MUMBAI, JAN 1: The State Bank of India (SBI) and ABN Amro Bank today struck a five million euro deal, probably the first inter-bank trade in the world, heralding the arrival of the single currency for the European Monetary Union. The US dollar-euro deal was clinched at an exchange rate of US dollar 1.1740 to an euro, according to foreign exchange (Forex) dealers.According to a dealer, euro value in the inter-bank Forex market was indicated at Rs 49.68/73 to an euro and actual trading would commence only on January four, when European markets will for the first time trade in euro after the Christmas and New Year vacation.Engineering major Larsen & Toubro (L&T) yesterday became the first Indian corporate to borrow in the Europe's new currency. Bank of America arranged a deal on behalf of L&T for 0.5 European currency unit (ECU), which ceased to exist today following the emergence of euro.A Forex dealer said the 0.5 ECUs would be converted and sold in euros when European markets open on Monday. Eurocame into effect on the New Year's day sweeping away monetary borders across 11 participating countries-France, Germany, Italy, Spain, Austria, the Netherlands, Belgium, Luxembourg, Portugal, Finland and Ireland. Three members of the 15-nation European Unionthe UK, Denmark and Sweden-are staying out of the EMU by choice. Greece was unable to join because it was not able to meet the fiscal standards for entering and staying in the euro.Indian banks' nostro accounts (accounts with foreign banks abroad) in the 11 countries could either be re-denominated in euro or continued in the same national currency as would be decided between the banks. SBI and Bank of India (BoI) have already drastically slashed their nostro accounts in euro zone. SBI has brought down its nostro accounts from 27 to 14 and BoI from 23 to just five. Bank of Baroda too would be closing some of its nostro accounts. Euro will replace national currencies of the 11 countries.
