Monday June 29, 2009

KARACHI: Increased budgetary borrowing (by Rs 19 billion) and improved net foreign assets of the banking system (up Rs 16 billion) along with a marginal increase in borrowing for commodity operations (Rs 3 billion) pushed up money supply during the week by Rs 24 billion after netting out the moderating effect of OINs reflecting an increase in other liabilities amounting to some Rs 14 billion.

Overall incremental money supply during FY09 to June 13 thus stood higher at Rs 338 billion, or 7.21 percent, represented by currency in circulation amounting to Rs 220 billion and deposit money amounting to Rs 118 billion. The increase during the week occurred entirely in deposit money, represented by an increase in demand and time deposits. No significant changes were observed in credit utilisation by the corporate sector including both the private sector and the PSEs.

All in all, net domestic assets (NDA) of the banking system, represented by public and private sectors indebtedness to the system's constituents, increased during the week by over Rs 8.5 billion to Rs 536.5 billion. Net foreign assets (NFA) of the banking system, in the meanwhile, improved by Rs 15.7 billion, reflecting lower depletion of foreign assets, which now stood reduced to Rs 198 billion.

The improvement in NFA was in line with the improvement in liquid foreign reserves of the country which surged from $11.515 billion on June 6 to over $11.643 billion on June 13. The surge over the week was shared by an increase of about $101 million in liquid reserves held by the central bank and an increase of about $27 million in liquid reserves held by the scheduled banks.

Among important developments during the week, government borrowing increased by Rs 22 billion to over Rs 600 billion as on June 13, 2009.

Within it, budgetary borrowing increased by Rs 19 billion to Rs 402 billion while borrowing for commodity operations by various government agencies and departments, which is principally for wheat procurement at present, increased by Rs 3 billion to over Rs 200 billion. Break-up of budgetary borrowing showed that almost entire borrowing during the week was made from the State Bank of Pakistan while borrowing from scheduled (mainly commercial) banks rose only by a negligible amount. Government's rising indebtedness to the central bank may pose serious problem for the government when it will come to meet the IMF targets of overall budgetary borrowing and, within it, the downward looking target of borrowing from the central bank. Maybe, the government has to go farther into the already aggressive borrowing made from non-bank elements or seek a benevolent review of the conditionals in view of the on-going operation against the militants in whose success IMF may be as interested as any other stakeholder.

NFA's details for component analytical accounts are available for the month of April 2009. According to this, NFA of the banking system depleted by about Rs 24.6 billion during April.

The entire depletion occurred on account of the State Bank of Pakistan as depletion at scheduled banks was only of a negligible amount. Further analysis of analytical accounts at the central bank showed that net depletion was a result of SBP's incremental claims on the non-residents, which showed an increase of about Rs 44.4 billion, adjusted for SBP's liabilities to the non-residents, which showed a much higher increase, of about Rs 69 billion, during the month.

The claims were in the form of monetary gold, etc, holdings of SDRs, foreign currency, deposits and securities other than shares, whereas liabilities were in the form of deposits, securities other than shares, and loans.


(BRecorder)

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Friday June 26, 2009

MUMBAI: The Indian rupee ended slightly weaker on Thursday, surrendering early gains as the stock market turned negative and as importers bought dollars to meet month-end commitments. The partially convertible rupee ended a choppy session at 48.595/605 per dollar, just below Wednesday's close of 48.56/57. From an early high of 48.46, the rupee fell as far as 48.73.

On Tuesday, it had hit 48.90, its lowest since mid-May. "The month-end demand is also picking up. But stocks remain the main trigger," a senior dealer with a foreign bank, said. The rupee has rebounded from a record low of 52.2 in early March as foreigners bought around $7.5 billion of stocks in three months as the main index rose more the 90 percent.

(Reuters)

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Thursday June 25, 2009

LONDON: The interbank cost of borrowing three-month euros hit a record low on Wednesday after the European Central Bank lent nearly 450 billion euros in 1-year funds, providing a flood of excess liquidity to the market.

The cost of borrowing dollars also marked new lows before the conclusion of a US Federal Reserve meeting where the central bank is expected to hold its target for the federal funds rate - the rate banks charge each other for overnight loans - in the zero to 0.25 percent range.

The ECB said it will lend banks 442.24 billion euros ($612.8 billion) in its first one-year refinancing operation, marking its biggest ever liquidity injection and its latest step to get liquidity flowing in the wake of the financial crisis. Demand was above the expectations of traders in a Reuters poll, who forecast the ECB would allot 300 billion euros, and exceeds the previous record allotment of 348.6 billion in December 2007.

It is also significantly above the minimum required reserves that banks need to raise during the current maintenance period, by some 250 billion euros, according to Tullett Prebon's estimates, and the excess liquidity is likely to put downwards pressure on euro zone rates.

"This will put immediate downward pressure on short-end Eonia rates and drag three-month Euribor down towards the ECB's 1 percent refi rate level, though at a more gradual pace," said Tullett's head of G7 market economics Lena Komileva. The three-month London interbank offered rate for euros fell 2.6 basis points to 1.185 percent.

Overnight index swap rates (OIS) out to the three-month tenor marked new lows, short-dated bond yields also fell and Euribor rate futures rallied. Overnight Libor rates jumped, however, as banks which had scaled back participation in the ECB's weekly tender on Tuesday in anticipation of Wednesday's operation, sought cash to tide them over until the 1-year funds are transferred on Thursday.

The rate was fixed at 0.752 percent on Tuesday and it fell as low as 0.486 percent in May. The tender of 12-month funds slashed demand for the ECB's three-month funds and other shorter-term operations with banks taking just 6.4 billion euros in the ECB's latest three-month tender on Wednesday. London interbank offered rates on three-month dollars fell a third of a basis points to a record low of 0.60438 percent.


(Reuters)

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Wednesday June 24, 2009

KARACHI: The rupee improved with slight gains against dollar on the interbank market on Tuesday, rising three paisa for buying at 81.32 and five paisa for selling at 81.35, money experts said. The rupee may move both ways in the coming days despite the rising demand for dollars, they added.

On the second day of Asian trade dollar extended losses against yen Tuesday to hit its lowest point this month, as investors continued to cut bets on riskier assets and bought back yen against other major currencies. The dollar fell as low as 94.98 yen on trading platform EBS, its lowest since June 1, before trading at 95.06 yen, down 0.8 percent on the day.

Open Market Rates: The rupee extended its decline against dollar for the second day as it shed 10 paisa against dollar for buying at 81.40 and 40 paisa for selling at 81.90, they said. The rupee, however, maintained its firmness against euro, rising 90 paisa for buying at Rs 111.60 and it also rose by 80 paisa for selling at Rs 112.10, they said.

Open Buying Rs 81.40
Open Selling Rs 81.90

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

Buying Rs 81.32
Selling Rs 81.35

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Tuesday, June 16, 2009

The Bank of Japan said the nation’s worst recession since World War II is easing after exports improved and industrial output rose the most in 56 years.

“Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening,” the bank said in a statement in Tokyo today, after leaving the overnight lending rate at 0.1 percent. “In the coming months, Japan’s economy is likely to show clearer evidence of leveling out over time.”

Governor Masaaki Shirakawa may signal later today that it’s too soon to consider unwinding the bank’s policies of buying corporate debt and providing lenders with ample funds because the economy remains fragile. The yen rose, worsening the outlook for exporters, and stocks slumped the most in more than two months on concern a global recovery may be delayed.

“The BOJ is still cautious about the prospects for the economy and is still far away from an exit,” said Masaaki Kanno, chief economist in Tokyo at JPMorgan Chase & Co., who used to work at the central bank.

Japan’s currency gained 1.6 percent to 96.27 per dollar at 3:41 p.m. in Tokyo from 96.84 late yesterday. The Nikkei 225 Stock Average slumped 2.9 percent, the biggest drop since March 30, as a report on New York manufacturing damped optimism for a U.S. recovery.

The central bank said there are “continued high downside risks” facing Japan, citing developments in domestic and global financial conditions and the world economy.


(Bloomberg)

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Tuesday June 16, 2009


KARACHI: Habib Bank Limited (HBL) has decided not to participate in the bidding for Royal Bank of Scotland (RBS) Pakistan Limited, and has withdrawn its interest from acquisition. The HBL had expressed interest in acquisition of RBS Pakistan Limited. It was also granted permission by the State Bank of Pakistan (SBP) to conduct due diligence of RBS.

Accordingly, it did conduct due diligence of the information made available to it. In a notice sent to Karachi Stock Exchange (KSE) on Monday, HBL said that after careful consideration it decided not to participate in the bidding of RBS Pakistan Limited, and has withdrawn its interest from its acquisition. Total four parties-HBL, MCB, JSBL and Orascom-had expressed interest to buy RBS Pakistan Limited. However, after withdrawal by HBL, now three remaining parties will participate in the bidding process of RBS Pakistan Limited.


(BRecorder)

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Tuesday June 16, 2009

KARACHI: Governor State Bank of Pakistan (SBP), Syed Salim Raza on Monday urged the corporate sector in the country to introduce more transparency in governance and decision making through greater disclosure of financial and non-financial information to the stakeholders.

He was addressing the 9th Best Corporate Report Awards-2008 ceremony organised by the Joint Committee of the Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost Management Accountants of Pakistan (ICMAP) at a hotel here.

Earlier, the Governor SBP presented the awards/certificates to the representatives of the winning companies under seven sectors.

Syed Salim Raza said that there was still a need for fostering a change in the thinking of the corporate sector as the old system of protectionism cannot work in this global challenging environment.

He said that these awards would also assist the country's economy, which, he said needs sizeable investments in fixed capital.

The government's efforts towards structural reforms and recent geo-political developments in South Asian Region have once again put Pakistan in a position to attract foreign investments and these awards would serve as a catalyst in augmenting this progress, he added.

He urged the professional accountants to work with renewed zeal to enhance the prestige of the profession in the present global economic slowdown.

He said that the Best Corporate Award would certainly take us towards greater transparency in disclosure of annual accounts and to strengthen good governance practices in the corporate sector.

These awards would also narrow the credibility gap, which exists between various stakeholders and the management of the companies, he said.

The Governor SBP expressed hope that the level of reliance by all the stakeholders on the corporate reports and annual accounts will significant grow in the years to come.

He said the cross border exposure of the corporate sector, the exposure in new asset forms such as derivatives and accounting for off-balance sheet exposure are all accompaniments of globalization and liberalization and they make new demands for progress in the area of accounting and regulatory discipline.

He said that in order to maximise dividend of the global opportunity, the corporate sector has to improve the corporate governance even in tightly held ownership companies.

He observed that the modern accounting system underpins the continuity and evolution of the joint stock company, which is the base of all developments in the modern economy.

He said that from the simple-double entry book keeping system, the profession of accounting has evolved itself as a qualitative framework of methods and standards that ensure a company's affairs are well understood to all constituencies.

Syed Salim Raza said the accounting profession is one of the cornerstones that have immensely supported and contributed towards the emergence of modern day economic system and its institutions.

"The world is changing at a rapid pace and the accounting profession must come up to the international standards of accounting and good corporate governance", the Governor SBP said.

He congratulated the Chief Executives, Chief Financial Officers and representatives of all those companies, who have participated in the competition and those who have been selected as winners of the Awards/certificates.

These awards will play a major role in promotion of excellence in all forms in the corporate sector and such events should be held on regular basis to pay tributes to those who have contributed towards the profession, he added.

Earlier, the President ICAP Syed Asad Ali Shah and President ICMAP Hasan Bilgrami also spoke.


(APP)

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Monday, June 15, 2009


Asian stocks declined as the three- month, 47 percent rally in the MSCI Asia Pacific Index raised investor concerns that equities are too expensive relative to earnings prospects.

Sumitomo Mitsui Financial Group Inc., Japan’s second- biggest bank by value, sank 6.4 percent on speculation a share sale will dilute existing holdings. Fortescue Metals Group Ltd., Australia’s No. 3 iron ore exporter, slumped 7 percent as Metal Bulletin reported prices for the raw material fell last week. Malaysian Airline System Bhd. fell 3.7 percent after posting a quarterly loss.

“We’re still in the midst of the worst global recession in the post-war period,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $95 billion. “It’s inevitable that aftershocks will keep coming through.”

The MSCI Asia Pacific Index lost 1.2 percent to 103.88 as of 1:27 p.m. in Tokyo, after ending last week at its highest level since Oct. 2. Japan’s Nikkei 225 Stock Average fell 0.7 percent, while Hong Kong’s Hang Seng Index declined 1.5 percent. Taiwan’s Taiex Index slumped 3.7 percent, the most in Asia today.

Singapore’s Straits Times Index sank 1.6 percent after the government reported the city’s employers had fired more workers last quarter than initially estimated. Australia’s OZ Minerals Ltd., an Australian mining company, fell 4.3 percent as Citigroup Inc. downgraded the stock.

Among shares that rose today, Shenzhen Development Bank Co. jumped 6.7 percent after Ping An Insurance (Group) Co. said it plans to buy a stake. Goodman Group, Australia’s biggest industrial real estate investment trust, surged 10 percent after the Australian Financial Review reported China Investment Corp. will take a stake in the company.

‘Signs of Stabilization’

Futures on the Standard & Poor’s 500 Index fell 0.5 percent. The gauge advanced 0.1 percent to a seven-month high on June 12, as Bank of America Corp. rallied on higher profit estimates and investors bought shares of utilities and phone companies. Treasuries rose for a third day today.

MSCI’s Asian gauge has gained 47 percent from a more than five-year low on March 9 amid speculation the global economy is recovering. The Group of Eight finance ministers said after a meeting in Italy at the weekend that they have started pondering how to reverse the emergency steps they took to rescue the global economy as there are “signs of stabilization.”

The three-month stock rally drove the average valuation of companies on MSCI’s Asia Pacific gauge to 1.5 times the book value of assets at the end of last week. That’s the highest since Sept. 26.

Stock Sale

“The rally in the past few months seems to have come too fast,” said Marco Mak, head of research at Tai Fook Securities Ltd. in Hong Kong. “Some companies may also move to raise some cash from the market, and that could also contribute to the consolidation phase.”

Sumitomo Mitsui fell 6.4 percent to 4,070 yen after the Nikkei reported the company may raise more than expected from a previously announced share sale. Kyosuke Hattori, a spokesman for the bank, said the company hadn’t changed the maximum amount of stock it planned to sell.

Asciano Group, an owner of ports and container terminals in Australia, announced plans today to sell at least A$2 billion ($1.6 billion) in shares to repay debt. The stock, which has tripled in the past three months, was halted in Sydney today.

Fortescue slumped 7 percent to A$3.86. Cash prices for iron ore into China, the world’s biggest buyer, dropped 2 percent from a four-month high in the week ended June 12, according to Metal Bulletin prices.

Best Performers

Materials and energy stocks fell today on declines in metal and oil prices. The two groups are the best-performing of the MSCI Asia Pacific Index’s 10 industries in the past month as investors bet demand for raw materials will pick up as the global economy recovers.

BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, lost 2.1 percent to A$37.26. Rio Tinto Group, the world’s third-biggest mining company, fell 1.5 percent to A$76.07. Cnooc Ltd., China’s largest offshore oil producer, sank 3.3 percent to HK$10.48 in Hong Kong.

Gold futures dropped 2.2 percent in New York on June 12, while copper slid 2.9 percent. Oil fell 1.1 percent in after- hours trading, adding to the previous trading day’s 0.9 percent decline.

OZ Minerals declined 4.3 percent to A$1 as Citigroup Inc. cut the company’s stock rating to “sell” from “hold,” citing risks associated with the startup of a mine.

National Carrier

Utility stocks, the worst performers in this year’s global rally, was one of only two groups that rose today on the MSCI Asia Pacific Index. Utilities trade at the cheapest levels relative to the MSCI World Index since 2004 after falling 8.6 percent in 2009, according to Bloomberg data.

Malaysian Airline, the country’s national carrier, dipped 3.7 percent to 3.14 ringgit after reporting its first quarterly loss in more than two years on lower passenger traffic and wrong-way bets on the price of fuel. The stock was downgraded to “underperform” from “neutral,” Credit Suisse Group AG said in a report today.

Shenzhen Development Bank gained 6.7 percent to 21.33 yuan after Ping An agreed to pay $3.2 billion for a controlling stake. Ping An, China’s second-largest insurer, gained 0.1 percent to 45.15 yuan following a five-day trading halt.

Goodman Group surged 10 percent to 49.5 Australian cents. The company may announce China Investment Corp. will take a A$500 million ($404 million) stake, the Australian Financial Review reported, without saying where the information came from.


(Bloomberg)

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KARACHI: The rupee, despite being under pressure due to heavy payments by importers, somehow managed to reduce losses against dollar during the week ended on June 13, 2009. On the interbank market, the rupee lost 30 paisa against dollar for buying and selling at 81.05 and 81.10.

On the open market, the rupee followed same trend, shedding 10 paisa versus dollar for buying and selling at 81.00 and 81.20, and losing 50 paisa in relation to euro for buying and selling at Rs 113.00 and Rs 114.00. High demand for dollars made the rupee unable to keep its level firm versus both the US and European currencies. It looked that the rupee would not retain its firmness in the near future due to importers' hectic buying to clear payments yet it may resist sharp losses. According to State Bank of Pakistan (SBP) weekly data, foreign exchange reserves were down by 9.8 million dollars to 11.5 billion dollars.

INTERBANK MARKET RATE: On Monday, the rupee, despite being under pressure due to heavy payments before the end of the outgoing fiscal year, gained five paisa against dollar for buying and selling at 80.75 and 80.80. On Tuesday, strong demand for dollars pushed the rupee down which lost 25 paisa for buying and selling at 81.00 and 81.05.

On Wednesday, the rupee drifted lower by 5 paisa in terms of dollar for buying and selling at 81.05 and 81.10. On Thursday, the rupee managed to gain 25 paisa against dollar for buying and selling at 80.80 and 80.85. On Friday, the rupee dropped sharply by 20 paisa versus dollar for buying at 81.00 and 17 paisa for selling at 81.02. On Saturday, the rupee shed five paisa versus dollar for buying at 81.05 and 8 paisa for selling at 81.10.

OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the dollar rose against a basket of currencies extending sharp gains made late last week as US Treasury yields rose to seven month highs, prompting investors to cover short-dollar positions.

Smaller-than-expected job losses in the United States in May sparked concerns on Friday that the Federal Reserve may lift interest rates sooner than previously thought, helping push up Treasury yields. In the second Asian trade, the dollar rose against a basket of currencies but stayed below a two-week high scaled after US jobs data last week stoked expectations for a Federal Reserve rate rise later this year.

The euro dipped but stayed above lows hit on Monday, when ratings agency Standard & Poor's cut Ireland's sovereign credit rating to AA, its second downgrade in three months.

Amid third Asian trade, the dollar was steady against a basket of currencies after sliding the previous day when investors questioned whether the economy had improved enough to justify talk of a Federal Reserve rate hike by the year-end. The dollar rose against the yen as traders cited regional players actively covering short positions with Asian shares extending gains in early trade.

In the fourth session of the Asian trade, the dollar fell against a basket of currencies, paring some gains made after the benchmark US Treasury yield hit its highest point in eight months the previous day.

In the fifth session of the Asian trade, the dollar was steady against other major currencies after falling the previous day when improved US labour market and retail sales figures boosted optimism about the economy, eroding the dollar's allure as a safe haven.

At the week-end, the US dollar rose broadly in New York, rebounding from a sell-off earlier this week, while demand for the euro fell after data showed a plunge in euro zone industrial production. The US dollar is likely to extend this week's drop in the trading week ahead as economic data fails to convince investors the US economy is recovering fast enough to warrant demand for the greenback. Despite a rally on Friday, this week's record auction of $65 billion of Treasury debt and burgeoning fears of inflation are also prompting investor caution on the dollar as they feel they are in uncharted waters regarding US fiscal policy.

Rhetoric about finding a new global reserve currency to challenge the greenback is another slight weight on the dollar before a meeting in Russia of BRIC nations Brazil, Russia, India and China.

OPEN MARKET RATES: On June 8, the rupee shed 10 paisa in terms of dollar for buying at 80.90 while it did not show any change for selling at 81.10. The rupee managed to hold the weekend levels versus euro for buying and selling at Rs 112.50 and 113.50.

On June 9, the rupee managed to hold its overnight levels against dollar for buying and selling at 80.90 and 81.10. The rupee managed to gain Re one in relation to euro for buying and selling at Rs 111.50 and 112.50. On June 10, the rupee shed 5 paisa against dollar for buying and selling at 80.95 and 81.15. The rupee shed Rs 1.60 versus euro to Rs 113.10 and Rs 114.10.

On June 11, the rupee inched up 5 paisa in relation to dollar for buying and selling at 80.90 and 81.10. The rupee adopted the same pattern versus the euro, gaining 60 paisa for buying and selling at Rs 112.50 and Rs 113.50.

On June 12, the rupee shed 5 paisa for buying against dollar for buying at 80.95 while it did not show any change for selling at the overnight level at 81.10. The rupee, however, lost 50 paisa for buying at Rs 113.00 and 114.00. On June 13, the rupee was down by 5 paisa against dollar for buying 81.00 and 10 paisa for selling at 81.20. The rupee rose 30 paisa in relation to the euro for buying and selling at Rs 113.00 and Rs 114.00.


(BRecorder)

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KARACHI: The rupee, despite being under pressure due to heavy payments by importers, somehow managed to reduce losses against dollar during the week ended on June 13, 2009. On the interbank market, the rupee lost 30 paisa against dollar for buying and selling at 81.05 and 81.10.

On the open market, the rupee followed same trend, shedding 10 paisa versus dollar for buying and selling at 81.00 and 81.20, and losing 50 paisa in relation to euro for buying and selling at Rs 113.00 and Rs 114.00. High demand for dollars made the rupee unable to keep its level firm versus both the US and European currencies. It looked that the rupee would not retain its firmness in the near future due to importers' hectic buying to clear payments yet it may resist sharp losses. According to State Bank of Pakistan (SBP) weekly data, foreign exchange reserves were down by 9.8 million dollars to 11.5 billion dollars.

INTERBANK MARKET RATE: On Monday, the rupee, despite being under pressure due to heavy payments before the end of the outgoing fiscal year, gained five paisa against dollar for buying and selling at 80.75 and 80.80. On Tuesday, strong demand for dollars pushed the rupee down which lost 25 paisa for buying and selling at 81.00 and 81.05.

On Wednesday, the rupee drifted lower by 5 paisa in terms of dollar for buying and selling at 81.05 and 81.10. On Thursday, the rupee managed to gain 25 paisa against dollar for buying and selling at 80.80 and 80.85. On Friday, the rupee dropped sharply by 20 paisa versus dollar for buying at 81.00 and 17 paisa for selling at 81.02. On Saturday, the rupee shed five paisa versus dollar for buying at 81.05 and 8 paisa for selling at 81.10.

OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the dollar rose against a basket of currencies extending sharp gains made late last week as US Treasury yields rose to seven month highs, prompting investors to cover short-dollar positions.

Smaller-than-expected job losses in the United States in May sparked concerns on Friday that the Federal Reserve may lift interest rates sooner than previously thought, helping push up Treasury yields. In the second Asian trade, the dollar rose against a basket of currencies but stayed below a two-week high scaled after US jobs data last week stoked expectations for a Federal Reserve rate rise later this year.

The euro dipped but stayed above lows hit on Monday, when ratings agency Standard & Poor's cut Ireland's sovereign credit rating to AA, its second downgrade in three months.

Amid third Asian trade, the dollar was steady against a basket of currencies after sliding the previous day when investors questioned whether the economy had improved enough to justify talk of a Federal Reserve rate hike by the year-end. The dollar rose against the yen as traders cited regional players actively covering short positions with Asian shares extending gains in early trade.

In the fourth session of the Asian trade, the dollar fell against a basket of currencies, paring some gains made after the benchmark US Treasury yield hit its highest point in eight months the previous day.

In the fifth session of the Asian trade, the dollar was steady against other major currencies after falling the previous day when improved US labour market and retail sales figures boosted optimism about the economy, eroding the dollar's allure as a safe haven.

At the week-end, the US dollar rose broadly in New York, rebounding from a sell-off earlier this week, while demand for the euro fell after data showed a plunge in euro zone industrial production. The US dollar is likely to extend this week's drop in the trading week ahead as economic data fails to convince investors the US economy is recovering fast enough to warrant demand for the greenback. Despite a rally on Friday, this week's record auction of $65 billion of Treasury debt and burgeoning fears of inflation are also prompting investor caution on the dollar as they feel they are in uncharted waters regarding US fiscal policy.

Rhetoric about finding a new global reserve currency to challenge the greenback is another slight weight on the dollar before a meeting in Russia of BRIC nations Brazil, Russia, India and China.

OPEN MARKET RATES: On June 8, the rupee shed 10 paisa in terms of dollar for buying at 80.90 while it did not show any change for selling at 81.10. The rupee managed to hold the weekend levels versus euro for buying and selling at Rs 112.50 and 113.50.

On June 9, the rupee managed to hold its overnight levels against dollar for buying and selling at 80.90 and 81.10. The rupee managed to gain Re one in relation to euro for buying and selling at Rs 111.50 and 112.50. On June 10, the rupee shed 5 paisa against dollar for buying and selling at 80.95 and 81.15. The rupee shed Rs 1.60 versus euro to Rs 113.10 and Rs 114.10.

On June 11, the rupee inched up 5 paisa in relation to dollar for buying and selling at 80.90 and 81.10. The rupee adopted the same pattern versus the euro, gaining 60 paisa for buying and selling at Rs 112.50 and Rs 113.50.

On June 12, the rupee shed 5 paisa for buying against dollar for buying at 80.95 while it did not show any change for selling at the overnight level at 81.10. The rupee, however, lost 50 paisa for buying at Rs 113.00 and 114.00. On June 13, the rupee was down by 5 paisa against dollar for buying 81.00 and 10 paisa for selling at 81.20. The rupee rose 30 paisa in relation to the euro for buying and selling at Rs 113.00 and Rs 114.00.


(BRecorder)

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Monday, June 15, 2009


KARACHI : The Sindh government has allocated Rs 1,233 million for the development of industrial sector under the Annual Development Programme (ADP) in the fiscal year 2009-10. The funds earmarked for the industrial development have been increased by Rs 104 million as compared to the last year's allocation of Rs 1,129 million for some 16 new and ongoing schemes, official sources told Business Recorder.

Of these schemes, development work on ten projects is under way, while only six new schemes have been included in the next year's ADP, they added. The sources said Rs 73.884 million has been earmarked for the ongoing schemes of the Sindh Small Industries Corporation, and Rs 150 million for new projects.

Break-up of the allocations is as follows: Rs 34.457 million for extension of Small Industrial Estate, Hyderabad, Rs 11.854 million for establishment of Small Industrial Estate in Ghotki district, Rs 5.639 million for setting up of Small Industrial Estate in Mithi, district Tharparkar. While Rs 21.934 million has been earmarked for the up-gradation of nine Small Industrial Estates in districts Thatta, Sanghar, Dadu, Hala, Badin, Nawabshah, Rohri, Sehwan Sharif, and Mirpurkhas.

The new schemes include extension of Small Industrial Estate in Larkana district with an allocation of Rs 50 million, and Small Industrial Estate Power Looms, Hyderabad with an amount of Rs 100 million. The SITE Ltd will give Rs 100 million as its share.

Rs 29.053 million has been earmarked for the improvement of infrastructural facilities in five estates - SITE Limited in Karachi, Nooriabad, Kotri, Hyderabad and Sukkur. Rs 100 million has been allocated for the development of infrastructure at SITE Benazirabad (Nawabshah).

Rs 100 million for laying of water supply line from Keenjhar Lake, Thatta to SITE Nooriabad. The scheme is being undertaken on 50:50 basis between the provincial government and SITE Ltd. Rs 70 million for the construction of 5.0MGD filter plant at SITE Hyderabad on 50:50 basis between the Sindh government and SITE Ltd. The new scheme includes consultancy service for combined effluent treatment plants in Karachi with an allocation of Rs 20 million.

Rs 100 million has been allocated for water connection to industrial and economic zone at Dhabeji and adjoining areas under public-private partnership. Rs 400 million has been earmarked for establishment of development and management companies for SITE Karachi, Nooriabad, Kotri and SITE Sukkur. Rs 3.557 million has been allocated for the improvement of the office of the deputy director industries and residential accommodation in Hyderabad district, and Rs 14.273 million for up-gradation of Sindh Government Press in district Khairpur.


(BRecorder)

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Monday, June 15, 2009

Foreign direct investment in China fell for an eighth month from a year earlier as companies cut spending to weather the worst economic slump since the Great Depression.

Investment slid 17.8 percent in May to $6.38 billion, the commerce ministry said at a briefing in Beijing today, after falling 22.5 percent in April.

China is relying on government-led spending under a 4 trillion yuan ($586 billion) stimulus plan to revive growth. Investment from abroad may increase when the global economy recovers from what the World Bank forecasts will be a contraction of almost 3 percent this year.

“Companies have just been trying to survive the crisis, I don’t think they’re in the mood for aggressive overseas expansion,” said Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong. “It’s too soon to see a pick-up.”

For the first five months of the year, foreign direct investment declined 20.4 percent.

Premier Wen Jiabao cautioned during a tour of Hunan province on June 12 and 13 that the world economic outlook remains unclear, the government said in a statement on its Web site yesterday. China has yet to establish solid foundations for a recovery, he added.

The Chinese economy expanded 6.1 percent in the first quarter from a year earlier, the slowest pace in almost a decade. Full-year growth may be 7.5 percent, according to a Bloomberg News survey of economists last month.

Overcapacity, Unemployment

The nation’s economic problems include slumping exports, falling profits, industrial overcapacity, unemployment and potential budget shortfalls, the premier said. Positive signs include a bumper summer harvest, gains in retail sales, rebounding industrial output, improving market confidence and faster growth in urban fixed-asset investment, Wen said.

China “mustn’t underestimate” the difficulties and needs to prepare to tackle them over “a long-term,” the premier said.

Foreign-invested businesses account for 30 percent of industrial output, 55 percent of trade and 11 percent of urban jobs, according to the commerce ministry.

China will further relax and streamline procedures for investment from abroad, commerce ministry spokesman Yao Jian said at today’s briefing. The nation wants to create jobs and to attract money for high-technology industries, backward regions, and environmental protection, Yao said.

Tesco Plc , the biggest U.K. retailer, is among foreign companies still expanding in China, saying it will spend an average of 500 million yuan ($73 million) on each of four new shopping centers.


(Bloomberg)

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Monday, June 15, 2009


ISLAMABAD: Pakistan State Oil (PSO), the state owned fuel supplier, has conveyed to power generation companies that due to the current financial crunch owing to the accumulating circular debts it is unable to continue to tender for importing Low Supphar Furnace Oil (LSFO), official sources told Business Recorder. According to latest reports, PSO is owed Rs 80 billion by financially ill power generation companies.

PSO has been maintaining uninterrupted supply of LSFO to Kot Adu Power Company (Kapco) for the past several months. It was only after an exchange of correspondence and exchange of discussions, an amount of Rs 14 billion was transferred to the PSO directly in March 2009 for adjustment against Kapco outstanding dues of Rs 25 billion. Since then no payment has been received and with the continuity of supplies, the outstanding has accumulated to over Rs 20 billion (inclusive of the LSFO-HSFO price differential amount).

Consequently, PSO is unable to make payment to Attock Refineries Limited (ARL) as a result of which supply of local LSFO has been drastically reduced. Presently, the major portion of LSFO supplies is imported. Nonetheless PSO which is facing serious cash flow problems due to non payment by major fuel customers of the power sector totalling Rs 80 billion inclusive of Kapco, is not able to procure the product through imports.

"We apprehend that PSO will not be in a position to go for tendering process of LSFO cargos anymore. We have already conveyed this to WPPO with the request to arrange payment of the outstanding LSFO-HSFO price differential amount immediately," the sources quoted, PSO's top management informing the Petroleum Ministry. The sources said that PSO was of the view that it has taken this stand to save the utility from complete collapse/shut down as it is meeting 75 per cent POL requirements of the country.

"We asked Kapco to pay outstanding dues on most urgent basis enabling the company to make necessary arrangements for import of LSFO failing which we will not be in a position to import any further cargos," the sources quoted the General Manager, Consumer Business of PSO as writing in a letter a couple of days ago.

A couple of months ago, the government had floated Term Finance Certificates (TFCs) to clear a portion of the inter circular debt but the current status of outstanding amount of Rs 80 billion against public sector power generation companies and Kapco is again a source of serious concern. The government has earmarked Rs 30 billion in 2009-10 budget to pay interest on TFCs but this amount is clearly inadequate to deal with the issue of inter circular debt which indicates that the power crisis will intensify in the coming months.



(BRecorder)

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Monday, June 15, 2009

ISLAMABAD: The Advisor to Prime Minister on Finance, Shaukat Tarin, said on Sunday that in case of any delay in receipts of pledges from Friends of Democratic Pakistan (FODP) Pakistan has lined up commitment of $4 billion from the International Monetary Fund (IMF).

Addressing the post-budget news conference here, he said that FODP forum has been requested to give money for social sectors so that the growth-oriented policy could be pursued and implemented in true spirit through financial resources available with the country. He said that the World Bank, the Asian Development Bank, and Islamic Development Bank (IDB) would give $4.80 billion in the next two years. An assistance of $5.80 billion is expected from FODP forum in the same period.

"After achieving targets of economic stabilisation plan, the economy is poised to go for sustainable, equitable and job creating growth. The current account deficit and fiscal deficit are well under control.

The budget 2009-10 is focused on agriculture and manufacturing with agenda of enhancing productivity level through improvements to human capital base and physical infrastructure and ensure availability of cost effective energy in the country.

Shaukat said that during 2008-09 the response of this government was phasing out of the subsidies and sustaining the budgetary resources. He said that the expenditures were rationalised through a process of prioritisation of government development schemes to reduce budget deficit.

He said in this regard development expenditures were reduced and went down by Rs 120 billion. He added that SBP followed a tight monetary policy to reduce the aggregate demand and to bring down inflation. There were adjustments in petroleum prices and electricity prices to reduce burden on the budget, he added.

He said that net borrowing from SBP as of October was Rs 252 billion to Rs 258 billion. "By March it had been reduced to Rs 58 billion, which means we have started paying back to the SBP rather taking from it".

He said that import of non-essential items was curtailed by tariff adjustments to reduce the trade and current account deficits. He said that fiscal deficit has remained on target which means it has come down from 7.6 percent in 2007-08 to 4.3 percent in 2008-09. He said that current account deficit has been reduced from 8.5 percent to 5.3 percent of GDP, again a reduction of 3.2 percent in one year.

"Our tax and duty measures in Budget for Fiscal Year 2009-10 would revolve around providing protection to the poor and vulnerable against the current economic downturn by providing cash transfers and skill development, reviving manufacturing and industry, especially export-oriented industry, to raise their productive levels, broadening the tax base, instead of overburdening the existing taxpayers, and restraining unnecessary imports to improve the Balance of Payments position."

Tarin told a questioner that budgetary deficit will be around 3.4 percent during next fiscal year. Non-productive subsidies are being done away with this year, he said, adding that foreign exchange reserves stood at $11.30 billion while Gross Domestic Product valued Rs 14.82 trillion.

Responding to a query about entitlement of 15 percent ad hoc relief with regard to regular, contract and daily wage employees of the government and semi-government corporations, the Advisor said that all those who were getting their salaries from the national exchequer will be entitled to ad hoc relief. He said that levying carbon surcharge on POL products is a permanent feature and to help cut demand. "This will remain intact," he reiterated.

He said that the government would soon complete the National Finance Commission (NFC) Award within the next three months. This will help fair distribution of national resources between Centre and provinces. Tarin said that there was no jugglery of figures in the budget. "The Federal Budget 2009-10 is an open document. We have placed all our budget documents in the media cell of Ministry of Finance to maintain transparency," he added.

The government would pass on to the consumers impact in case oil prices increase along with rates of carbon surcharge on POL products. Although the government has imposed carbon surcharge on CNG, it would remain 35 percent cheaper than POL products and the aim of the government is to ensure use of gas resources wisely.

"Earlier, the CNG price was 58 percent of the POL products prices and now we have raised it from 58 percent of POL products prices to 65 percent of the POL products prices," he said.

The government would collect Rs 134 billion from carbon surcharge on POL products and carbon surcharge on CNG imposed in the budget 2009-10. Rs 122 billion would be collected from carbon surcharge on POL products and Rs 12 billion from carbon surcharge on CNG in next fiscal year 2009-10. Carbon surcharge on POL products will be Rs 8 per litre on high speed diesel oil (HSDO), Rs 10 per litre on motor spirit (petrol), Rs 6 per litre on kerosene oil, Rs 3 per litre on light diesel oil, and Rs 6 per kg on CNG.

He said that out of $1.5 billion Kerry Lugar Bill aid to be received from United States, $1 billion or Rs 80 billion would be spent in terrorism affected 25 percent districts of NWFP, Balochistan and Punjab during 2009-10.

He said NFC issue has been discussed in the special Cabinet meeting and Prime Minister would soon re-constitute Commission to hold detailed negotiations with provinces. Issue of arrears of Net Hydel Profits of NWFP against Wapda would also be discussed during NFC Award negotiations.

He said that power tariff increase would be made in case it was necessary, in gradual manner but not in one go. He hinted that the government would not pass on to the consumers the inefficiencies of public sector entities that are wasting Rs 150 to Rs 200 billion due to their inefficiencies. The government would reduce the line losses of distribution companies to keep the power tariff at reasonable level.

He clarified that Rs 19.4 billion that has been indicated income from privatisation in 2009-10 would mainly come from $700 million remaining PTCL privatisation proceeds that were held up due to the dispute over assets in provinces. He said that the issue has been resolved with the provinces and Etisalat will release to Pakistan the remaining privatisation proceeds soon.


(BRecorder)

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Monday, June 15, 2009

KARACHI: The Indian Tea Board plans to open an Indian tea promotion centre in Pakistan and Egypt with a view to increasing its market share in both the countries.

Sources said on Friday that India is striving hard to boost its tea exports in both prominent CTC tea consuming countries since the disintegration of the Soviet Union.

In the past, India’s largest chunk of tea production was imported by the Soviet Union. However, after losing this biggest market, Indian tea producers are looking for alternate markets such as Egypt, Pakistan and Iran besides UK.

The Pakistani consumers had declined the Indian CTC tea in the first place due to its poor quality. In order to cope with the situation, the delegations of Indian tea board and the Indian tea producers association have visited Pakistan twice lobbying among the tea packers, blenders and local importers.

The Pakistan tea association has however suggested to the Indian exporters to influence the tea packers as they could increase Indian tea component in their blended tea.

Courtesy: Finance.Kalpoint.Com

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Monday, June 15, 2009

VIENNA: The OPEC oil producers’ cartel said the worst of the impact from the economic crisis had passed for the oil markets, as it fractionally reduced its demand estimate for 2009 on Friday.

“In light of the considerable challenges the world economy and commodity markets, particularly the oil market faces, have undergone, the worst appears to be behind us,” the Organization of Petroleum Exporting Countries wrote in its latest monthly report.

“As the world economy stabilises, the world oil demand appears to be settling down,” it said. “Industrial production activities are steadying and in some parts of the world and have even improved slightly. This should stop the bleeding in oil demand. There are no significant downward revisions to our previous oil demand forecasts.”

OPEC estimated that demand would contract by 1.62 million barrels per day (bpd) or 1.89 per cent in 2009, only a marginal downward revision in demand from its earlier forecast.

In its previous monthly bulletin released in May, OPEC had been penciling in a contraction of 1.57 million bpd or 1.83 per cent for 2009. Nevertheless, uncertainties remained, OPEC cautioned.

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Monday, June 15, 2009

CAPE TOWN: Companies from the United States and the United Arab Emirates are interested in establishing large farms in Zambia to grow sugar and grains, the southern African country’s agriculture minister said on Friday.

Although a growing number of such land investments elsewhere have proved controversial, Agriculture Minister Brian Chituwo told Reuters Zambia had so much land available there would not be opposition.

He said a US company had offered to invest as much as $200 million in sugar cane production to make ethanol, involving small-scale farmers, but was waiting for proper policies to be put in place.

Chituwo added Zambia had 115,000 hectares of prime land suitable for sugar cane production.

He said a Dubai company was keen to grow rice or wheat.

“They are looking at 200,000 hectares, but we have 900,000 hectares of prime land available so the issue of land really should not be a problem. It is just a question of the mechanics of implementing this,” he told Reuters on the sidelines of the World Economic Forum on Africa in Cape Town. He said Zambia’s lack of exchange controls and the fact that it had lots of land available made it an ideal place for agricultural investment.

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Friday, June 12, 2009

European stocks drifted between gains and losses as a rally in health-care shares offset concern the three-month surge by the Dow Jones Stoxx 600 Index has outpaced prospects for earnings. Asian shares climbed for a third straight day.

GlaxoSmithKline Plc led pharmaceutical stocks higher as the World Health Organization declared the first influenza pandemic since 1968. BT Group Plc increased 5.2 percent after Bank of America Corp. advised buying the shares. Total SA led a decline by commodity producers as oil and base metals slid. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., rose 6.2 percent on higher retail sales in China.

Europe’s Stoxx 600 slid 0.1 percent to 214.6 at 11:26 a.m. in London, trimming its fourth straight weekly gain to 1.9 percent. The gauge has surged 36 percent since March 9 on speculation the $12.8 trillion pledged by the U.S. government and Federal Reserve will end the first global recession since World War II.

“There are lots of people who have missed the upturn in equities and there is the end of the quarter looming so I think we’ll see some buying there,” Christian Gattiker, head of research and strategy at Bank Julius Baer & Co. in Zurich, said in a Bloomberg Television interview. We are likely to see “some more difficult markets during the summer lull in July.”

(Bloomberg)

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Friday, June 12, 2009

European industrial production dropped by the most on record in April as the worldwide recession ravaged demand for goods.

Production in the euro region plunged 21.6 percent from a year earlier, the most since the data series started in 1986, the European Union’s statistics office in Luxembourg said today. Economists expected a 19.8 percent decline, according to the median of 14 estimates in a Bloomberg News survey. From March, output declined 1.9 percent.

The global economy will contract for the first time since World War II this year as the fallout from the financial crisis leads companies to scale back production and run down stocks, the World Bank predicts. The European Central Bank this month kept its benchmark interest rate at a record-low 1 percent and will soon buy bonds in a bid to improve the flow of credit.

“The region has simply been hammered by the downturn in global demand and hampered by the run-up in the euro,” said Peter Dixon, an economist at Commerzbank AG in London. “We see interest rates on hold right through next year. The euro zone has been especially badly hit compared to the more service- oriented economies of the U.K. and the U.S.”

Production of durable consumer goods such as washing machines in the 16-member euro region declined an annual 22.4 percent in April, and output of capital goods such as factory machinery dropped 26.7 percent, according to today’s report.


Courtesy: Bloomberg

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Friday, June 12, 2009

LONDON: Sterling hit a 2009 high against the euro on Thursday after a poll showing rising UK inflation expectations and data pointing to economic growth in April and May bolstered the view that the UK economy may be recovering. Sterling rose to around 85.00 pence against the euro according to Reuters data, its strongest since December. The pair's rally helped the pound to scale the year's high against a basket of currencies at 83.8.

Sterling rose broadly after the Bank of England/GfK NOP Inflation Attitudes Survey showed British inflation expectations for the coming year rose to 2.4 percent in May from 2.1 percent in February, the first rise since August. Thursday's data added to a string of fairly firm UK figures this week, which continue to boost the pound. Analysts added that ongoing speculation that the global economy may be starting to recover was also helping to boost demand for higher-risk currencies, a description often attached to sterling.

"All the local economic news is supportive for sterling," said Adarsh Sinha, forex strategist at Barclays Capital in London. He added: "Sterling has been perceived as a risky currency throughout the financial crisis so the better external markets get, sterling will outperform the dollar and the euro."

By 1345 GMT, the euro traded 0.3 percent lower at 85.15 pence, on track to post its fifth day of losses. The pound's trade-weighted index rose to 83.8, its highest since November 2008. Sterling's gains against the euro contributed to its rise against the currency basket, as a majority of that basket comprises euros.

Sterling traded 0.8 percent higher at $1.6475, near the day's high of $1.6493, and taking gains into a fourth day. The pound was well supported against the dollar after the pair broke through its 14-day moving average earlier in the week. On Thursday, the pair traded comfortably above that support level around $1.6180. The pound hit 161.84 yen to the Japanese currency according to Reuters data, its highest since November.


Courtesy: BRecorder

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