JAMNALAL BAJAJ INSTITUTE OF MANAGEMENT

STUDIES

Derivatives and Rish Management

Project Prepared By
Roll No. 16-F-324
Dhaval Shah
Third Year MFM, Semester V

Eurocurrency Markets & Syndicated Credits

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 CONTENTS

Page
Serial No. Topic No.
I. What is Eurocurrency 3
II. Types of Instruments in Euro Market 4
III. Features of Euro-Currency Market: 6
IV. Effects of Euro Currency Market 7
V. The Eurobond Market 8
VI. Sectors of the International Money Markets 9
VII. Humble Beginnings of the Eurocurrency 9
VIII. Comparative Spreads Between Lending and Deposit Rates 11
IX. Creating Eurodollars 11
X. Growth of the Eurocurrency Market 14
XI. Pricing in the Case of One Currency & Two Financial Centres 14
XII. Pricing of Eurocurrency Deposits and Loans 16
XIII. Market Share and Pricing in Competing Offshore Centres 18
XIV. Legal Implications of Eurocurrency 20
XV. Conclusion 22
XVI. Bibliography 22

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What is 'Eurocurrency'
Eurocurrency is currency deposited by national governments or corporations in
banks outside their home market. This applies to any currency and to banks in
any country. For example, South Korean won deposited at a bank in South
Africa, is considered eurocurrency.

Also known as "Euromoney"

BREAKING DOWN 'Eurocurrency'

Having "euro" doesn't mean that the transaction must involve European
countries.

• Eurocurrency is used as a source of short- or medium-term finance,

especially in international trade, because of easy convertibility.
• Eurocurrency does not have to involve either the euro currency or the
eurozone.
• Eurocurrency and Eurobond markets avoid domestic interest rate
regulations, reserve requirements and other barriers to the free flow of
capital.

The Eurocurrency market and its offspring - the Eurobond, Euro commercial
paper, and Euro equity markets - comprise some of the most important financial
innovations of the last 40 years.

• These innovations are examples of unbundling, in this case, separating the

exchange risk of one currency (the US $, for example) from its indigenous
regulatory environment, and combining it with the regulatory climate and
political risk of another financial centre (such as London). The Eurocurrency
and Eurobond markets,
• virtually non-existent until the late 1950s, have grown to become major
centres of activity and in many instances the preferred market for raising or
investing funds.

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• The market for deposits placed under a regulatory regime different than the
regulations applied to deposits used to execute domestic transactions.

Types of Instruments in Euro Market

1. Global Depository Receipts GDR is a negotiable certificate, denominated

in US dollars that represents a non-US companies publicly traded local
currency security, which can be equity instrument / debt instrument. A
company when issues ordinary shares keeps them with custodian /
depository banks against which bank issue Drs to the foreign investors.
GDRs are listed on the Luxemburg stock exchange. These GDRs are
traded freely in the overseas market either on a foreign stock exchange
or in over the counter market or among qualified institutional buyers.
Holders of GDRs participate in the economic benefits like an ordinary
shareholder. But they can not avail voting rights. GDRs are settled
through CEDEL and Euro clear international book entry systems.
Investors may get GDR cancelled any time after a cooling off period of 45
days. When any depository bank receives a request from an investor to
cancel GDR, it gets corresponding underlying security released in favour
of such investor.

2. American Depository Receipts: - ADRs are depository receipts are issued

by a company in USA. In this case, a non-US company deposits its
securities with a custodian bank which in turn informs the depository in
US that ADRs can be issued. The holder of such receipts enjoys same
ownership rights of underlying securities.

3. Eurobonds: - Eurobonds are bonds which are denominated in currencies

other than that of the country in which the bonds are sold. In the Eurobond
market risk of lending is borne directly by the lender whereas in case of
Euro currency market such risk is borne by financial institutions.

4. Euro convertible bonds: - Euro convertible bond is a debt instrument with

an option to convert it into a pre-determined number of equity shares of
the company. It carries a fixed rate of interest. Euro convertible bonds
can be issued with call option and put option. In case of call option, issuer
company can any time call bonds for conversion into equity shares prior
to the date of maturity. Generally, company exercises this option when
share prices reach up to 130% to 150% of conversion price /redemption

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 price. In case of put option, holder of bond has a right to sell back bonds
to the company. In this case usually, issuer company makes payment in
US dollars. Euro convertible bonds are also known as a deferred equity
issue.

5. Euro bonds with equity warrants in case of these bonds, equity warrants
are attached to the bonds. These equity warrant are detachable and can
be traded in market. These bonds carry a coupon rate which is
determined by the market rates.

6. Euro notes: - The traditional function of commercial banks, was to lend

money over the medium term. But now, instead of lending money, they
can go for securitization where they simply commit their resources, under
Euro note issuance facilities, to guaranteeing that it will be available over
the medium term. The actual funds are provided by non-bank investors.
A borrower can raise money by issuing short term Euro notes, with
maturity of 3-6 months. Such Euro notes are negotiable like certificate of
deposits. Thus, they can be placed with non-bank investors. Before going
for Euro notes borrowers must be sure that they will always be able to
find buyers for their notes in the markets. It give rise to so many other
ways e.g. NIF’s (note issuance facilities), RUF’s (revolving underwriting
facilities), MOFF’s (multiple option funding facilities), TRUFs (transferable
revolving underwriting facilities), and BONUS (borrower’s option for notes
and underwritten stand by) and so on.

7. Certificate of deposit:-It is a negotiable instrument evidencing a deposit

with a bank. Whenever investor requires cash, he can easily dispose it in
secondary market. Final holder of Certificate of deposit gets face value
along with the interest on maturity. These are issued in large
denominations. Interest on Certificate of deposit with maturity exceeding
one year, is paid annually rather than semi-annually. Floating rate
Certificate of deposits are also prevalent now a day, where interest rate
is periodically reset.

8. Euro Commercial Papers: - CP is a corporate short term, unsecured

promising note issued on a discount to yield basis. It is redeemable at a
face value on maturity. Its maturity generally does not exceed 270 days.
Issuers usually roll over the issue and use the proceeds from the new
issue to retire the old issue. CP is a cheap and flexible source of funds
especially for highly rated borrowers. It is cheaper than banks Loans. But
generally, these require a backup credit line from a bank ranging from
50% - 100%. Investors in CP consists of money market funds, insurance
companies, pension funds, other financial institutions and corporations
with short term cash surpluses.

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Features of Euro-Currency Market:

1. International Market:
The Euro-currency market is an international market which accepts deposits
and gives credit in currencies from throughout the world.

2. Independent Market:
It is a free and independent market which does not function under the control of
any monetary authority.

3. Wholesale Market:
It is a wholesale market in which different currencies are bought and sold usually
above $ 1 million.

4. Competitive Market:
It is a highly competitive market in which the supply and demand for currencies
depends on interest rate changes of Euro-banks.

5. Short-Term Market:
It is a short-term money market in which deposits in different currencies are
usually accepted for a period ranging from a few days to a year and interest is
paid on them.

6. Inter-Bank Market:
It is an inter-bank market in which the Euro-banks borrow and lend dollars and
other Euro-currencies from each other.

Effects of Euro Currency Market:

Positive Effects:

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1. The expansion of the Euro-currency market has greatly increased
international capital mobility and has helped in easing the global liquidity
problem.
2. It has helped in integrating international capital markets.
3. It has played an effective role in recycling funds from countries having surplus
balance of payments to those having deficit balance of payments.
4. International flows of Euro-currencies have improved economic efficiency by
reducing interest differential among nations.
5. The Euro-currency market has also resolved the problems of countries
whose policy objectives aim at controlling international capital movements by
transferring their currencies from and to Euro-banks.
6. It has helped in financing BOP deficits and surpluses of countries through
lending and borrowing their currencies in exchange for other currencies from
the Euro-currency market.
Adverse Effects:
However, these flows of Euro-currencies have three adverse effects:
First, when the monetary authority of a country is trying to curb inflation through
a restrictive monetary policy, an inflow of short-term capital defeats such a
policy. Again, when there is an outflow of capital and the country is following an
easy monetary policy to combat unemployment, such a policy again becomes
ineffective. This is because the Euro-currency market does not operate under
the regulations of any authority.
Second, Euro-currencies provide an enormous fund of liquid resources which
are used for speculative capital movements. These expose the economies of
the concerned countries to severe strains of sudden and large withdrawals of
credits. Such financial upheavals and disturbances also affect the international
monetary system, especially when the countries involved are not protected by
exchange controls or trade barriers.
Third, according to Milton Friedman, “The Euro-currency market has almost
surely raised the world’s nominal money supply (expressed in dollar
equivalents) and has thus made the world price level (expressed in dollar
equivalents) higher than otherwise it would be.”

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The Eurobond Market:
A Eurobond was once defined as a debt instrument-
(A) underwritten by an international syndicate,
(B) offered for sale simultaneously in many countries.

• Several countries have set up special regulations to permit “Eurocurrency

deposits” on domestic turf. For example, in the US, dollar deposits at
socalled International Banking Facilities (IBFs) are subject to a lower
regulatory burden.
• IBF deposits are tantamount to Euro deposits, but they are available only
to non-residents, and IBF accounts may not be used to conduct
transactions within the US.
• Since the Eurocurrency market has expanded to financial centres outside
of Europe, the term offshore is more appropriate to describe its location.
And we use the term onshore to mean the traditional, domestic
marketplace. The key distinction between offshore and onshore markets
is the regulatory environment, not location.

Sectors of the International Money Markets

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Taxes and Cost factor:

(1) The offshore market is like a parallel market that offers bank
instruments and securities that compete with similar financial products
in the traditional, onshore market.
(2) A second dimension of competition exists in international financial
markets. Securities in the onshore market bear certain regulatory
costs and political risks. If these costs or risks become large, agents
have an incentive to cross into the offshore markets and devise new
securities and institutional structure. Any market can be characterized
by its supply and demand components, which is a useful way to think
about the origins of the Eurocurrency market.

Humble Beginnings of the Eurocurrency:

(1) International commodities were often priced in terms of US dollars. So,
Europeans held balances in US dollars to execute transactions, to act as
a hedge against foreign exchange changes, and to serve as a store of
value. Russian depositors once were reluctant to hold their US $ in
accounts in the US, since Russian owned $ balances had been
impounded by the Alien Property Custodian during World War II. Instead
they deposited their $ in London and Paris with affiliates of state-owned
Russian banks.
(2) Another boost to the market came in 1958 with a general relaxation of
exchange controls throughout Europe and a return to external

9
 convertibility for the £. Private individuals could now hold their US $
earned through international trade rather than being required to sell them
to the central bank.
(3) Borrowers will always prefer to borrow cheaper funds because there is
no risk to them in doing so. The sterling crisis of 1957: The Bank of
England restricted the use of Sterling for financing foreign trade and
external loans. British merchant banks responded with a pragmatic
solution: Use the US $ which was not regulated by the Bank of England
to conduct these transactions from accounts based in London - the
advantage was evident and European banks began to actively solicit $
deposits.

Onshore Banking Regulations Boost the Offshore Market: US Examples

(1970s)
Banking regulations in the US helped to serve up a fresh, continuing supply of
funds to the Eurodollar market. Regulation Q by Federal Reserve: No interest
was allowed on demand deposits, < 1% interest to time deposit < 90 days.
Interest Equalization Tax (IET): excise tax on US purchases of new or
outstanding foreign currencies => raising the price of long-term borrowing in US
=> outlets: Euro$, Eurobond market.
Foreign Credit Restraint Program: set specific limits on the volume of bank
lending that US banks could conduct with foreigners (including foreign
subsidiaries of US multinational firms) => a large group of borrowers were given
strong incentive to investigate the Eurocurrency markets.

Onshore Banking Regulations Boost the Offshore Market: Germany & Swiss
Examples (1970s)
German capital controls: the Bundesbank required foreigners with onshore DM
accounts to place a fraction of their funds in noninterest bearing accounts.
Objective: limit non-resident demand for DM. Result: agents deposited DM
offshore. The German capital controls expired in 1974. Swiss interest rate
penalties: impose heavy interest rates penalties on non-residents with onshore
Swiss franc accounts. The Swiss interest rate penalties were abolished in Dec.
1979.

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Comparative Spreads Between Lending and Deposit Rates in the Eurodollar
Market

Creating Eurodollars:

Adam Smith (an American) holds a $100 deposit with a New York Bank. Smith
decides to open an account in London. He does so by writing a check on his
New York bank, carrying it to London, and depositing it (2). The London bank
accepts the check, open an account for Smith (3), and sends the check for
collection to its New York correspondent. The New York bank deducts $100
from Smith’s account and credits that amount to the London Bank’s nostro (its
own) account (4).

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After Smith’s transaction, there are 100 Euro$ measured by the liabilities of the
London bank. Note also that US $ are cleared and settled in New York. The
London bank may wish to increase its earnings on the $100 above the interest
paid on its nostro account and it can do so by making a loan. Suppose that in
Round 2 David Hume (a Swiss) comes to the London bank for a $100 loan,
shown in Round 2 as the London bank’s asset and a liability for Hume (5).
The London bank issues a check to Hume, which he takes to a Zurich bank for
deposit (6). The Zurich bank accepts the check and sends it to New York for
collection (7). The New York bank debits the London bank’s nostro account and
credits the Zurich bank’s nostro account (8).

After Hume’s transaction, there are 200 Eurodollars - the $100 liability of the
London bank to Smith and the $100 liability of the Zurich bank to Hume. The
liabilities of the New York bank remain at $100. The process of lending and
redepositing could continue until Euromarkets deposits reached: D = R/r R=
initial injection of funds into the Euromarkets, r = fraction of reserves held
against deposits, 1/r = deposit-reserve multiplier

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How much Eurocurrency deposit is eventually created if funds are deposited,
lent, redeposited, relent? Let’s add them up: Original deposit = $ R First lending
= (1 - r) X $ R
Second lending = (1 - r) 2 X $ R
. . .
. . .
. . .
Total Euro$ supply = $ R/r

If r = 0, then in theory, deposit creation within the Euromarkets could go on

indefinitely, creating a huge inverted pyramid of deposits backed by only $100
of base reserves in the New York bank. This certainly presents the image of a
market at risk if Messrs, Smith, Hume, and their friends were to arrive at their
respective banks at the same time to withdraw their funds. This risk is highly
unlikely since nearly all Euro deposits are term deposits which can be withdrawn
only at maturity, rather than demand deposits which can be withdrawn at any
time on short notice.
The multiplier effect in the Eurodollar market comes from the practice of
fractional reserve banking. For every $100 deposit, if a bank holds 10% in
reserve, it can lend out $90 of the initial deposit. This $90 deposit in turn
generates a $9 reserve in the next bank and an $81 loan. This generates
another $81 deposit, an $8.10 reserve in the next bank and a $72.90 loan. The
sum of $100 + $90 +81 + $72.90 + … eventually reaches $1,000, or $100
divided by the percentage reserve.

Growth of the Eurocurrency Market

The Euro-currency market has growth enormously since its inception in 1958.
The principal agencies for collection of data on operations in this market are the
Bank for International Settlements and the Bank of England. Starting with less
than $ 1 billion in 1958, the market has growth to $ 100 billion (net size) by 1972
and further to a few thousand billion (net size) by 1972 and further to a few
thousand billion early in Nineties. About two-thirds to three-quarters of these
funds are in dollars and the rest in various other convertible currencies. In the
seventies, the relative importance of non-dollar currencies had increased due
to the decline in confidence in dollar and the abandonment of the old Bretton
Woods System. The importance of the Bond market has also been growing in

13
recent years. Loans of more than 3 years now constitute a larger portion of total
loans than before.

Pricing in the Case of One Currency & Two Financial Centres

To begin, consider the case of one currency (the US $) and two financial centres
(New York and London). Suppose that in the onshore market, the demand (D)
for funds depends on the required rate of return on available projects, while the
supply (S) of funds depends on individuals’ rates of time preference. The curve
takes on the expected slopes as illustrated in the figure. In the absence of
transactions costs, equilibrium is at point A.

However, banks incur costs in collecting deposits and in servicing loans.

The major categories of costs are:
(1) noninterest-bearing reserves at the Federal reserve,
(2) Federal Deposit Insurance Corp. (FDIC) insurance,
(3) credit review,
(4) asset-liability risk management,
(5) taxes, and
(6) administrative overheads.

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If these costs are summarized by amount X, then the onshore market will reach
an equilibrium with deposit rate R D, lending rate R L, and market size Q, as
shown in the previous Figure.

Where can a Euro$ market fit into this picture? Assume that a new market in
US$-denominated funds opens in London. Americans will supply dollars to the
offshore market only if they are compensated for bearing the extra costs and
risks associated with London. Since Americans can earn R D with minimum
inconvenience and no political risks in the onshore market, the supply curve to
the offshore market (S*) will begin at R D.
Similarly, in the absence of capital controls, no borrower would travel to London
to pay a higher price for funds. Therefore, the demand curve for offshore funds
(D*) must begin at R L, reflecting the unfunded projects along the onshore
demand curve D.

Pricing of Eurocurrency Deposits and Loans

• The relationships among onshore and offshore interest rates are: RL >
RL > RD > RD

• In other words, for US$: New York lending rate (“Prime”)> London
Interbank Offered Rate (LIBOR) >London Interbank Bid Rate (LIBID)> New
York deposit rate

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The offshore $ market exists only if it can collect deposits and service loans at
a profit. We can see that if this cost remains at X, the Eurodollar market will not
exist. However, if the cost of collecting deposits and servicing loans in the
offshore market (X*) is less than in the onshore market, we can determine the
offshore deposit rate R D*, lending rate R L*, and market size Q*

Eurobanks exist because:

(1) earn interest on their voluntary level of reserves,
(2) do not pay FDIC-like insurance,
(3) deal primarily with known, high-quality credits,
(4) use floating interest rate arrangements and maturity matching to minimize
interest rate risks,
(5) often operate in tax havens or under other special tax incentives, and
(6) operate a wholesale business with lower overheads than onshore
operations, we fully expect to find X* << X.

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With X* << X, above Figure shows the normal relationship between onshore
and offshore interest rates. That is: RL > R L* > R D* > R D (9.1) In more familiar
terms, this inequality states that for US$, the New York lending rate (“Prime”) R
L exceeds the London Interbank Offered rate (LIBOR) R L*, which exceeds the
London Interbank Bid Rate (LIBID) R D*, which in turn exceeds the marginal
cost of funds RD (either a certificate of deposit rate or the Federal Funds rate)
of a New York bank.

 Prime rate: Rate banks charge good corporate customers

 London Interbank Offered Rate (LIBOR) offered means asked
 London Interbank Bid Rate (LIBID)
 Fed Funds rate: Overnight loans between banks

Market Share and Pricing in Competing Offshore Centres

Consider the case of one currency (the US dollar) and several offshore centres
(London, Frankfurt, Singapore, and Beijing). In Figure below, we continue to
assume that the demand for dollars offshore is described by D*, which reflects
the underlying set of projects. The supply of funds to each offshore centre
depends on depositors’ assessments of the costs of using the centre –
associated with known taxes and capital controls as well as the inconvenience
of time zone differences – and the risks (of future taxes and capital controls)

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18
In principle, each centre might have its own cost for collecting deposits and
servicing loans. For simplicity, assume that these costs are identical across
centres and equal to 0.25 percent. In Figure, this selection of X* results in a
London deposit rate of 8.00 percent and lending rate of 8.25 percent and a
London market size Q A. If a Frankfurt offshore centre is to develop, it must
offer loans at 8.25 percent to compete with the price charged in London. As a
result, Frankfurt can pay no more than 8 percent on deposits, and it must be
satisfied with a market size of Q B.
A similar story applies to Singapore with a resulting market size of Q C and
Beijing with a market size of Q D. In our example, once the most efficient and
least risky financial centre has set the price of loans, other centres must follow
suit, leaving quantity as the only other variable left to adjust.

If Germany or Singapore were saddled with higher operating cost, they might
be able to set a higher R L* and still attract borrowers. But their loan portfolios
would have higher credit risks than London. Figure also suggests that countries
which depositors view as riskier will need more favourable regulations to lower
their costs and reduce their lending rates.

Legal Implications of Eurocurrency:

CITIBANK, N. A. v. WELLS FARGO ASIA LTD., (1990)

Respondent Wells Fargo Asia Limited (WFAL), a Singapore-chartered bank

wholly owned by a United States-chartered bank, agreed to make two time
deposits in Eurodollars - i.e., United States dollars that have been deposited
with a banking institution located outside the country, with a corresponding
obligation on the part of that institution to repay the deposits in United States
dollars - with Citibank/Manila, a branch of petitioner Citibank, N. A. (Citibank),
which is chartered in the United States. The parties received telexes detailing
the deposits' terms from the money broker who had arranged them. The parties
also exchanged slips confirming the deposits and stating that repayment was to
occur in New York. Citibank/Manila refused to repay the deposits when they
matured because a Philippine government decree prevented it from repaying
them with its Philippine assets. WFAL commenced suit in the District Court,
claiming that Citibank in New York was liable for the funds deposited with
Citibank/Manila. Finding that there was a distinction between "repayment,"
which refers to the physical location for transacting discharge of the debt, and
"collection," which refers to the location where assets may be taken to satisfy
the debt, the court determined that the parties' confirmation slips established an

19
agreement to repay the deposits in New York, but that there was neither an
express agreement nor one that could be implied from custom or usage in the
Eurodollar market on the issue of where the deposits could be collected; that no
provision of Philippine law barred an agreement making WFAL's deposits
collectible outside Manila; that, in the absence of such an agreement, New York
law, rather than Philippine law, applied and required that Citibank be found liable
for WFAL's deposits with Citibank/Manila; and that WFAL could look to
Citibank's worldwide assets for satisfaction of its deposits. The Court of Appeals
affirmed on different grounds. It concluded that the District Court's finding that
the parties had agreed to repay WFAL's deposits in New York was not clearly
erroneous under Federal Rule of Civil Procedure 52(a) and reasoned that,
under general banking law principles, if parties agree that repayment of a
foreign bank deposit may occur at another location, they authorize demand and
collection of the deposit at that location. Thus, it held that WFAL was entitled to
collect its deposits out of Citibank's New York assets.

Court Verdict:

1. The Court of Appeals' factual premise that the parties agreed to permit
collection from Citibank's New York assets contradicts the District Court's
factual determinations, which are not clearly erroneous. o The District Court
distinguished an agreement on "repayment" from one respecting "collection"
and, in quite specific terms, found that the only agreement the parties made
referred to repayment. However, while saying that this finding was not clearly
erroneous, the Court of Appeals appears to have viewed repayment and
collection as interchangeable concepts, not divisible ones. In responding to an
argument that a bank's home office should not bear the risk of foreign
restrictions on the payment of assets from the foreign branch where a deposit
has been placed, unless it has an express agreement to do so, the Court of
Appeals stated that its affirmance of the District Court's order was based on just
such an agreement. Furthermore, to support its holding, the court relied on
authorities that all turned upon the existence, or nonexistence, of an agreement
for collection. o The District Court's findings - that the parties agreed on
repayment, but not collection - were not clearly erroneous. While the
confirmation slips are explicit that repayment would take place in New York,
they do not indicate an agreement that WFAL could collect its deposits from
Citibank's New York assets. In fact, their language seems to negate such an
agreement's existence. The money broker's telexes also speak in terms of
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repayment and do not indicate any agreement about where WFAL could collect
its deposits if Citibank/Manilla failed to remit repayment. Moreover, a fair
reading of the contradictory testimony at trial supports the conclusion that the
parties failed to establish a relevant custom or practice in the international
banking community from which it could be inferred that they had a tacit
understanding on this point.

2. The case is remanded for the Court of Appeals to determine whether, in

the absence of an agreement, collection is permitted by rights and duties
implied by law. On remand, the court must determine which law applies and the
content of that law. It is not a fair or necessary construction of the Court of
Appeals' opinion to say that it relies on state law. Alternatively, if the Court of
Appeals is of the view that the controlling rule is supplied by Philippine law or
by the federal common law rule respecting bank deposits, it should make that
determination, subject to further review deemed appropriate by this Court.
Thus, it is premature to consider the parties' other contentions respecting the
necessity for any rule of federal common law or the pre-emptive effect of federal
statutes and regulations on bank deposits and reserves.

Conclusion:

A well-developed international money market with easy access to a widely

accepted international currencies is deemed desirable because it reduces the
costs of international financial transactions and facilitates international capital
mobility. Two major criticisms are that the Eurocurrency market contributes to
international inflation and that Euro banks have been imprudent in lending to
developing countries. Conclusion is that the conventional credit multiplier model
is not appropriate in studying the market but that there is, however, some
inflationary potential. As for imprudent Euro bank lending, some blame adheres
to the bankers, but extensive international controls are ruled out. Finally, the
advent of floating exchange rates in the 1970s and uncertainty surrounding
United States economic policy has led to considerable uncertainty in
international financial markets. This has been aggravated by volatile short-term
international capital flows fuelled by the efficient Eurocurrency market. In such
an environment India has experienced considerable oscillations in the price of
rupee and has embarked on a programme to establish a flexible foreign
exchange market. Much progress has been made but important changes,
particularly in the forward market, are vital.

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Bibliography:

1. https://www.mbaknol.com/international-finance/eurocurrency-
marketcharacteristics/
2. https://web.stanford.edu/class/msande247s/2009/1103%202009%20po
sting/2009chap09a%20SLIDES%20NCCU.pdf
3. https://scholarship.law.duke.edu/cgi/viewcontent.cgi?referer=https://ww
w.google.co.in/&httpsredir=1&article=1304&context=djcil
4. http://www.indiaessays.com/essays/india/currency/essay-on-the-
eurocurrency-market/1383
5. https://rbi.org.in/scripts/FAQView.aspx?Id=120#Q57
6. Prof Durgesh Tinaikar Notes July-Nov 2018

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