Friday July 03, 2009

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Friday July 03, 2009

KARACHI: The rates opened on bearish note on the interbank market on Thursday as the rupee lost 15 paisa against dollar for buying at 81.50 and 10 paisa for selling at 81.55, dealers said. The interbank market reopened after observing one-day holiday on account of bank closure, they said.

In the fourth Asian trading dollar edged up from close to three-week lows as the market awaited monthly jobs figures as a guide to recovery in the US economy but also kept a watchful eye on debate about reserve currencies.

Open Market Rates: The rupee retained its overnight level against dollar for buying at 81.25 while it shed 5 paisa for selling at 81.40, dealers said. The rupee fell in terms of euro losing 30 paisa for buying and selling at Rs 113.62 and Rs 114.62, they said.

Buying Rs 81.50
Selling Rs 81.55

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

Open Buying Rs 81.25
Open Selling Rs 81.40

(BRecorder)

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Friday July 03, 2009

NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.

"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.

Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.


(Reuters)

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Friday July 03, 2009

NEW YORK: The US dollar dropped to its lowest in more than three weeks against the euro on Wednesday, pressured by news China has asked to debate proposals for a new global reserve currency at next week's Group of Eight summit. Gains in global stocks as well as improved manufacturing activity data in Europe and China have also hurt demand for the dollar as a safe haven.

But it was the report on China, citing sources that fuelled a steep round of dollar selling, adding to the currency's earlier losses in Asia and London. "This remains an Achilles' heel for the dollar and will be a problem going into the G8 meeting," said Richard Franulovich, senior currency strategist at Westpac in New York.

"I think this is making a mountain out of a molehill and I think China is playing games. The fear mow is that there could be a sharper G8 statement next week on this issue." In late afternoon trading, the euro was up 0.8 percent on the day at $1.4147. It earlier traded as high as $1.4201 in the wake of the China news, its highest since June 5, according to Reuters data.

The ICE Futures' dollar index, a measure of the greenback's value against a basket of six major currencies, fell 0.6 percent to 79.649. Other analysts were also skeptical about the China news. "We are struck by the gap between China's declaratory policy - what they say - and their operational policy - what they do," said Marc Chandler, head of global currency strategy at Brown Brothers Harriman in New York.

What China says sounds like they want to end the dollar's role as the top reserve currency, Chandler said, but the world's third-largest economy has not backed its rhetoric as it continues to accumulate dollars and Treasuries. China remains the biggest holder of US Treasuries with about $763.5 billion in holdings as of April, the latest data available from the US Treasury Department. It has roughly $2 trillion in currency reserves and some estimates from analysts suggested China holds about 65 percent to 75 percent of these in dollars.

Earlier in the session, positive data on manufacturing in Europe and China boosted economic optimism around the world. That helped US stocks and commodity currencies, such as the Canadian and Australian dollars.

That said, a round of mixed US data including readings on the labour, manufacturing and housing sectors, contributed to a bias toward dollar weakness as safe-haven support wanes, analysts said. But they warned that trading would remain volatile ahead of a key US employment report on Thursday. Economists expect the US economy to have shed another 363,000 jobs in June after losing 345,000 in May. The dollar rose 0.3 percent to 96.61 yen while the euro gained 1.1 percent to 136.71 yen.


(Reuters)

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Friday July 03, 2009

WASHINGTON: US employers cut far more jobs than expected last month and the unemployment rate hit a nearly 26-year high of 9.5 percent, underscoring the likelihood of a long and slow recovery from recession. The loss of 467,000 jobs reported by the Labour Department on Thursday was 100,000 more than Wall Street economists had expected and was spread widely across economic sectors.

-- Payrolls fall by surprisingly large 467,000 in June

-- Jobless rate hits 9.5 percent, highest since August 1983

-- Jobless benefit claims fall by 16,000 in latest week

-- May factory orders rise more than expected

The economy has lost 6.5 million nonfarm jobs since the recession began in December 2007 and the unemployment rate has nearly doubled in that time. "It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Boca Raton, Florida.

The Dow Jones industrial average fell 2.0 percent as investors worried that the data darkened the recovery outlook. A later report of a stronger-than-expected increase in US factory orders for May failed to restore confidence.

Prices for US Treasury debt, normally seen as a safe bet during hard times, rose and the dollar fell against the Japanese yen, considered a haven for investors. Also on Thursday, data showed unemployment in the 16-nation euro zone rose to a 10-year high of 9.5 percent in May.

America's June jobless rate of 9.5 percent was up from 9.4 percent in May and was the highest since a matching rate in August 1983. Analysts had expected it to rise to 9.6 percent. Monthly job losses peaked in January at 741,000 and had decreased each month since then until June, an indication that the pace of the economy's deterioration had been slowing.

The unemployment rate has continued to rise. Since the recession started in December 2007, US payroll employment has dropped by a total of 6.5 million. The Labour Department revised figures for April and May to show a net 8,000 fewer jobs were lost in those months than previously reported. The May job losses were revised downward to 322,000, while April losses were revised upward to 519,000.

"The only saving grace is that the decline in payrolls may not be as large as we saw at the start of the year," JVB's Sullivan said. A separate report, however, offered some hope that pressure on the labour market was starting to fade.

The Labour Department said first-time claims for state unemployment insurance benefits fell to 614,000 in the week ended June 27 from an upwardly revised 630,000 the prior week. In another hopeful sign, the number of people still on jobless aid rolls after claiming an initial week of aid fell to just over 6.70 million in the week to June 20 from an upwardly revised 6.76 million a week earlier, only the third week this year that "continued claims" had dropped.

Separately, the Commerce Department reported that orders for US manufactured goods in May rose 1.2 percent, their largest increase in nearly a year, beating analysts' median forecast for a 0.8 percent rise.

Non-defence capital goods excluding aircraft, considered a measure of manufacturing activity, rose 4.7 percent in May following a 3.5 percent fall in April. While June's job losses were spread across all sectors, the steepest decline was in services, which fell 244,000 after a 107,000 drop in May. Professional and business services lost 118,000 jobs, while government employment fell 52,000. Manufacturing was one of the few areas to show a smaller drop in June, down 136,000 after a 156,000 fall in May.

(Reuters)

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Friday July 03, 2009

SYDNEY: Australia posted its largest trade deficit in 12 months Thursday, as softening commodity prices and demand hammered export earnings amid the global economic turmoil, dealers said. The trade deficit almost doubled to 556 million dollars (449 million US) in seasonally adjusted terms in May, up from 282 million in April, the Australian Bureau of Statistics (ABS) said.

Exports plunged five percent over the month, partially offset by a four percent fall in imports. It was the steepest fall since July 2008, when Australia reported a seasonally-adjusted deficit of 717 million dollars, and was more than four times the median market expectation of 125 million. Acting Trade Minister Kim Carr said a sharp fall in contract prices for iron ore and coal of between 35 and 60 percent was to blame for the deterioration in trade.

"While it is disappointing to see the value of exports falling, it is an inevitable consequence of the rapid slowdown in the economies of our major trading partners and the large falls in commodity prices that have occurred," Carr said. "The pleasing thing about today's figures is that volumes for our resource exports are holding up well," he added.

But J.P. Morgan chief economist Steven Walters warned that China - Australia's second-largest trading partner - could be stockpiling commodities, one of its most important sources of income.

"It could be the Chinese think that they've got enough of our raw materials and are therefore not importing as much as they were before," Walters told ABC radio. "If that's the case then that is quite a worrying sign," he added. Exports of coal, coke and briquettes slumped 540 million dollars, or 15 percent, in May, while metal ores and minerals was two percent lower, the ABS said.

Booming Chinese demand for raw materials drove years of stellar growth for mining exports in Australia, underpinning an unprecedented period of prosperity for the country. Canberra has launched stimulus measures worth more than 50 billion dollars (32.5 billion US) to combat the global economic crisis, while the central bank has slashed the cash rate by 425 basis points to 3.0 percent since September.

(AFP)

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MANILA: Asia's recession appears to have touched bottom and the region is likely to be the first to climb out of the global economic slowdown, the Asian Development Bank's chief economist said Thursday. However, ADB's Lee Jong-Wha said it would be difficult for the world's most populous region to return to the high-growth scenarios of 2007 and earlier unless the industrialised world also recovers from a deep recession.

Speaking at a news conference in Manila, Lee said that compared to other regions, Asia - outside of Japan - had mostly managed positive growth throughout the crisis, albeit at lower levels.

He added that the ADB was now seeing stronger numbers in terms of "quarter on quarter industrial production," and concluded that "Asia will see recovery faster than the industrialised countries." Expansionary monetary policies implemented by governments around the region loosened credit and lowered interest rates, helping Asians spend more money to keep local economies ticking over, Lee said.

Meanwhile large countries such as China and India "maintained relatively strong and resilient growth which provided demand for regional exports" from Asian neighbours. "Clearly now we are in the transition from recession to recovery. The question is how fast the recovery will happen," Lee said.

"No one can say for sure." The Manila-based bank said it will update on September 22 its flagship Asian Development Outlook forecasts, which predicted earlier this year that developing Asia will see its economic growth fall to 3.4 percent this year compared to 6.3 percent in 2008. Lee stressed that "the recovery is still not that strong" and that Asian governments must not pursue policies that may damage any green shoots, ensuring they review current stimulus policy once rehabilitation holds.


(AFP)

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Friday July 03, 2009

KUALA LUMPUR: Foreign investment in Malaysia has plummeted this year, Trade Minister Mustapa Mohamed said Thursday after the government announced liberalisation measures aimed at luring investors. "Foreign direct investment for 2008 was 46 billion ringgit (13 billion dollars) and for January to May this year we have only seen 4.2 billion ringgit," Mustapa told reporters.

Wahad Hamid, deputy head of the Malaysian Industrial Development Authority, said the investment climate was extremely tough despite a strong performance by Malaysia in the three previous years. "Last year, total investment was about 62 billion ringgit but this year we are only targetting half of that, about 30 billion ringgit," he told reporters.

Mustapa said he was confident that liberalisation measures announced by Prime Minister Najib Razak this week would help bring in more funds, amid forecasts of a 5.0 percent economic contraction this year. "We are confident that investor sentiment will improve, we are encouraged by all the measures taken by the government," he said.

The liberalisation moves targeted a decades-old policy of positive discrimination for Muslim Malays, which critics say is making Malaysia uncompetitive. Najib scrapped a rule requiring initial public offerings to reserve 30 percent of stock for Malays - who dominate the population of the multicultural nation - and dumped regulatory approval for foreign property purchases.

However, Mohammed Ariff, head of the influential Malaysian Institute of Economic Research, said the measures were poorly timed and would not bear fruit until the global economy recovers. "The liberalisation announcements should have been made in the good times instead of now, as there would have been a lot of responses from foreign investors," he told AFP.

Ariff said that despite hopes for a recovery next year, Malaysia's economy is unlikely to really get back up on its feet until 2012. "To me real recovery is not just positive growth but going back to the growth we are used to, of around six percent, and that is way off - until 2012," he said.

(BRecorder)

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Friday July 03, 2009

MULTAN: Condemning the hike in petroleum products, the business community said that the decision to increase POL prices would further raise the prices of essential commodities and dampen business activities in the country. President of the Multan Chambers of Commerce and Industry, Anis Ahmed Sheikh, in a press statement issued here on Thursday, strongly criticised the government's decision of increasing POL prices.

He said that around 70 per cent of the electricity in the country was generated through thermal sources and the hike would significantly push up power prices. He also said that this state of affairs was not good for the country's economy and would further increase prices of all items, making life for the common man more miserable.

He lamented that whenever POL prices went up in the international market, the government never lost time increasing prices in the domestic market. But when the prices came down, the required relief was not passed on to the masses. He called upon the government to break out of the clutches of donor agencies and the International Monetary Fund (IMF) and make independent decisions in the larger national interest, otherwise, people would lose trust in democracy.

President MCCI, said that raising POL prices, particularly at a time when trade and industry was passing through a difficult phase, was an unwise decision. He said that as a result of the hike, consumers would have to face extremely high prices of commodities, which would further render Pakistani products uncompetitive in the local, as well as international market.


(BRecorder)

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Friday July 03, 2009

BEIJING: Pakistan and China would intensify their efforts to increase bilateral trade through land route, Ambassador Masood Khan said on Thursday. Ambassador Khan who led a delegation to the fifth Central and South Asian Commodity Fair organised by Kashgar prefecture told APP after three day visit to Kashgar.

He said that two more delegations from Pakistan participated in the fair. Syed Ahmed Hussain Shah, NWFP Industries Minister, and Babar Yaqoub Fateh Muhammad, Chief Secretary Northern Areas, led these delegations in the trade fair, which was largely attended by diplomats and delegations of several Central Asian and South Asian countries.

Besides, official delegations, hundreds of Pakistani businessmen participated in the seminar. There were about more than 80 Pakistani exhibitors who established their stalls in the international fair. During his visit, Ambassador Masood Khan said he held in-depth talks with Commissioner of Kashgar Akbar Gopur to explore ways and means to strengthen economic and trade ties between Xinjiang and Northern Areas of Pakistan.

"Border trade right now constitutes merely 5 per cent of the overall trade. Both sides are keen to enhance overall trade and increase the volume of bilateral trade which has immense potential", Ambassador Khan observed.

The border trade takes place through Karakoram Highway (KKH) also known as Pakistan-China friendship highway. Extensive work is being done to repair and upgrade the KKH of the Pakistani side. The repair and upgradation is likely to be completed by 2011-2012, Khan said. "With upgradation of KKH, the volume of trade would increase, the speed of transportation would pick up", the Pakistani Ambassador said.

Ambassador Masood Khan visited Pakistani stalls, mingled with Pakistani businessmen and talked about trade potential between Pakistan and China and how it can further be enhanced.

He also visited Pakistan trade house in Kashgar and addressed a large gathering of Pakistanis. The gathering was hosted by Zahid Traders, a leading Pakistani enterprise doing business in Pakistan, Xinjiang, and Central Asia. Kashgar government also organised a culture evening during, which a popular Xinjiang Singer Muhammad Amin sang Pakistan's national song "Ye mera Pakistan he; ye tera Pakistan he", this made all Pakistanis proud and several of them rushed to the stage to sing and dance with Chinese singer.


(APP)

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Friday July 03, 2009

KARACHI: Pakistan's foreign exchange reserves rose by 70 million dollars to 11.84 billion dollars in the week that ended on June 27, compared with 11.77 billion dollars the previous week, a central bank spokesman said on Thursday. The State Bank of Pakistan's reserves edged up to 8.55 billion dollars from 8.45 billion dollars a week earlier.

Reserves held by commercial banks fell to 3.29 billion dollars from the previous week's 3.32 billion dollars, the spokesman said. Foreign reserves hit a record high of 16.5 billion dollars in October 2007, but fell steadily to 6.6 billion dollars by November last year, largely because of a soaring import bill. Pakistan agreed in November to an International Monetary Fund (IMF) emergency loan package of 7.6 billion dollars to avert a balance of payments crisis and shore up reserves.

(Reuters)

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Friday July 03, 2009

ISLAMABAD: The Federal Board of Revenue (FBR) has admitted that the taxpayers have misused the Universal Self Assessment Scheme (USAS), reflecting serious weakness in the voluntary payment system. According to the FBR latest quarterly review, the misuse of the USAS is evident from the fact that despite increase in number of returns for the last three years, there was 71 percent decrease in the income tax payments made during this period.

Some of the weaknesses in the taxation system need to be addressed immediately. It has been noted that shortfall in direct taxes is mainly due to lesser growth in voluntary payments and withholding taxes. A careful, detailed analysis and monitoring of withholding agents should be envisaged on priority basis. Similarly, it appears that the USAS has been misused by the taxpayers, needs attention through strict audit.

The objectives behind introduction of USAS were primarily to minimise interface between the taxpayer and tax administration, repose confidence in the system and inculcate self-realisation among the taxpayers. The initial years witnessed a success in this system with regard to the voluntary compliance, but during the last couple of years, there has been a poor compliance of taxpayers in this head. The two major factors behind the decline in voluntary payment (VP) are poor tax facilitation and weak audit system. The poor or inappropriate tax facilitation has been the major cause to inculcate self realisation among the taxpayers. Then as a result of weak audit and enforcement, there is little deterrence and check on the taxpayers of the tax authorities.

The overall growth in the VP has been only 9 percent for 2008-2009 as compared to 2007-2008. Further, the comparative analysis of the payments with returns has registered a growth of 65 percent as compared to the previous year. But, surprisingly by comparing the VP collections of 2008-2009 with 2006-07 reveals a different picture, which is quite appalling as it depicts an overall negative growth of 19 percent in VP collection even after two years. The perusal of collection with return when compared with 2006-07 reveals that even in the 2008-09 FBR is still 71 percent deficient of what was collected two years back. In figures the payment with returns was at Rs 47.9 billion during July-March 06-07 to only Rs 14.06 billion during 2008-09, thus yielding a decline of Rs 33.84 billion.

While analysing the growth in the number of returns submitted over the last three years, also does not give us an encouraging figure, thus further pointing towards the weaknesses in the USAS mainly owing to the voluntary payment scheme. The analysis when comparing the returns filed in 2006-07 to 2008-09 reveals an increase of 5.3 percent and 34,079 returns in absolute terms.

The point to ponder is despite the increase in number of returns for the last three years, why there has been a decrease in the payments at 71 percent over three years? One apparent reason is the major decline in the payments received from the corporate sector and secondly the poor check and deterrence through audits, particularly of the corporate entities. The second component of Voluntary Payments ie advance tax has not shown any encouraging growth. As compared to the 2007-08 the growth has been nominal ie only 4 percent, the report added.


(BRecorder)

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Friday July 03, 2009

LONDON (July 03 2009): The Asian Development Bank and the Islamic Development Bank have launched a $500 million Islamic infrastructure fund, manager and adviser CIMB Standard said on Thursday. The two banks said last month they would set up the fund to invest in the 12 countries that are borrowing members of both banks, including Afghanistan, Bangladesh, Indonesia, Kazakhstan, Malaysia, Pakistan and Uzbekistan.

The fund will receive initial commitments of $250 million each from the ADB and IDB, CIMB Standard said in a statement. The fund is the ADB's first Islamic fund. The bank estimates infrastructure needs in Asia to be around $250 billion a year for the next decade.


(Reuters)

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Friday July 03, 2009

ISLAMABAD: The International Monetary Fund (IMF) has requested Pakistani authorities to provide statistics with respect to interest and amortisation payments of major public enterprises, budgetary expenditures, including subsidies, grants, net lending and earthquake-related spending, official sources reported.

The IMF is to review performance of Pakistan's economy from July 3, as scheduled under the 7.6 billion-dollar standby arrangement, for which a team of the Finance Ministry, led by Finance Secretary Salman Siddique will face the Fund's panel in Istanbul, Turkey. The sources said the Pakistani team had been requested to provide details of Federal Board Revenue (FBR) revenue data for June 2009, including a two-year time series with a breakdown of direct taxes into its components.

Major revisions to the taxes, announced on June 13 in the budget, were revised downward a mere five days later, which are estimated to reduce the government revenue by Rs 22 billion. In addition, the government announced a rise in pay and pensions from 15 percent (as announced on June 13) to 20 percent as announced five says later.

The only reduction, announced by the State Minister for Finance and Economic Affairs, was Rs 183 million in the annual allocation for National Accountability Bureau (NAB). The consequent rise in the budget deficit was not noted by the government. It is a foregone conclusion that this raised serious concern within the IMF team dealing with the Pakistan authorities.

Budgetary revenues for all categories, including all non-FBR collected revenue, ie carbon tax and non-tax revenues and external budgetary financing with a detailed breakdown as well as domestic bank and non-bank financing and public debt, will be provided to the IMF team and will be an integral component of the discussions.

The sources said the IMF had also asked the Finance Ministry to provide detailed breakdown of the sub-category of current spending labelled "running of the civil government", separating in particular the wage bill and goods and services, for the FY 2005-06, FY 2006-07 and FY 2007-08, the first three quarters of the FY 2008-09 (actual execution data).

(BRecorder)

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Friday July 03, 2009

SINGAPORE: Oil fell further during Asian trade Friday as investors continued to fret about the state of the US economy where the jobless rate has surged to a 26-year high, analysts said.

New York's main contract, light sweet crude for August delivery, eased 38 cents to 66.35 dollars a barrel.

Brent North Sea crude for August delivery sank 57 cents to 66.08 dollars

"The US employment report was a negative for the oil price," said David Moore, a Sydney-based commodity analyst with the Commonwealth Bank of Australia.

Data released Thursday showed US job losses surged to 467,000 in June, pushing the unemployment rate to a 26-year high of 9.5 percent.

The latest report, seen as one of the best indicators of economic momentum, reversed the improvement seen last month when job losses fell to a revised 322,000.

Since the recession began in the United States in December 2007, the world's biggest economy and also the biggest energy user has lost 6.5 million jobs and the jobless rate has risen 4.6 percentage points.

"Risk aversion returned with a vengeance yesterday after a disappointing US labour market report for June," said Dariusz Kowalczyk, chief investment strategist with SJS Markets trading firm.

Oil prices are likely to remain under pressure until economic data point to a firm turnaround in US economic fortunes, which will in turn lead to stronger energy demand, analysts said.

"Beyond any help arising from equities... crude oil market fundamentals look fragile. No doubt, a rally in equities or a weaker US dollar could support higher oil prices," Merrill Lynch analysts said in a report.

"But anyway you cut it, oil demand is still extremely weak.... In sum, we believe oil prices will struggle to push higher over the next three months," they said.

A weak US unit makes dollar-priced oil cheaper for buyers using stronger foreign currencies and this usually pushes up demand and lifts crude futures prices.



(AFP)

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