officially to take care of bulk imports by the govt.In 1993 the dual rate system was abolished and the entire rate was market determined.USD replaced GBP as the intervention currency.

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Foreign Exchange

Dealings-• Direct and Indirect quotations(also known as European and American quotations

respectively)-(please see slide number 51.)The latter are also referred to as Inverse or Reciprocal quotes.

• Two way quotation /rates-In practice dealers quote two way rates,one for buying the foreign currency(known as bid price/rate)and another for selling of foreign

currency(referred to as Ask price/rate).Since dealers expect profit in FE operations,the 2 prices cannot be the same.The dealer will buy the FE at a lower rate and sell it at a higher rate and sell the foreign currency at a higher rate.For this reason,the Bid quote is a lower rate and the Ask rate is a higher rate.The quotations are always with respect to the dealer(say banker).

• By convention,the buying rate follows the selling rates Eg a dealer in Mumbai quotes Pound Sterling 1=Rs 83/83.5 implies that the dealer is prepared to buy 1 British Pound at Rs 83 and sell it at Rs83.5.Normally the rates are at 4 decimal points .

• SPREAD-IS THE DIFFERENCE BETWEEN ASK PRICE AND THE BID PRICE.

The spread is affected by a number of factors .The currency involved,the volume of business,and the market sentiments./rumors about the currency are the major variables reckoned by dealers/operators in the FE market.Spread is akin to the Gross Profit in a normal business,out of which the dealer has to meet his expenses.In percentage terms it can be expressed as follows;

Spread(percent) =(Ask price-Bid price)/Ask pricex100.In the above instance,it works out to;(Rs83.5-83)83.5x100=.05988%.Prima facie the spread appears to be very low.It depends on the volume of business the dealer generates.

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• Therefore it follows that normally the dealers buy FE from Exporters and sell Fe to Importers.Thus if the Rupee becomes stronger,the dealers will buy FE from exporters and pay less in Rs.

• Eg An exporter has earned USD 10000and if he has to convert it into Rs he will get Rs 440000(usd 10000xRs44) and if the Re is weak he may get Rs 460000(usd 10000x46).

• Conversely if an importer has to buy dollars for payment,the dealer will sell dollars and if the Re is strong he will pay less and pay more if the Re is weak.

• Therefore it follows that if the Re is weak the Exporter gains and the Importer loses and conversely if the Re is strong the exporter loses and the importer gains.

• The quotations are usually shortened as follows ;USD /INR 46.4870/90 which means 46.4870/46.4890.Remember that the offer rate must always exceed the bid rate –the bank giving the quote will always want to make a profit in its currency dealing .Hence if a quote is USD/INR 46.9595/.10 means 46.9595/46.9610 and a quote USD/INR 46.9595/8.10 means 46.9595/48.9610.

• ARBITRAGE between Banks-Though we hear about “Market rates”it is often found that different banks will give different quotes for a given pair of currencies.Suppose SBI and Canara Bank are quoting as follows

;

GBP/USD (SBI)1.4550/1.4560 (CAN BANK)1.4538/1.4548. This gives rise to an arbitrage opportunity.”Arbitrage in finance refers to a set of transactions ,selling and buying or borrowing and lending the same asset or equivalent group of assets,to profit from price discrepancies within a market or across markets.Most often no risk is

involved and no capital has to be committed.

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Arbitrage (contd)-

In the given example,GBP can be bought from Canara Bank at

USD1.4548 and sold to SBI at USD1.4550 for a net profit of usd 0.0002 per pound without any risk or commitment of capital..One of the main characteristics of modern finance is that they are very efficient these days and such arbitrage opportunities will be spotted by the markets and exploited.Therefore the arbitrage opportunities will disappear very fast.

Suppose,the quotes are as follows;

SBI Canara Bank GBP/USD (bid) 1.4550/1.4560(ask) 1.4545/1.4555

Here there is no arbitrage opportunity seen as earlier.The reason is that the 2 quotes overlap..However now SBI will find that it is being “hit”on its bid side much more often,while Canara Bank will find that it is confronted largely with buyers of GBP and few sellers.This could lead to a position where the banks building up a position

If SBI has sold more GBP than it has bought it is said to have a NET SHORT POSITION and if it has bought more GBP than it has sold ,it is said to have NET LONG POSITION.Given the volatility of the exchange rates,maintaining a large NET SHORT/LONG Positions for a long time can be a risky proposition.From time to time,a bank may deliberately move its quote in a manner designed to discourage one type of deal and encourage the opposite deal.Thus SBI may have built up a large NET short Position in GBP and may now want to encourage sellers of pounds and discourage buyers.of GBP.Canara Bank may be in a reverse position;it wants to encourage buyers and discourage sellers of GBP.Thus regular clients of SBI wanting to to buy GBP can save money by going to Canara bank and Vice versa.

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Cross-rates and three-point Arbitrage- A New York bank(N) is currently offering the following quotes;

USD /JPY; 110.25/111.10 USD/AUD; 1.6520/1.6530

At the same time ,a bank in Sydney(S) is quoting;

AUD/JPY ; 68.3/69.00

Is there an Arbitrage opportunity?

Let us see the sequence of transactions

1)Sell JPY,buy USD.Then sell USD and then buy AUD in New York and

2) sell the AUD for JPY in Sydney The calculations are as follows;

1 JPY sold in NY gets USD {1/(USD/JPY)ask(N)}=USD(1/111.10)=USD 0.00900 USD 0.00900 to be sold to buy AUD.=.00900X1.6520= AUD 0.014868

Sell this AUD for JPY=0.014862X68.3=JPY1.0154844=Margin of .00154844.

So by doing this ,for every JPY there is a profit of JPY 0.0154844(say 0.0155) and for 100 Million JPY ,the profit would be JPY 1.55 Million.

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In document Analysis of the interaction between chromosomal replication and transposition mediated by sliding clamps (página 81-91)