Tuesday June 23, 2009

MUMBAI: The rupee fell to its lowest in a month on Monday, weakened by a fall in share prices and demand for dollars from importers as the US currency strengthened ahead of a policy meeting of the Federal Reserve. The partially convertible rupee ended at 48.62/63 per dollar, off an intraday trough of 48.75, its lowest since May 18, according to Thomson Reuters data.

The rupee ended about 1.1 percent lower than Friday's close of 48.09/10. The local unit has shed more than 3 percent so far in June. "Equities were the key trigger for the rupee to fall today," a trader with a foreign bank said. One-month offshore non-deliverable forward contracts were quoting at 48.72/82, slightly weaker than the spot rate.


(Reuters)

Tuesday June 23, 2009

LONDON: Sterling rallied to its highest since early December against the euro on Monday as the single currency came under selling pressure ahead of the European Central Bank's first one-year refinancing operation. The UK currency later pared gains, however, turning lower on the day as UK equities extended losses to trade down 2 percent, while a survey cast doubt on any turnaround in the UK housing market.

The euro nevertheless remains on course for a quarterly fall of more than 8 percent against sterling which, if maintained, would be its biggest since the euro's inception. The earlier rise against the euro helped sterling to a seven-month high against a basket of currencies, but it fell against the dollar as global growth concerns and jitters before a US Federal Reserve meeting pushed the US currency higher.

The euro fell to a low of 84.01 pence, its weakest since December 1, before recouping the day's losses to trade up 0.3 percent at 84.64 pence at 1451 GMT. The gains against the euro helped propel sterling's trade-weighted index to 84.5, its highest since November.


(Reuters)

Tuesday June 23, 2009

LONDON: The interbank cost of borrowing euros fell to record lows in the runup to the European Central Bank's first one-year refinancing operation, indicating traders expect it to succeed in holding down money market rates. The Long Term Refinancing operation (LTRO) will be announced on Tuesday and allotments will be announced on Wednesday. If the ECB follows the usual pattern, bids will be due by 0730 GMT on Wednesday and the results announced around 0915 GMT.

The euro-denominated three-month London interbank offered rate, Libor, extended last week's decline to a record low of 1.21563 percent at the London fixings, according to the latest daily fixing from the British Bankers' Association. The equivalent sterling Libor rate also eased to a record low on Monday and three-month dollar rates eased.

"The upcoming one-year LTRO from the ECB helped to bring euro and sterling Libor rates lower," said Peter Chatwell, a market strategist at Calyon in London. The offer of 1-year funding at 1 percent from the ECB has grabbed the markets' attention, "hence money market rates are continuing to tend towards the repo rate," he said, adding three-month sterling and euro rates had both broken convincingly below the 1.25 percent level.

Euro zone interest rates will continue to be set at the ECB's monthly policy meetings, but traders expect the long-term refis to influence longer-dated interest rates in the market.

"The key to driving rates lower will be a combination of how much the refi tender will allot as well as how much of those allotted funds will become stored away from sight by banks, and how much will become cash they are willing to lend on," said a dealer in London.

A Reuters poll of traders showed expectations centred on the ECB allotting 300 billion euros in the first 1-year refi and predicted it would be effective in bringingJustify Full down rates at the short end of the money curve. Forecasts for the size of the auction ranged from 60 billion euros to as high as 650 billion.

"The 12-month ECB tender will have the strongest impact in the short end of the curve and should underpin the anchoring of rates," said David Schnautz, a market strategist at Commerzbank in Frankfurt. He expects Eonia fixings to be sharply lower by early next month.

The three-month dollar Libor rate eased on Monday but remained above last week's record low. The London-based dealer predicted it would remain around the 0.61 percent area ahead of Wednesday's Federal Open Market Committee meeting. US benchmark rates are in a range of zero to 0.25 percent. "The shorter-dated dollar fixings are under routine month-end pressure, hence the rises in the shortest instruments like overnight, one week and two-week paper," the dealer said. The spreads of three-month London interbank offered rates over OIS rates for dollar, euro and sterling were unchanged.


(Reuters)


Tuesday June 23, 2009

KARACHI : In the starting session the rupee showed mixed trend against dollar on the currency market on Monday, dealers said. The importers were busy in dollar buying to clear the bills before the end of the out-going financial year, they said. On the interbank market the rupee maintained its weekend levels against dollar for buying and selling at 81.35 and 81.40, they said.

In the first Asian trading yen rose, gaining in particular against euro and Australian dollar in a climate of uncertainty ahead of the Federal Reserve meeting this week and stalling investor confidence in riskier assets. The euro was also under pressure as the market awaited the European Central Bank's first ever one-year refinancing operation on Wednesday aimed at getting banks lending again and reducing the cost of borrowing for banks, firms and consumers.


Open Market Rates: The rupee fell sharply in terms of dollar, losing 20 for buying at 81.30 and 35 paisa for selling at 81.50, they said. The rupee, however, gained 20 paisa versus euro for buying at Rs 112.50 and it also rose by 80 paisa for selling at Rs 113.00, they said

Open Buying Rs 81.30
Open Selling Rs 81.50

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

Buying Rs 81.35
Selling Rs 81.40


(BRecorder)

Tuesday June 23, 2009

FRANKFURT: Lufthansa made headway on Monday on wrapping up its acquisitions of Brussels Airlines and BMI British Midland after it addressed competition concerns voiced by the European Commission. The German flagship carrier obtained permission from EU antitrust authorities to buy Brussels Airlines in a deal worth up to 250 million euros ($347 million) after it agreed to let rivals fly on some of its routes.

Lufthansa will allow new entrants to operate flights from Brussels to Frankfurt, Munich, Hamburg and Zurich. The acquisition will boost Lufthansa's network and give it more premium travellers.

Airlines around the world are looking to merge with or acquire rivals to boost scale and tap into growth regions following falling demand due to the global economic crisis. The world's carriers are expected to lose $9 billion this year, industry body International Air Transport Association said earlier this month, nearly doubling its earlier estimate of $4.7 billion. Lufthansa also said on Monday it has struck a deal with Sir Michael Bishop to acquire his stake of 50 percent plus one share in BMI via holding company LHBD.

LHBD, which is 35 percent-owned by Lufthansa, will buy the stake for around 48 million pounds ($79.1 million) on July 1. In addition, Lufthansa will pay Bishop 175 million pounds to cancel options forcing Lufthansa to buy the stake itself. Those two sums together are considerably less than the 400 million euros media had previously reported that Lufthansa had earmarked for the purchase.

The deal will help Lufthansa expand its presence at Britain's Heathrow airport, where BMI controls more than 11 percent of all the take-off and landing slots. Lufthansa already had a 30 percent minus one share stake in BMI, while Scandinavian airline SAS has 20 percent. "Like we have said before, we want to make an exit," a spokesman for SAS said, adding the company was still in discussions with Lufthansa. "We have awaited news around Bishop and Lufthansa, and I don't think we're going to have any more to say on the topic until that transaction is finished."

Lufthansa said earlier this year it was considering various options for BMI, which ranged from continuing the carrier's operations as they are to selling the company. Media had also speculated Lufthansa could sell BMI's Heathrow slots. The EU Commission, which already cleared Lufthansa's take-over of BMI last month, is now looking into its proposed buy of loss-making Austrian Airlines, with the deadline for that review set for July 1.


(Reuters)

Tuesday June 23, 2009

NEW DELHI: India's national carrier Air India said Monday it plans to slash staff costs by more than 15 percent as it struggles to cope with a cash crunch. A statement from the state-run carrier said it was aiming for a more than 100 million dollar reduction in annual employee salaries, from the 625 million dollars it currently spends.

The company has given an internal committee until mid-July to look at restructuring wage agreements and other bonuses linked to employee performance. "Besides reduction in wage cost, Air India is also looking at improving productivity of employees, (the) elimination of restrictive work practices and reducing wasteful expenditure," the company said. Spokesman Jitendra Bhargava said layoffs were considered a "last resort."

"We are not looking at layoffs at all at the moment," he said. A combination of high fuel prices, fewer passengers and the global financial meltdown have left Air India with an estimated 800 million dollars in losses for the past year and debt of four billion dollars, according to the Centre for Asia Pacific Aviation.

Last week the airline asked its top managers to forgo one month's salary as part of efforts to survive the crisis, just days after delaying the payment of June salaries for regular employees. The management of the struggling state-run airline - which merged with government-run domestic carrier Indian Airlines last year - sent a notice to its employees earlier in the week saying it would defer 73 million dollars in monthly wages until July 15.


(AFP)

Tuesday June 23, 2009

WASHINGTON: Sales of existing US homes likely rose for a second straight month in May as plentiful supplies and low mortgage rates have opened the resale market to a wider range of buyers, according to a Reuters poll. Existing homes probably rose to a 4.81 million annual rate in May, which would be the highest level since October, according to a median forecast of 64 economists polled by Reuters.

Sales notched a 4.68 million annual pace in April. This would also be the first back-to-back rise since August and September 2005, according to the National Association of Realtors. "While sales may not have yet reached an absolute bottom, clearly a bottoming process is underway," Wachovia said in a research note.

Aiding the likely upswing is the rise in pending home sales for three straight months. The data for April released earlier this month showed the biggest monthly gain since October 2001 for pending home sales. The National Association of Realtors will release US existing-home sales data on Tuesday at 10 am (1400 GMT).

The following is a selection of comments from economists. Forecast: 4.68 million units "Existing home sales are being pulled by two forces. Distressed sales and falling house prices are pulling the numbers up in a few states. Job losses are pulling the numbers down in most states. Over the last six months, sales have zigzagged about the 4.6 million mark. For May, we are expecting this patter to continue with flat sales. Going forward, we expect sales to slide further because of the recent rise in mortgage rates and further job losses."


(Reuters)

Tuesday June 23, 2009

TOKYO: Japan said Monday it would complain to the WTO this week over a South Korean plan to tighten safety regulations on lithium-ion batteries, accusing Seoul of protectionism. "We fear that if the new regulations are introduced, a trade barrier would be created against foreign companies," Economy, Trade and Industry Minister Toshihiro Nikai told reporters.

Nikai added that "the government of Japan plans to express its concern" at a World Trade Organisation committee meeting on technical barriers to trade scheduled for Thursday and Friday in Geneva. The fresh trade row came as Japanese Prime Minister Taro Aso and South Korean President Lee Myung-Bak prepared for a summit in Japan Sunday.

Japanese companies hold a 60 percent share in the global market of lithium-ion batteries, which are used in electronics including cellphones, digital cameras and laptops. The new regulations on the production and sale of products using lithium-ion batteries will require certificates from designated South Korean inspectors, according to reports.

South Korea is ready to introduce the rules on July 1, an official at the Korean Agency for Technology and Standards told AFP in Seoul. Violators of the regulations would face up to a one year in jail or a fine of up to 10 million won (7,874 dollars).

The South Korean official, requesting anonymity, dismissed allegations that Japanese producers would face discrimination. "Approval from state inspectors is required for the safety of products," he said, adding that the regulations were simply designed to prevent explosions involving lithium-ion batteries.

Foreign manufacturers fear the new regulatory process, which comes after some batteries have overheated or exploded in recent years, could significantly delay the launch of their products in South Korea. "The criteria for obtaining certification aren't particularly clear," a Japanese government official was quoted as saying by the Yomiuri Shimbun daily. "We're worried that Japanese products are basically being kicked out of the South Korean market."


(AFP)

Tuesday June 23, 2009

WASHINGTON: The World Bank on Monday estimated economic growth in developing countries of 1.2 percent this year, and said that without China and India, output would shrink 1.6 percent. Amid the worst global financial and economic crisis in seven decades, the multilateral institution eight days ago lowered its outlook on global growth, to a contraction of 3.0 percent this year.

It slightly revised the global gross domestic product (GDP) figure Monday, to a 2.9 percent decline. The development lender's preceding forecast, published in late March, put developing countries' annual growth at 2.1 percent, and at zero if China and India were excluded.

In 2010, global growth was projected at 2.0 percent, and that of the developing countries at 4.4 percent, according to the bank. Excluding China and India, the developing countries would grow 2.5 percent. China's economy was forecast to expand 7.2 percent in 2009 and 7.7 percent in 2010, while India's forecast was for 5.1 percent followed by 8.0 percent.

The latest World Bank forecasts on gross domestic product (GDP) - a measure of goods and services output in a country - came in a report, "Global Development Finance 2009: Charting a Global Recovery," published to coincide with a three-day Annual Bank Conference on Development Economics opening Monday in Seoul.

The World Bank expressed concern about the thinning flow of private capital into developing countries, which has fallen nearly by half this year - 49 percent - to 363 billion dollars compared with 707 billion in 2008, after a record 1.2 trillion in 2007. The development lender also projected a 9.7 decline in global trade volume this year, before a 3.8 percent growth rebound in 2010.

"The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction," Justin Lin, World Bank chief economist, said in a statement.

The anti-poverty bank called for "special attention" to "the risk of balance-of-payments crises and corporate debt restructurings in many countries," in order to "avoid another debt crisis as seen in the 1970s and 1980s." That was particularly the case in the hard-hit developing countries in Europe and Central Asia, where GDP was projected to fall 4.7 percent this year, before a slight recovery to 1.6 percent growth in 2010.

A similar pattern of decline and rebound was seen for Latin America and the Caribbean, where a 2.2 percent GDP contraction in 2009 would be followed by a 2.0 percent expansion the next year.

Other regions of the developing world continued to show growth but no contraction. In East Asia and Pacific, GDP was expected to rise 5.0 percent in 2009 and 6.6 percent in 2010, while South Asia would expand 4.6 percent, followed by 7.0 percent. GDP in the Middle East and North Africa was expected to rise 3.1 percent in 2009 and 3.8 percent in 2010.

Sub-Saharan Africa would expand 1.0 percent, then accelerate to a 3.7 percent pace next year. The relative economic weakness in the developing countries after recent years of robust growth heightens the risks of social unrest and deepening poverty, the 185-nation institution said. "To prevent a second wave of instability, policies have to focus rapidly on financial sector reform and support for the poorest countries," said Hans Timmer, director of the bank's Prospects Group.


(AFP)

Tuesday June 23, 2009

MELBOURNE: The world economy will face a crisis in the next two years even bigger than the downturn currently buffeting the global financial system, a respected US forecaster warned Monday. Author Harry S. Dent, who predicted Japan's slide into recession in the 1990s and the present slump, dismissed claims the worst was over for the world economy and that "green shoots" were emerging from the fiscal firestorm.

Dent said the baby-boomer generation was set to cut back on spending, sending the share and property markets into downward spirals that would dwarf the recent recovery. "We're in the middle of a bear market rally," Dent told the Australian Broadcasting Corporation.

He said share markets were likely to continue to gain in the next few months but would fall again towards the end of the year as the global banking system suffered another meltdown, bottoming out in 2011.

Dent said post-war baby boomers in the Western world were spending less as they aged, in a long-term demographic shift similar to that seen by Japan in the 1990s. "Peak spending is age 46, so we've been saying for decades, we're going to have this great, great boom and then around the end of this decade baby boomers are going to peak in spending, prepare for retirement," he said. "(Their) kids are going to leave the nest and the economy's going to slow just like Japan did in the 1990s.

"Japan has already gone through a housing bubble and a peak in generation spending ... their stock market declined for years, housing declined 60 percent, and all the government stimulus could not put Humpty Dumpty together again - that's what we're looking at."

Dent said Australia's proximity to Asia, the world economy's growth hotspot, meant it was likely to experience a less severe downturn than other Western nations. "If I had to sit out the depression in one place in the Western world, it would be Australia," he said. "Your demographic slide is less, your immigration's been stronger and you're on the edge of China and India - they're not turning down due to baby boomer demographics, they've got much growth ahead."


(AFP)


Tuesday June 23, 2009

KARACHI: Pakistan will acquire over Rs 519 billion foreign assistance in the shape of loans and grants for the next fiscal year from international finance institutions and different countries to run its development and non-development program smoothly, sources . They said that every year the government seeks huge foreign assistance to run its development and non-development program without financial hurdles.

"However, for the next fiscal year (2009-10) the federal government is relying more on foreign assistance due to high expenditure and less revenue," they added. They said that the government would be compelled to cut the ever highest Rs 646 billion Public Sector Development Program (PSDP) for next fiscal year if it failed to meet the target of estimated foreign assistance for development and non-development programs.

"Increase in budget deficit would be another option," they added. Sources said that delay in foreign inflows would also raise the pressure on the rupee against dollar. They said that Finance Division has estimated overall Rs 519.704 billion loans and grants (about $6.4 billion at Rs 80 per dollar exchange rate) from external sources, which is Rs 219.313 billion higher than the budget estimates of current fiscal year 2008-09. They said that estimated loans and grants by Finance Ministry for fiscal year 2009-10 are about 73 percent higher than current fiscal year.

For the current fiscal year the ministry had estimated Rs 300.319 billion inflows, while the estimated loans and grants were 39 percent higher than the revised estimates of Rs 374.497 billion for current fiscal year. Planned and non-plan assistance through external resources for development and non-development programs comprise Rs 444 billion loans and Rs 67 billion grants. External loan estimates for development and non-development expenditures stand at Rs 452.450 billion for next fiscal year against Rs 283.776 billion for the current fiscal year, depicting an increase of 59 percent.

Revenue estimates through external grants depict an increase of 310 percent to Rs 67.254 billion in fiscal year 2010 against Rs 16.393 billion in fiscal year 2009. Overall foreign assistance for the next fiscal year comprises by planned resources Rs 510.413 billion and non-planned resources Rs 9.291 billion. Project aid for federal departments is Rs 85.86 billion; Rs 26.923 billion for provinces; Rs 150.645 billion for commodity; Rs 16.385 billion for Wapda; and Rs 10 billion for National Highway Authority.

Under plan resources Asian Development Bank would provide Rs 140.954 billion grants and loans; Australia Rs 1.79 billion; China Rs 12.293 billion; European Union Rs 1.092 billion; European Commission Rs 8.027 billion; Eurobond Rs 41.250 billion; Germany Rs 5.66 billion; France Rs 8.9 billion; International Bank for Reconstruction and Development (World Bank) Rs 2.9 billion; International Development Association Rs 49.96 billion; Islamic Development Bank Rs 59.28 billion; and Iran Rs 10.89 billion.

Italy would provide Rs 4.71 billion as loans and grants under plan resources; International Fund for Agriculture Development Rs 950 million; Japan Rs 41.307 billion; Korea Rs 7.93 billion; Kuwait Rs 3.831 billion; Norway Rs 50 million; Netherlands Rs 2.64 billion; New Zealand Rs 18.9 million; Saudi Arabia Rs 34.88 billion; Spain Rs 872 million; Sweden Rs 165 million; Turkey Rs 3.3 billion; UAE Rs 10.39 billion; UK Rs 11.289 billion; United Nation Development Programme Rs 637 million; Uncief Rs 157 million; USA Rs 33.474 billion; World Bank Rs 9.9 billion; World Food Programme Rs 580 million; and Opec would provide Rs 219 million loan in the next fiscal year.


(BRecorder)

Tuesday June 23, 2009

ISLAMABAD: The print media advertising excluding classified advertisements would be liable to federal excise duty in VAT mode. Through amendments in the Finance Bill (2009-10), the government has withdrawn FED on classified advertisements and shop boards to provide relief to common man and small shopkeepers.

The newsprint media is being provided relief to help them in their difficult situation, by exempting import of newsprint from the levy of 16 percent general sales tax. Now, it will be subjected to customs duty of 5 percent only.

Similarly, for classified advertisements, no withholding income tax shall apply for which a separate notification will be issued. These measures will provide relief of about Rs 1 billion to the newsprint sector, enabling it to play its due role in the nation-building process.

In budget 2009-10, the levy of Federal Excise Duty @ 16 percent in VAT mode was proposed on advertisement in newspapers, periodicals, hoarding boards, pole signs, sign boards and shop boards through amendment in Table II of First Schedule to the Federal Excise Act, 2005.



(BRecorder)

Tuesday June 23, 2009

WASHINGTON: Advocating the critical importance of democracy and economic development to defeating terrorists, President Asif Ali Zardari on Monday asked the international community, particularly the Western powers, to support Pakistan with immediate assistance as well as expanded trade to help it address challenges of global implications.

The president underlined the urgency to back Pakistani anti-terror effort with a 'robust economic package' to help the democratic government deliver for its millions of displaced people from Swat and other north-western valleys. In an opinion piece in The Washington Post, Zardari called the internally displaced persons as the latest victims of terror that has afflicted the country in recent years.

'In the battle against international terrorism, we are in the trenches for ourselves but also for the world. We have lost more soldiers, 1,200 of them, fighting the Taliban in Pakistan than all of the countries of Nato have lost, combined, fighting the Taliban in Afghanistan. Thousands of civilians, victims of attacks such as the recent bombing of the Pearl Continental Hotel in Peshawar, have died," he wrote.

At a personal level, Zardari said, 'I lost my wife (former prime minister) Benazir Bhutto, the mother of my children and Pakistan's greatest leader.' He appreciated the expression of support by President Barack Obama's administration but said the European economic powers must join the effort to back Pakistan's crucial struggle against militancy.

'We need immediate assistance. The Obama administration recognises that only an economically viable Pakistan can contain the terrorist menace.' In this respect, Zardari noted that the United States has committed $1.5 billion a year for five years to help stabilise Pakistan's economy, and the House of Representatives and the Senate Foreign Relations Committee have acted decisively to reorient the Pakistani-American relationship towards not just a military alliance but a sustained economic partnership.

'Now, the rest of the world must step up and match the US effort. Pakistan needs a robust assistance package so that we can deliver for the people and defeat the militants. And the rest of the world should again follow the American lead in helping us deal with the millions of internally displaced people who are the most recent victims of terrorism in our nation.'

Concurrently, he underscored, the rich Western countries must give greater access to Pakistani trade and launch preferential trade programmes for it. 'But aid is not enough. In the long term, Pakistan needs trade to allow us to become economically independent.' 'Only such an economically robust Pakistan will be able to contain the fanatics and demonstrate to the 1.5 billion Muslims world-wide that democracy and economic development go hand in hand.'

He applauded the United States' initiative to move forward with the preferential trade program called economic opportunity zones in Afghanistan and the Federally Administered Tribal Areas region of Pakistan. The programme, he said, will remove trade barriers and provide economic incentives to build factories, start industries, employ workers-and give hope to the people.

'This opportunity zone concept should be a model to Europe, as well. Europe must realise that it is in its own self-interest, as the United States has realised, to do everything possible to grow the Pakistani economy and to provide incentives for Pakistani exports to the continent.'

The president faulted the Western capitals for supporting Pakistani dictators in the past at the cost damage to democracy. 'The West, most notably the United States, has been all too willing to dance with dictators in pursuit of perceived short-term goals. The litany of these policies and their consequences clutter the earth, from the Marcos regime in the Philippines, to the Shah in Iran, to Mohammed Zia ul-Haq and Pervez Musharraf in Pakistan.


(APP)


Tuesday June 23, 2009

ISLAMABAD: The government on Monday announced a major relief to exporters by declaring income tax collected on export proceeds as final discharge of liability, reduced withholding tax from four to three percent for industrial importers, abolished 'Carbon Surcharge' on CNG, replaced 16 percent sales tax on import of newsprint with five percent customs duty and abolished 20 paisa Federal Excise Duty (FED) on SMS with increase in FED from 19 to 19.5 percent on services provided by cellular companies.

Winding up the debate on the federal budget in the House, Minister of State for Finance Hina Rabbani Khar said the government has decided to revise the ad-hoc relief allowance for civil employees in BPS 1-16 from 15 percent to 20 percent. This revision would also be applicable to personnel of the Armed Forces in BPS 1-16 and equivalent who were earlier allowed only a 15 percent increase. Moreover, the ad-hoc relief allowance announced for old pensioners who retired ten years ago or earlier is being revised and they would now enjoy the benefit of 20 percent increase in net pensions.

Announcing other relief measures for business community through amended Finance Bill (2009-2010), she said that requirement of NTN or CNIC for sales to unregistered purchasers is being withdrawn; similarly, presenting of NTN for opening of bank account is being made voluntary or as per requirement of the bank concerned. Through another amendment in Finance Bill, the difference in the charge of additional tax on delayed payments and compensation on refund is being reduced to three percent from present about 12 percent.

The concept of third party audit by established and certified Chartered Accountant companies is being introduced. However, it is being ensured in the concept that it does not result in unnecessary harassment of business concerns.

The procedures relating to resolution of tax disputes is being further streamlined and simplified and all such proposals that were considered to be unnecessarily harsh and punitive like conducting raids on business premises without approval of FBR, are being withdrawn.

Sharing details of the tax-related amendments in the Finance Bill, she said that it was being proposed to lower the withholding tax from four percent to three percent for industrial imports to provide relief to manufacturers.

This involves a relief of over RS five billion to the manufacturing sector and would reduce their cost of production. Income tax collected on export proceeds is being made final discharge of liability of the exporters to facilitate export oriented activities and to enable exporters to compete more effectively in the international market.

On the demand of youth and children, additional Federal Excise Duty at the rate of paisa 20 per SMS is being withdrawn. The revenue loss would be compensated by increasing the additional FED on cellular services form 19 percent to 19.5 percent.

She also announced that since the government expects to wind up the National Accountability Bureau within the next three months, the budget for NAB is proposed to be reduced to Rs 183 million to cover 3 month's expenditure. The excess amount would be surrendered.

The government also announced reconstitution of Seventh National Finance Commission (NFC). The first meeting of the NFC would be convened in July 2009. The NFC deliberations would be completed at the earliest and hopefully within three months of the convening of the first meeting, she added.

She said the government has risen the PSDP eighty-five percent to the previous year's development programme, which is a record and would help improve the physical infrastructure and basic amenities of life. She said the government has been able to return back Rs 200 billion to the State Bank.

She said the inflation rate in October 2008 stood at 25 percent has now been reduced to 14.4 percent in May this year while food inflation stood at over 32 percent in October 2008 has also been reduced significantly.

She said the government has initiated Benazir Income Support Programme to check the poverty and allocations of this programme has been doubled and stood at Rs 70 billion. Referring to Minorities, the Minister said five percent quota for minorities in federal services has been fixed.


(BRecorder)

Tuesday June 23, 2009

LONDON: European stock exchanges suffered sharp falls on Monday on renewed fears for the health of the world economy.

The London FTSE 100 index shed 2.57 percent to close at 4,234.05 points while in Paris the CAC 40 lost 3.04 percent to finish at 3,123.25. The Frankfurt Dax fell 3.02 percent to 4,693.40 points.

Elsewhere in Europe there were declines of 2.53 percent in Madrid, 4.17 percent in Milan, 2.05 percent on the Swiss Market Index, 3.14 percent in Amsterdam and 2.47 percent in Brussels.

Late trading in Europe tracked a weak start to the day on Wall Street, where traders fretted over conflicting signals of a recovery in the world's most influential economy.

The Dow Jones Industrial Average at mid-day was down 1.65 percent at 8,399.16 points while the tech-dominant Nasdaq had shed 2.49 percent to reach 1,781.95.

Investors returned to the market Monday nervous ahead of a two-day Federal Reserve policy meeting beginning Tuesday.

They also had their eyes on the upcoming round of quarterly earnings reports and prospects for financial and other reforms.

But the mood was especially dampened by a grim outlook from the World Bank and declining commodity prices led by oil.

"The bulls are losing momentum on Wall Street," said Joseph Hargett of Schaeffer's Investment Research.

He said investors had "little to cheer about" heading into the market Monday, especially with a decision on US monetary policy due out of the Federal Open Market Committee.

The Federal Reserve's comments after the meeting are likely to offer clues on the timing and strength of an economic recovery.

"The lack of conviction right now is rooted in a wait-and-see mentality," said Patrick O'Hare of Briefing.com.

The World Bank meanwhile slashed its outlook for momentum in developing nations, estimating growth at a meagre 1.2 percent this year while warning more measures were needed for a recovery to take hold.

The forecast amounts to steep drops from the previous two years, with developing countries having seen 8.1 percent growth in 2007 and a 5.9 percent expansion in 2008.

European traders took little apparent comfort from a survey showing that firms in Germany, the eurozone's largest economy, were getting over the recession blues and expecting a stabilisation after the turmoil of recent months.

The Ifo institute's business climate index for June rose for a third straight month to reach 85.9 points, well ahead of market expectations for 85.3 points and up from a revised 84.3 points in May.

"The market has seen enough morale indicators," one trader told Dow Jones Newswires. "Now we want results."

In Frankfurt companies that depend heavily on macroeconomic factors were under pressure.

Steel maker ThyssenKrupp fell 5.31 percent to 16.95 euros while auto manufacturers Volkswagen and BMW declined 2.03 percent to 219.45 euros and 4.05 percent to 25.80 euros respectively.

Flag carrier Lufthansa shed 2.73 percent to finish at 8.55 euros after disclosing that it would have to slash costs further if it wanted to turn a profit this year.

In Paris, according to Jean-Bernard Parenti of SwissLife Gestion Privee, "investors took profits in sectors that had been gaining, such as automobiles and mines."

Auto maker Renault plunged 7.86 percent to 24.90 euros after Standard and Poor's lowered its long-term debt rating to BB -- speculative grade -- from BBB-minus.

Elsewhere oil companies suffered from a slide in crude prices. Total fell 3.32 percent to 37.88 euros and Vallourec 1.90 percent to 84.96 euros.



(AFP)

Tuesday June 23, 2009

TOKYO
: The yen firmed against the dollar and euro Tuesday as investors ran for cover on renewed fears that a world economic recovery will remain slow and painful, dealers said.

The euro slipped to 1.3846 dollars in Tokyo morning trade from 1.3856 in New York late Monday. It slumped to 132.13 yen from 132.84. The dollar fell to 95.42 yen from 95.86.

The yen and dollar benefited from safe haven flows after the World Bank on Monday sapped hopes that the global economy would be able to show real signs of strength in the near future.

"Investors exited high-yielding global growth sensitive currencies like the Australian and New Zealand dollars in favour of the 'safe haven' yen and US dollar," wrote NAB Capital strategist John Kyriakopoulos in a note to clients.

In times of economic uncertainty the yen and dollar are considered safer for traders who are more risk averse.

Currency traders took their cues from world stock markets, which "slumped on concerns that any economic recovery will be weak," he added.

The World Bank Monday downgraded its economic growth forecast for developing countries to 1.2 percent this year, and said that without China and India output would shrink 1.6 percent.

China's economy was forecast to expand 7.2 percent in 2009 and 7.7 percent in 2010, while India's forecast was for 5.1 percent followed by 8.0 percent.

"More relevant, in our view, is speculation surrounding the possibility of a slowdown in Chinese import buying of commodities," Barclays Capital analysts said in a report.

"There are already some early signals that Chinese demand is beginning to ebb, so commodity prices will remain highly sensitive to any deterioration in market sentiment," they added. As the worst financial and economic crisis in several decades continues to bite, the Bank nine days ago lowered its outlook on global growth to a contraction of 3.0 percent this year. It slightly revised this up to 2.9 percent Monday.

In 2010, global growth was projected at 2.0 percent, with that of developing countries at 4.4 percent, according to the Bank. Excluding China and India, developing countries would grow 2.5 percent next year, it said.

Meanwhile traders were looking ahead to a two-day Federal Open Market Committee meeting beginning later Tuesday amid concerns over the safety of US debt and for clues to future lending rates policy.


(AFP)


Tuesday June 23, 2009

SINGAPORE: Oil fell sharply to below 67 dollars in Asian trade Tuesday amid conflicting signals about the prospects of an early rebound for the struggling global economy.

A decline in world stocks further weighed on the oil market, while a stronger US dollar prompted traders to lock in profits from a recent rally that saw prices climb past 73 dollars, analysts said.

In morning trade, New York's main futures contract, light sweet crude for delivery in August, tumbled 1.10 dollars 66.40 dollars a barrel. The July contract settled at 66.93 dollars as it expired Monday.

Brent North Sea crude for August delivery dropped 98 cents to 66.00 dollars.

Traders said concerns that a global economic recovery may come later than expected are dampening sentiment, with the sharp fall in US stocks overnight a grim reminder of the hurdles ahead.

Asian stocks were also tumbling Tuesday.

"The main driver of oil has gone beyond traditional measures of just supply and demand and has metamorphisised into a macroeconomic force that at times measures the state of the global recovery and other times becomes a safe haven from the dollar or inflation or systemic risk," said Phil Flynn of Alaron Trading.

The World Bank Monday slashed its forecast for developing nations' economies, estimating growth at 1.2 percent this year while warning more measures were needed for a recovery to take hold.

"General concerns about the economy persist with the World Bank warning that the prospects for the global economy remain unusually uncertain," said Mike Fitzpatrick of MF Global.

Investors also took profit after the dollar strengthened.

A stronger US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, which in turn tends to dampen demand and pull the market lower.

Oil prices plunged from record highs of more than 147 dollars in July 2008 to around 32 dollars in December as the economic slowdown crushed demand for energy -- but the market has since rebounded.


(AFP)