Saturday, June 20, 2009

Indonesia’s rupiah completed its biggest weekly drop in seven months and led losses in Asian currencies as overseas investors dumped emerging-market assets on concern a global recovery is stalling.

The Bloomberg-JPMorgan Asia Dollar Index, which gauges the strength of the 10 most-active regional currencies excluding the yen, slumped 0.5 percent this week and Asian stocks slid. Bank of England Governor Mervyn King said a rebound in the U.K. economy may be “protracted” and President Barack Obama said the U.S. will “take a long time to recover.” The Philippine peso was near a seven-week low on concern a widening budget deficit will erode investor confidence.

“The outflow from equities markets in the region is putting downward pressure on Asian currencies,” said Dariusz Kowalczyk, a strategist with SJS Markets Ltd. in Hong Kong. “Add to that the overall strength of the U.S. dollar.”

The rupiah declined 2.9 percent this week to 10,400 per dollar in Jakarta, according to data compiled by Bloomberg. South Korea’s won fell 1.1 percent to 1,268.40, while Malaysia’s ringgit slid 0.9 percent to 3.5360.

The MSCI Asia Pacific Index of stocks dropped 3.8 percent this week, the most since March 6, as investors favored safer bets than emerging-market assets. The ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, has jumped 1.5 percent in the past three weeks.

Mixed Data

Data from the world’s major economies were mixed with some showing signs of a recovery, while others showed a deepening slump. Retail sales in the U.K. unexpectedly dropped in May for the first time in three months, the government said this week, while the Confederation of British Industry said manufacturing export orders slumped to a decade low in June.

The index of U.S. leading economic indicators rose in May for a second consecutive month and a regional factory gauge climbed more than forecast in June. The World Bank this week raised its 2009 growth forecast for China even as the third- largest economy last week reported the biggest monthly slump in its exports on record.

“There’s concern that the rally in global equities is overdone, substantiated by declines in most markets over the last few weeks,” Kowalczyk said.

Public Finances

The peso has dropped 3.1 percent in the past six months, the worst performance among the 10 regional currencies, as the government raised its budget-deficit estimate three times this year. The main tax agency missed its May revenue target, BusinessWorld reported yesterday, citing a person it didn’t identify.

“If this goes on, we may have a possible credit-rating downgrade,” Ricky Cebrero, treasurer of East West Banking Corp. in Manila. “Investors don’t mind a big budget deficit per se. What is worrying is what will stop the government from changing its forecasts again.”

The won fell this week as higher crude oil prices boosted the nation’s fuel bill. The currency traded near a three-week low after U.S. Defense Secretary Robert Gates ordered defensive measures be taken should North Korea attempt to fire a ballistic missile toward Hawaii. The communist state last month tested a nuclear weapon and threatened to attack South Korea.

“There was a steady downward pressure on the won this week,” said Roh Sang Chil, a currency dealer with Kookmin Bank in Seoul. “Nagging concerns about North Korea, albeit not an immediate threat, are adding to the weak sentiment along with foreigners’ stock sales.”

Elsewhere, Taiwan’s dollar declined 0.2 percent this week to NT$32.872 against the U.S. currency and India’s rupee dropped 1.3 percent to 48.255. Thailand’s baht slipped 0.1 percent to 34.15, while Singapore’s dollar weakened 0.3 percent S$1.4563. China’s yuan traded at 6.8362 versus 6.8338 on June 12.

(Bloomberg)

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Saturday, June 20, 2009

India’s inflation is likely to stay in “negative territory” for several months before surging above the central bank’s target early next year, economists say.

The benchmark wholesale-price index fell 1.61 percent in the week to June 6 from a year earlier, the first decline since December 1978. Accelerating inflation later this year and into 2010 will compel the Reserve Bank of India to maintain a “cautious stance” on monetary policy, said Angus To, an economist at BNP Paribas SA in Hong Kong.

“Deflation in wholesale prices should offer scope for the RBI to cut interest rates again in order to offer additional stimulus to the economy,” said To. “However, the stubbornly high food prices will keep the central bank on a more cautious stance, preventing any aggressive action.”

Central bank Governor Duvvuri Subbarao slashed interest rates to record lows since October to help shield India from the worst global recession since the Great Depression. Signs that Asia’s third-largest economy is now recovering prompted Subbarao last month to suggest it might be time to start thinking about reversing “expansionary” policies.

“The Reserve Bank is close to the end of its easing cycle,” said Rohini Malkani, an economist at Citigroup Inc. in Mumbai. “At best one can expect a 25 basis point cut before it starts hiking rates in the second quarter of 2010.”

Other analysts say the central bank’s cycle of interest- rate cuts has already ended and that Subbarao’s next move will be to increase borrowing costs. The governor and his Reserve Bank colleagues next meet to set policy in Mumbai in late July.


(Bloomberg)

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Saturday, June 20, 2009

India’s rupee fell a third week, its longest losing streak since March, as funds sold emerging-market assets on concern the global economic slump isn’t over yet.

The currency reached a two-month low as overseas investors sold more Indian shares than they bought this week after the benchmark Bombay Stock Exchange Sensitive Index, or Sensex, snapped a 14-week winning streak. The rupee also fell on speculation refiners increased dollar purchases, betting crude oil prices will climb from near an almost eight-month high.

“The near-term outlook is a bit bearish for the rupee because of global fundamental factors,” said Ritwij Mahanta, a trader at IndusInd Bank Ltd. in Mumbai. “The oil price movement has pushed up dollar demand and weakened the rupee.”

The rupee fell 1 percent this week to 48.0825 a dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It may decline to 48.35 next week, Mahanta said.

Funds based abroad have sold a net $348 million in the four days to June 17, according to the Securities & Exchange Board of India, reducing this month’s purchases to $945 million. The currency has rallied 5.5 percent this quarter.

The currency gained 0.3 percent today on speculation exporters took advantage of the rupee’s drop to convert overseas earnings.

“Exporters seized this opportunity and reduced part of their dollar holdings seizing negative impact on the rupee,” said Puneet Sharma, chief currency trader at state-owned Allahabad Bank in Mumbai. “The drop in the rupee seems temporary.”

Offshore contracts indicate traders bet the rupee will trade at 48.25 per dollar in a month, compared with expectations for a rate of 47.81 a week ago. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars.

(Bloomberg)

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Saturday, June 20, 2009

European Union leaders spotted the first signs of a “sustainable economic recovery” from the worst recession since World War II and started planning to roll back budget deficits piled up to combat the financial crisis.

The 27 government heads today said the looming end of the slump means it is time to start hatching an “exit strategy.” They also agreed to overhaul financial regulation after banking supervision failed to contain the crisis sparked in the U.S. housing market.

“It is important that consolidation keeps pace with economic recovery,” the leaders said in a statement after a two-day summit in Brussels. “There is a clear need for a reliable and credible exit strategy.”

The EU leaders’ outlook is more upbeat than that struck last week at a meeting of Group of Eight finance ministers, which ended with a statement noting “signs of stabilization in our economies.” U.S. Treasury Secretary Timothy Geithner said at those talks that “it’s too early to shift toward policy restraint.”

The expression of official optimism pushed the euro higher and prompted declines in European government bonds. The currency was up 0.1 percent at $1.3909 at 4:15 p.m. in Brussels.

Extra spending by European governments will pump 5 percent of gross domestic product into the 27-nation economy in 2009 and 2010, helping restore growth after this year’s estimated 4 percent contraction, according to EU forecasts. “The significant measures taken by governments and central banks are contributing to limiting the negative effects of the downturn and helping to safeguard jobs,” according to the statement.


(Bloomberg)

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Saturday, June 20, 2009

More than one-quarter of American states now have unemployment rates higher than 10 percent, and all but two saw a further job-market deterioration in May.

Tennessee and Indiana joined the rank of states, now 13, that have jobless rates exceeding 10 percent, and eight states - - including California, Florida and Georgia -- reached their highest level of joblessness in May since records began in 1976, the Labor Department reported today in Washington.

The figures make it likely President Barack Obama, whose home state of Illinois also passed 10 percent for the first time since 1983, was correct this week in forecasting the national unemployment rate will reach that level this year. With no region escaping the rout, consumers across the country will probably curtail their spending, preventing any boom out of the deepest recession in half a century, analysts said.

“It’s tough everywhere,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Nobody’s really been spared.” The biggest increases in unemployment will be in states most dependent on manufacturing, construction and financial services, he said.

For the country, “unless hiring magically picks up, a 10 percent unemployment rate is pretty much baked in,” Vitner said.


(Bloomberg)

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Saturday, June 20, 2009

KARACHI: State Bank Governor Salim Raza has said that only 0.5 per cent big borrowers are enjoying 72 per cent of banks’ loans, a situation that is highly risky for banks.

Delivering a keynote address at a prize distribution ceremony of the Institute of Bankers Pakistan (IBP) here on Thursday, he cautioned that banks’ loan portfolio was highly skewed towards big-size loans.

He said only 0.5 per cent of total bank borrowers with loan size of more than Rs10 million were using 71.7 per cent of banks’ loan portfolio.

‘This indicates high concentration of risk in the banking sector,’ he said, adding that sensitivity analysis of concentration risk in the sector suggests that the default of the three largest fund-based exposures can cause the aggregate Capital Adequacy Ratio (CAR) to fall below the minimum requirements.

He said the Non-Performing Loans (NPLs) of banks were expected to stabilise with the improvement in macroeconomic fundamentals. The recent macroeconomic pressures, which eventually led to a slowdown in economic growth in FY09, indicate that the increase in NPLs of the banking system is largely of a cyclical nature.

The governor also expressed his concern over the slow economic growth and its implications.

‘Pakistan is currently standing at a juncture where long-term investment in infrastructure is crucially needed to facilitate the process of economic growth,’ he said.

He said the banking sector, which enjoys virtual monopoly in providing financing to all sectors of the economy, can play a contributing role in the development of the debt market.

He said the State Bank was committed to develop and diversify the financial sector in order to enhance its role in supporting the country’s economic growth.

He said the central bank had a crucial role in promoting secondary market trading of debt securities by improving the effectiveness of monetary policy implementation.

He was firm that now the economy was poised for a remarkable turnaround, while the banking sector had a greater role to play in supporting the real sector by meeting its financing needs.

Mr Raza emphasised that banks needed to make concerted efforts to ensure a sustained deposit growth by tapping the un-banked market, increasing financial penetration and facilitating the process of financial intermediation. ‘The sensitivity analysis undertaken at SBP suggests that the banking sector is well placed to withstand credit risk shocks of a modest nature,’ he concluded.


(Dawn)

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Saturday, June 20, 2009

ISLAMABAD: The government has decided to increase the salaries of government employees from grade one to 16 and pensions of retired servants by 20 per cent, federal minister for overseas Pakistanis Farooq Sattar said.

Mr Farooq who is a front line leader of Mutahida Qaumi Movement (MQM) revealed this after meeting Prime Minister Syed Yusuf Raza Gilani and advisor to Prime Minister Shaukat Tarin discuss the Finance Bill 2009-10.

‘On our request, the prime minister directed the concerned authorities to raise the government employees salaries from Grade one to Grade-16 by 20 per cent. Moreover, it was also decided that those government employees would also get 20 per cent raise in pensions who had retired before year 2000,’ he said.

Meanwhile a leader of Awami National Party (ANP) Haji Adeel presented a new formula to parliament, suggesting a 25 per cent raise in the salary of employees of grade one to five, and lowering salaries by one per cent from grade six to 22.

In the recently announced federal budget 2009-10, the government had announced a 15 per cent increase in both salaries of employees and pension of retired government servants.

However, generally the raise is considered insufficient in the wake of recent high inflation.

Flanked by MQM leader Syed Haider Abbas Rizvi, Farooq Sattar told the media that the prime minister was very candid in giving a sympathetic consideration to the MQM’s demands.

‘The PM also assured the delegation that the subsidy on electricity would not be withdrawn at once and rather it would be withdrawn gradually,’ the MQM leader said.

The minister said the prime minister also agreed to withdraw Rs20 paisa tax on Short Message Service (SMS) to give boost to the telecom industry.


(Dawn)

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Saturday, June 20, 2009

ISLAMABAD: Prime Minister Yousuf Raza Gilani announced on Thursday withdrawal of carbon tax on compressed natural gas (CNG) and asked the finance ministry to make transparent the mechanism of its collection on petroleum products.

In a reply to severe criticism by members during the budget debate in the National Assembly, the prime minister admitted that levying of tax on CNG would burden the lower middle class.

Earlier, Muttahida Qaumi Movement (MQM) lawmakers staged a walkout after they were not allowed to speak on the electricity breakdown in Karachi.

Shipping Minister Babar Khan Ghauri led the walkout after he was obstructed by the chair from speaking on a point of order on the breakdown.

He warned that riots could erupt in Karachi if the government did not intervene.

Mr Ghauri said it would be difficult for his party to remain in government if the subsidy on electricity was withdrawn.

The Minister for Water and Power, Raja Pervaiz Ashraf, said a storm had led to a massive tripping of the electricity system, resulting in huge breakdowns which had now been overcome and supply had been restored.


Discussing the budget, PMLN's Khwaja Saad Rafiqq said the accumulated losses of Pakistan International Airlines, the Railways, Pakistan Steel Mills and Pakistan Electric Power Company were far more than the defence budget.

Marvi Memon of the PML-Q alleged that DAP fertiliser had become unaffordable for farmers because its price had increased to Rs2,787 per bag, while it was Rs993 when her party was in power.

She said manufacturing of cars had dropped to 63,084 per annum from 179,814. She accused the government of recruiting PPP ‘jialas’ in all departments by disregarding merit. She alleged that party loyalists were being recruited in place of 650 candidates who had been declared eligible for lecturers’ posts by the Public Service Commission.

Ms Memon alleged that prices of essential goods had increased three-fold and the Water and Power Development Authority’s failure to utilise funds under the Public Sector Development Programme had resulted in massive loadshedding.

Chaudhry Barjees Tahir said that while Rs70 billion had been allocated for the Benazir Income Support Programme, Rs134 billion was being withdrawn in the shape of subsidy on electricity.

Former interior minister Aftab Ahmed Khan Sherpao criticised what he termed overdependence on foreign aid in the budget and said a sprawling Rs722 billion deficit would be met by borrowing.

He said the huge losses incurred by the PIA, the Railways and Wapda were eating into national resources and the problem needed to be addressed to bring the economic situation under control.



(Dawn)

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Saturday, June 20, 2009

LONDON: Sterling rose on Friday, recovering from a one-week low versus the dollar when rising share prices stoked some demand for currencies seen to be higher risk. Friday's gains put the pound on track to end the week in positive territory, recuperating from losses versus the dollar and the euro incurred after weak UK retail sales data on Thursday dampened expectations of economic recovery.

"People are putting some risk back on ... we are seeing quite a good performance from the riskier trades," said Maurice Pomery, managing director at Strategic Alpha in London. Trade in sterling has been volatile this week as investors reassess optimism that the economy may soon recover, a view that was fuelled last week by a batch of firm economic readings.

Figures this week have been mixed, while UK Finance Minister Alistair Darling and Bank of England Governor Mervyn King have both expressed caution about improvements to the economy. By 1344 GMT, sterling traded 0.7 percent higher at $1.6445 as UK share prices rose nearly 2 percent. It fell on Thursday to $1.6187, its weakest in just over a week, after news of the surprise fall in retail sales. The euro fell roughly half a percent to the day's low of 84.55 pence, according to Reuters data, edging closer to the year's low of 84.19 pence touched earlier in the week.


(Reuters)

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Saturday, June 20, 2009

NEW YORK: The rates banks charge one another for borrowing three-month dollars edged higher on Friday from the previous day's record low fixing, but the rise was far less than some market participants feared after news of planned changes to the setting of Libor rates.

Libor is the benchmark for more than $350 trillion of financial products and the world's most widely monitored interest rate. The equivalent sterling and euro rates clocked fresh all-time lows, according to the latest daily fixings from the British Bankers' Association (BBA).

The three-month euro rate hit 1.22563 percent, declining below the previous nadir struck on May 19, while the cost of borrowing three-month sterling funds was fixed at 1.23938 percent. The fixings attracted investor interest in the wake of the BBA's announcement of reforms to the London interbank offered rates system (Libor).

The BBA said it had no target number for additional banks to join the panels that participate in the fixings, but said it planned changes in the definition of its Libor rates to allow a greater number of firms to take part in the process.

"The increased universe of rate providers will make the Libor fixings more stable and robust and a better indicator of system-wide borrowing costs," said T.J. Marta, chief market strategist at Marta on the Markets, in a research note.

The one-month New York Funding Rate (NYFR) was fixed at 0.33 percent Friday, up from 0.32 percent Thursday, while the three-month NYFR was fixed at 0.6178 percent Friday, down from 0.6306 percent Thursday. Libor rates represent the average cost at which a panel of banks believes funds can be borrowed for a given period of time in a given currency.

"The fear of higher Libor rates that was being spoken of yesterday evening - and was priced into the Eurodollar strip - turned out to be a storm in a teacup," said Peter Chatwell, a market analyst at Calyon in London. The planned change to the BBA rate survey had spurred concern in financial markets that smaller, less credit-worthy banks would enter the Libor rate-setting process, raising the cost of borrowing money, particularly in dollars, for all banks that use Libor.

Those concerns contributed to a 7-basis-point widening in two-year US interest rate swap spreads Thursday and a rise in the dollar against the euro. By 9:15 am EDT (1315 GMT), the two-year US swap spread was at 49 basis points, versus around 52 basis points at the intraday peak in New York Thursday.

Chatwell described the worries as overdone, especially in the euro dollar market. Futures had priced in a large jump upward in the Libor rate to as high as 0.88 percent for three-month dollar funds in September, he said. Market watchers were also soothed by what happened to sterling rates, in particular.

"The drop in three-month sterling is particularly interesting, as it looks like a good attempt to break the 1.25 percent resistance point," said one trader in London. Calyon's Chatwell added: "The sterling fixing is the best example of how unlikely it is that Libors will be pushed higher if the panel is enlarged. And it is reassuring to see that some of the banks which are setting higher rates have also reduced their rates."


(Reuters)

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Saturday, June 20, 2009

KARACHI: The rupee managed to recover slightly against the dollar on the interbank market on Friday as it gained three paisa in relation to dollar for buying and selling at 81.10 and 81.15, dealers said. According to some marketmen there is higher demand for dollars by the importers, but supply factor did not allow the rupee to bow down in terms of the greenback.

Amid final Asian trade dollar fell against euro and the Australian dollar trimming the previous day's light gains after reassuring US data supported regional stock markets. But gains in euro and the Aussie were limited as the market has struggled for direction this week, with investors assessing whether a three-month long rally in riskier assets has forgotten ahead of itself while the global economy is still struggling.

Open Market Rates: Downward trend was seen as the rupee shed five paisa in terms of the US currency for buying at 81.05 and 10 paisa for selling at 81.10, they said. The rupee failed to give up weakness against euro, falling 10 paisa for buying at Rs 112.60 and Rs 113.60, they said.

Open Buying Rs 81.05
Open Selling Rs 81.10

Interbank Closing Rates: Interbank Closing Rates For Dollar On Friday.

Buying Rs 81.10
Selling Rs 81.15

(BRecorder)

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Saturday, June 20, 2009

ISLAMABAD: Pakistan Pavilion at Beijing International Tourism Exhibition (BITE), China stunned thousands of visitors by showcasing fascinating tourist products of the country. A colourful inauguration of BITE 2009 was held at the site of the Expo, which was attended by 281 public and private sector tourism organisations from 30 countries and destinations of the World.

A high ranking Pakistan delegation led by Minister for Tourism Maulana Atta ur Rehman was there to exploit three-day event by attracting foreign tourism to enchanting destinations of Pakistan. Other members of Pakistani delegation included: MD PTDC, Amjad Ayub, President of Pakistan Association of Tour Operators and General Manager, Pearl Tours, Nake Nam Karim of Adventure Tours Pakistan and Ghulam Ahmad of Mountain Tours Pakistan, officials of PIA and Tourism Development Corporation of Punjab.

Pakistani delegation attended the event to promote the country as a tourist friendly destination and to project the soft image of the country. It gave information on tourist attractions, distributed literature and marketed country's tourist attracting places to attract maximum number of foreign tourists towards Pakistan.

Pakistan pavilion was decorated professionally with large pictures and loudly appreciated by the visitors and a number of VVIPs. Besides, Minister for Tourism in the Pakistan Pavilion, Vice Mayor of Beijing along with other senior officials and Deputy Minister for Tourism of Syria remained there for sometime and discussed with the minister the matters of mutual interest for promotion of tourism.

The international media representatives also conducted interviews of the minister. The minister on the occasion said participation in such internationally reputed events contributes a lot in dispelling negative propaganda against Pakistan.

He said since China was rapidly emerging as one of the world's largest out bound tourist generating market, Pakistan's participation in such international events would go a long way for promotion of foreign tourism in Pakistan thereby enhancing country's foreign exchange earnings.


(APP)

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Saturday, June 20, 2009

ISLAMABAD: The global economic crisis is also a social crisis in Asia, with an estimated 60 million people remaining mired in poverty due to falling growth rates, an Asian Development Bank executive has said. "The social consequences of the economic crisis are very severe," said Rajat M. Nag, ADB Managing Director General. "That is our biggest concern", a private television channel reported.

Nag said the estimated three percent drop in gross domestic product (GDP) between 2008-9 in developing Asia - excluding Japan, Australia and New Zealand - meant 60 million would fail to emerge from poverty. An extra 10 million people would be undernourished and around 56,000 more children aged under five would die. "Asia will need to sell its products to itself more than it has," Nag said. Developing Asia at present exports 60 percent of its production to Japan, the Eurozone and the United States and "that cannot continue forever."

Asia must boost consumption - an important part of poverty reduction - by saving less and spending more, he said. He said the regional savings rate was very high, largely to compensate for the lack of welfare programmes. "People save for old age, people save for ill health, people save for education," Nag added. "Is it more efficient for people to save individually for what is essentially a social protection network, or is it more efficient to save collectively as a nation".

"If we want to increase consumption, we've got to decrease savings." Service industries should also be encouraged. At present, Nag said, services in Asia are difficult to access because of protectionist or other measures. "The development model for the last 50 years of export-oriented growth which has served Asia well, which we believe was the right one, now needs to be rethought."

Nag also called for greater Asian integration on environmental and infrastructure matters. "The centre of gravity of economic power is shifting to Asia. Asia needs to cooperate and integrate within itself," he said. "It does not mean tomorrow we will have an Asian common market or an Asian common currency but I think the trend is to have greater integration."

Average growth in developing Asia was 6.3 percent in 2008 and the ADB forecasts 3.4 percent this year, rising to six percent next year. "We think we have seen the worst of it," Nag said. But he cautioned that the biggest threat to recovery was "to think of green shoots as more than green shoots" and slowdown on reforms and stimulus measures. "The economic recovery is still very fragile," Nag said.



(APP)

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Saturday, June 20, 2009

KARACHI: The bears has dominated the trading at Karachi Stock Exchange (KSE) Friday as 100-Index lost 12.04 points to close at 7047.64, dealers said.

The turnover volume declined to 96.955 million shares as prices of 98 scrips recorded gains while 131 sustained losses and 27 remained unchanged.

Arif Ali, a dealer at a leading brokerage house said that bears in total control of the market in the first session and Index went below 7000 level.

But some buying started in the second session for a short while and improved prices of leading scrips. However, selling pressure mounted again and off set all the gains and Index closed in the negative zone, he added.

The market capitalization was eroded by about Rs 4.6 billion to Rs 2.088 trillion.

OGDC was the volume leader with a turnover of 12.204 million shares followed by Jahangir Siddiqui Co 9.737 million shares, D G Khan Cement 8.818 million shares, Arif Habib Sec 8.024 million shares and MCB Bank 6.287 million shares.

PTCL closed at 16.53, Arif Habib Sec 28.72, Lucky Cement 57.21, Jahangir Siddiqui Co 24.50, MCB Bank 142.06, D G Khan Cement 27.69, OGDC 75.42 and NBP 64.85.

Nestle Pak recorded the highest gain of Rs 46.25 to close at 971.25 followed by Siemens Pak which moved up by Rs 31 to 1050 while Wyeth Pak dipped by Rs 30 to 1260 and Unilever Pak went down by Rs 22.94 to 1927.06.


(APP)

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Saturday, June 20, 2009

LONDON: The dollar softened against the euro on Friday as investors showed more confidence in world economic prospects and were prepared to move out of the safe-haven US currency.

The single European currency in late day trade rose to 1.4012 dollars from 1.3901 dollars late Thursday in New York.

The dollar was at 96.18 yen against 96.55.

"The euro should continue to climb against the dollar as investor confidence is restored," said analysts at BNP Paribas bank.

They pointed to recent encouraging reports from the United States suggesting that a recovery may be starting to take hold in the world's largest economy.

On Thursday, the Conference Board's index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent in May from the prior month. Most analysts had expected a rise of 1.0 percent.

As chances for a rebound in the United States strengthen, investors are emboldened to take positions in currencies seen as riskier than the dollar, notably the euro.

The euro also drew strength from recent stability on world financial markets, which further encourages investors to venture into currencies apart from the dollar.

"As the level of panic in financial markets is falling, traders are changing gears on buying currencies that attest to strength in the global economy," said Sumitomo Trust and Bank foreign exchange strategist Jitsuo Tachibana.

At the same time, other analysts cautioned that concerns over the health of US public finances, notably the country's massive budget deficit, were likely to cast a shadow over the recent encouraging data.

Washington will issue a record 104 billion dollars in new bonds next week and traders "will be nervously watching for how this jump in supply is absorbed with implications for the dollar and bond yields," NAB Capital strategists wrote in a research note to clients.

The auction comes just after President Barack Obama unveiled a financial overhaul that includes expanding the power of the Federal Reserve to oversee regulation on all risky finance firms or lenders.

Investors will also be waiting for the Fed's monetary policy meeting beginning next Tuesday for clues on the outlook for interest rates.

In London trade on Friday, the euro was changing hands at 1.4012 dollars against 1.3901 dollars late on Thursday, at 134.55 yen (134.23), 0.8466 pounds (0.8508) and 1.5084 Swiss francs (1.5099).

The dollar stood at 96.18 yen (96.55) and 1.0784 Swiss francs (1.0861).

The pound was at 1.6524 dollars (1.6331).

On the London Bullion Market, the price of gold fell to 935.25 dollars an ounce at the fixing from 940.50 dollars an ounce late on Thursday.



(AFP)

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Saturday, June 20, 2009

Hong Kong: Asian stocks moved higher Friday as bargain hunters closed in following a week of sell-offs, while some upbeat data out of the United States also gave markets a fillip. Hong Kong added 0.81 percent and Sydney 0.19 percent, breaking a four-day losing streak for both markets, while Tokyo was 0.85 percent higher. A lack of direction throughout the week, and concerns that the recent rally may have made many shares overpriced helped push regional indexes lower, which in turn led many dealers to move in on Friday. Sentiment was also boosted by a US index of leading indicators that forecasts conditions in the coming months, which surged for the second consecutive month. The Federal Reserve Bank of Philadelphia's index on mid-Atlantic manufacturing activity rose for the fourth month running, in an unexpectedly sharp gain to the highest level since September. The news also sent the Dow Jones up 0.69 percent. TOKYO: Up 0.85 percent. The Nikkei-225 rose 82.54 points to 9,786.26. HONG KONG: Up 0.81 percent. The Hang Seng Index closed up 144.27 points at 17,920.93. The benchmark index was down 5.1 percent this week, but still up 58 percent from the 2009 low of 11,344 hit on March 9. SYDNEY: Up 0.19 percent. The S&P/ASX 200 closed up 7.5 points at 3,899.6. The market rose for the first time in a week that was hit by falls in the resources sector and losses in other markets. SHANGHAI: Up 0.93 percent. The Shanghai Composite Index, which covers A and B shares, was up 26.59 points at 2,880.49. Investors shrugged off share supply worries after Beijing gave the go-ahead for its first IPO in nine months, dealers said. The key index gained five percent this week, breaking 11-month highs, and the upward trend was expected to continue as Beijing is not expected to launch large IPOs until it has tested the market with the smaller offerings. TAIPEI: Up 1.41 percent. The weighted index rose 86.62 points to 6,231.15. SEOUL: Up 0.55 percent. The KOSPI ended up 7.58 points at 1,383.34. Many investors remained on the sidelines due to a lack of strong upward momentum, dealers said. SINGAPORE: Up 1.61 percent. The Straits Times Index jumped 35.98 points to 2,273.18. Bargain hunters helped the market put an end to six days of losses. KUALA LUMPUR: Up 0.48 percent. The Kuala Lumpur Composite Index gained 5.09 points to 1,059.50. BANGKOK: Up 3.25 percent. The Stock Exchange of Thailand (SET) composite index rose 18.55 points to close at 588.98. The rise ended four days of losses. JAKARTA: Up 2.02 percent. The Jakarta Composite Index gained 39.48 points to 1,990.47. MANILA: Down 1.48 percent. The composite index fell 35.96 points to 2,398.30. "The market has been very overbought the last couple of weeks so this correction was expected by investors but it was a bit fast," said Gomer Tan of Regina Capital Development Corp. WELLINGTON: Down 0.50 percent. The NZX-50 fell 13.97 points to close at 2,784.27. MUMBAI: Up 1.80 percent. The 30-share Sensex rose 256.36 points to 14,521.89. (AFP)

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Saturday, June 20, 2009

LONDON: European stock markets closed higher on Friday, with sentiment more positive after better-than-expected US data helped ease concerns over the economic outlook, dealers said.

They said US figures on Thursday showing an improvement in the employment picture and a pickup in a key regional industrial reading bolstered investors after a nervous few days worrying the worst of the slump might not be over.

At the same time, they said the markets are now most likely to consolidate the sharp gains made since early March than race ahead, with any bad news inevitably leading to fresh profit-taking.

In London, the FTSE 100 index of leading shares closed up 1.52 percent to 4,345.93 points. In Paris, the CAC 40 index gained 0.85 percent to 3,221.27 points but in Frankfurt, the DAX edged up 0.04 percent to 4,839.46 points. European dealers said that despite the gains, the tone remained somewhat cautious, with investors wanting to see more sustained evidence showing signs of a recovery.

On Wall Street, the Dow Jones Industrial Average was up 0.28 percent at around 1600 GMT, maintaining the upward momentum sparked by Thursday's economic data.

The "upbeat economic data on manufacturing and unemployment claims is carrying over and the markets are poised to finish out the week on a positive note," Charles Schwab & Co analysts wrote.

US trade was technical, however, dominated by position adjustment to account for the multiple expiry of futures and options contracts on the day which often distorts business.

Briefing.com's Patrick O'Hare noted that volumes have been low over the past two weeks and while this was likely reflected the traditional summer lull, "it has more to do with a wait-and-see attitude now that the 'easy money' has been made in the rally off the March low." Any Further gains will need greater volumes, he added.

"Markets are still debating how to interpret the most recent economic indicators," noted Herve Goulletquer of Calyon.

"The two main issues seem to be the precise timing of the expected sustainable recovery and the current value of market prices relative to this expected timetable." Elsewhere in Europe, Amsterdam rose 1.44 percent, Brussels put on 0.85 percent, Madrid jumped 2.10 percent, Milan added 0.59 percent and Swiss stocks gained 0.83 percent.

In Asian trade, Tokyo closed 0.85 percent higher, Hong Kong rose 0.81 percent and Sydney put on 0.19 percent, finishing in positive territory for the first time in several days as investors welcomed Thursday's US data.


(AFP)

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Saturday, June 20, 2009

NEW YORK: Oil prices fell below 70 dollars on profit-taking on Friday after a brief rally spurred by hopes that the worst may be over for the ailing global economy.

Early gains were also supported by continuing attacks on oil facilities in Nigeria and concerns about political developments in Iran, OPEC's second largest producer, following disputed presidential elections there.

New York's main futures contract, light sweet crude for delivery in July, shed 1.82 dollars from Thursday's close to end at 69.55 dollars a barrel after climbing past 72 dollars.

In London trade, Brent North Sea crude for August delivery dropped 1.87 dollars to 69.19 dollars per barrel.

Traders said prices came under pressure ahead of Monday's expiry of the New York futures July contract.

"It put downward pressure into the close," said Phil Flynn of Alaron Trading.

Positive US data and stronger demand has driven the market in recent days, fueled also by unrest in key oil producing nations.

"We will be going into the weekend with some legitimate geopolitical concerns," said Olivier Jakob, analyst at Swiss-based research group Petromatrix.

"We will need to keep an Iranian risk premium for the weekend and to it we will add a Nigerian risk premium," he added.

Since the recession hit the global economy, concerns about geopolitical issues have rarely featured as a market driver, analysts at JPMorgan Commodity Research said in a note to clients. "But after a muted response to the disputed Iranian elections, and lethargy to ongoing Nigerian disruptions, there seems to be a more significant response," they said.

Iran's supreme leader Ayatollah Ali Khamenei on Friday called for an end to street protests over last week's disputed presidential election, siding with declared winner Mahmoud Ahmadinejad.

Making his first public appearance after daily protests over the official results, Khamenei ruled out any major fraud in the poll and warned that the defeated candidates would be held to account over any violence on the streets.

In Nigeria meanwhile, the country's main militant group said it destroyed early Friday a major pipeline supplying crude oil to Italian oil group Agip's Brass exports terminal.

On Thursday, the Movement for the Emancipation of Niger Delta (MEND) also claimed it destroyed a major crude oil pipeline belonging to Royal Dutch Shell as it stepped up a campaign against foreign oil companies in the country.

Unrest in the Niger Delta has reduced Nigeria's oil output sharply to 1.8 million barrels per day, according to the latest June report of the International Energy Agency, from 2.6 million barrels in 2006.

Oil prices touched multi-year lows of around 32 dollars in December as the economic slowdown crushed demand for energy but they have slowly clawed their way back since then.


(AFP)

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Saturday, June 20, 2009

BEIJING: The Government of Pakistan and China's EXIM Bank have signed a Memorandum of Understanding (MoU) for $700 million to finance the construction of 12 small and medium sized dams. Secretary General to the President, Salman Faruqui, said here on Friday that the credit line would help in the construction of dams and water reservoirs for generation of electricity to local communities in all the four provinces. It would also help irrigate millions of acres of agricultural land, he added.

"This credit line will help us alleviate poverty," the Secretary General said after the MoU signing ceremony at the EXIM Bank. Secretary Economic Affairs Division, Farrakh Qayyum, and Executive of the EXIM Bank of China, Zhu Li, signed the MoU.

WAPDA Chairman, Shakeel Durrani, Pakistan's Ambassador to China, Masood Khan, and senior officials of the Pakistan Embassy witnessed the signing ceremony. The Secretary General said President, Asif Ali Zardari had sent him to China with special instructions to expedite all economic projects under implementation between Pakistan and China.

The Secretary General said the construction of small and medium sized dams and water reservoirs in far-flung areas of the country would help improve living standard of poor people, and provide them employment opportunities.

He pointed out that alleviating poverty was one of the top priorities of the PPP government. He appreciated the EXIM Bank of China for smooth processing of the financial package. The Executive of the EXIM Bank on the occasion referred to the Pakistan-China friendship as a model of friendly relations, and said his bank would continue to extend its support to economic and commercial projects in Pakistan.


(APP)

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Saturday, June 20, 2009

ISLAMABAD: Considerable revision of the budgetary tax proposals is reported to be on the cards with no major economic policy maker in the country willing to take ownership of the budget document as was presented in the National Assembly on June 13, sources told Business Recorder. A closed-door meeting was held in Finance Ministry on Friday.

Participants included Advisor to Prime Minister on Finance Shaukat Tarin, Hafeez Pasha, Saquib Sherani, a member of the panel of economists, Finance Secretary, top officials of Federal Board of Revenue (FBR), representatives of chambers-from Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Sultan Chawla, KCCI President Anjum Nisar, Presidents of RCCI, ICCI, LCCI, PCCI, SCCI and FCCI-, Zubair Motiwala, Zahir Khaliq, AQ Khalil and Javed Bilwani.

The business community had given a 24-hour ultimatum for rectification of anomalies in the aftermath of the budget announcement. "We really do not know who took the controversial decisions in the budget for the business community. We will rectify these decisions through amendments in the Finance Act," an insider quoted Tarin, Hafiz Pasha, Saqib Shirani and Finance Secretary as saying in the meeting.

The participants, who spoke with Business Recorder after the meeting, expressed satisfaction over the progress made during the deliberations, but were of the view that 'there is many a slip between the cup and the lip'. "We cannot become complacent till the government makes a formal announcement in the Assembly through amendment in Finance Act," said one of the chambers' President.

Insiders were of the view that as Tarin had replaced Irfan Nadeem with Sohail Ahmed in FBR, there was a revolt-like situation in the tax collecting agency, which was the main reason for the anomalies in the budget. "The government did not even incorporate agreed proposals in the budget, which indicates that something was wrong at the decision making level," said another president of a chamber.

According to Zubair Motiwala, the government did not agree to undo two decisions-reduction in tax on import stage from the increased level of 4 percent to 2 percent, and 0.5 percent turnover tax. Another major demand, which has been agreed to by the government, was that now tax officers would audit once in a calendar year, rather than the practice of previous years. The government also agreed to rationalise withholding tax on exports. In the budget, withholding tax was increased to one percent from 0.75 percent.


(BRecorder)

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