Thursday, June 18, 2009

TOKYO: The euro rose on Wednesday as investors bought it back after steep falls against the dollar and yen this week, but the market struggled for clear direction as it tried to decide if a dollar recovery had run its course. The dollar has fallen against major currencies such as the euro and Australian dollar this year, with investors unwinding safe-haven dollar positions.

The worst of the economic crisis faded and as questions arose over its suitability as the world's reserve currency. Both it and the yen have clawed back some lost ground this month as investors have paused to assess whether rallies in riskier assets including shares have got ahead of themselves. But with a question over its reserve currency status resurfacing on Tuesday, analysts said the market was not sure which direction to head.

"The market seems to be bewildered, facing lots of different factors," said Kazuyuki Kato, treasury department manager at Mizuho Trust and Banking. "And investors are shying away from taking risks after stocks entered a correction phase as optimism for the economy had gone too far," he said.

The euro edged up 0.2 percent from late US levels to $1.3860 after earlier veering towards a one-month low of $1.3747 set on Tuesday. It has gained 11 percent on the dollar since March but is below its 2009 high of $1.4339 set this month.

The greenback fell on Tuesday after Russia suggested ahead of a meeting with leaders of Brazil, India and China there was a need for a reserve currency other than the dollar. In the event, the four leaders avoided the reserve status issue in their statement after the summit, causing the dollar selling to peter out.

"The global financial markets are in correction mode," Yamamoto said. Traders and analysts said currency flows seemed to be driven by short-term players, making the market choppy, but some saw the dollar and the yen as having room to strengthen a bit more.

"The dollar can continue a bit higher but overall the medium-term trend lower is still intact," a senior trader at a European bank in Hong Kong said. The yen reversed early gains after driving the dollar to a two-week low below 96.00 yen and the Australian dollar to a three-week low below 76.00 yen. The dollar rose 0.2 percent to 96.60 and the Aussie dollar climbed 0.5 percent to 76.80 yen.

Traders said talk that Japanese investors may repatriate funds from euro zone bond redemptions had helped push the euro down versus the yen this week, with 15.6 billion euros ($21.6 billion) of redemptions and 2.1 billion euros of coupon payments falling due. The euro has fallen 2.5 percent against the yen since Friday but short-covering pushed it up 0.6 percent to 134.16 yen.

(Reuters)

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Thursday, June 18, 2009

BERLIN: The head of the World Trade Organisation is hopeful long-running trade talks can be wrapped up next year. Trade ministers came close to reaching a deal on the Doha round of talks in July 2008, but they collapsed because of a dispute between Washington and emerging economies, spearheaded by India, over proposals to help farmers in poor nations.

The Cairns Group, 19 nations accounting for more than 25 percent of the world's agricultural exports, said last week that trade officials from the United States, Europe and India had shown fresh resolve to conclude the Doha talks launched in 2001.

"I am optimistic that Doha will be concluded in 2010," Pascal Lamy, the WTO's director general, told Germany's Sueddeutsche Zeitung. "The developing countries are pressing for that. But so far there have only been political declarations of intent. Whether the negotiations really progress depends largely on the US Congress," he added. The Doha deal is estimated to be worth $150 billion for the world economy and considered even more important now that the world faces its worst economic crisis in decades.


(Reuters)

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Thursday, June 18, 2009

BRUSSELS: The eurozone's unadjusted external trade surplus rose in April as exports showed signs of stabilising on a monthly basis and fell less than imports, though shipments sank more than a quarter from a year earlier. The surplus in the 16 countries using the euro came to 2.7 billion euros ($3.75 billion), compared with an upwardly revised 1.8 billion euro surplus in March and a 2.2 billion surplus in April 2008, European Union statistics office Eurostat said.

Unadjusted exports fell 27 percent year-on-year to 102.1 billion euros and imports dropped 28 percent to 99.4 billion. Seasonally adjusted, the trade balance continued a trend of narrowing deficits since January. The gap shrank to 300 million euros from March's 1.8 billion as exports fell only 1.3 percent month-on-month and imports declined 2.7 percent.

"Taken together, the last three months suggest that exports are starting to stabilise after they fell off a cliff between October of last year and January of this year," said Nick Kounis, economist at Fortis. The eurozone economy contracted 2.5 percent quarter-on-quarter in the January-March period - its deepest fall on record - in what economists said was likely the low point of the recession.

Negative trade on the back of exports plunging faster than imports lowered the quarterly result by 0.3 percentage point. "A poor net trade performance has contributed to the eurozone's deep economic contraction," said Howard Archer, economist at IHS Global Insight.

"Plunging domestic demand in Britain and the United States, as well as substantially deteriorating activity in emerging Europe, has been a particular concern for eurozone exporters," Archer said. Detailed data for April was not yet available but a country breakdown for January-March showed the eurozone's trade surplus with its biggest trading partner, Britain, fell to 12.2 billion euros from 15.0 billion a year earlier.

The surplus more than halved with the United States, the single-currency area's second-biggest trade partner, to 4.9 billion. The trade deficit with energy exporter Russia more than halved to 5.4 billion euros from a year before as oil and gas prices plunged.

The eurozone's trade gap with China contracted to 26.4 billion euros in the first quarter from 27.5 billion a year before. Separately, Eurostat said construction output in the eurozone rose 0.6 percent month-on-month in April for the second month running, limiting the year-on-year drop to 4.7 percent versus 8.3 percent in March and 12.5 percent in February.


(Reuters)

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Thursday, June 18, 2009

DUSHANBE: The global economy should begin showing signs of recovery by next year, IMF managing director Dominique Strauss-Kahn said on Wednesday during a visit to the Central Asian state of Tajikistan. The fund chief said that although 2009 was likely to continue to bring difficulties, negative global financial trends should begin to retreat by 2010.

"We.... expect that the rate of growth in the global economy will begin to recover in 2010, and with the rate of growth recovering in the world economy, so too will it grow in your country," he told reporters through a translator. Strauss-Kahn made the comments to reporters after meeting with Tajik president Emomali Rakhmon as part of a tour of Central Asian states, many of which have been badly affected by the global financial downturn.

Despite data that the plunge in remittances from Tajik labourers working in Russia and China is straining the economy, Strauss-Kahn said Dushanbe had pursued largely sound anti-crisis measures.

"I think what has been done by the government was correct given the situation in the economy, especially on the monetary side and by letting the currency depreciate," he said. Tajikistan - a mountainous former Soviet republic which borders China and Afghanistan - has struggled to provide even basic services for its citizens in recent years, with blackouts the norm across much of the country last winter. The IMF boss began his regional tour on Monday in Central Asia's economic powerhouse, Kazakhstan, whose resource-driven economy has been battered as the global economic downturn has forced down commodities prices.

The trip comes as China and Russia are both seeking to increase their influence in this strategically vital region, as evidenced by billions in loans, aid and investment from Moscow and Beijing in recent months. Strauss-Kahn is due to arrive in Bishkek later today, where he will meet with Kyrgyz President Kurmanbek Bakiyev before wrapping up his trip in reclusive Uzbekistan on Thursday.

(BRecorder)

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Thursday, June 18, 2009

TOKYO: Japan's economy hit bottom in the January-March quarter, Finance Minister Kaoru Yosano said Wednesday, as the central bank also slightly upgraded its views on the economy. "We can firmly presume that the economy hit the bottom," Yosano told reporters, after the government upgraded its monthly economic assessment saying there were signs of recovery.

"But there are things that Japan alone cannot control. Naturally downside risks exist, depending on the trend of the world economy," Yosano said, adding that the first quarter was "clearly the bottom." His comment came as the Cabinet Office lifted its assessment for the second straight month in June, saying the economy was expected to pick up soon as exports and industrial production improve. "While the economy is in a difficult situation, signs of a pickup are seen in some areas," the report said in its Japanese-language edition.

Many private economists have already said the world's number two economy had probably hit the bottom and was slowly climbing out of its worst recession since World War II. The government report also said Tokyo hoped that its stimulus packages as well as improvement overseas would help put Japan on a firmer path to recovery. However, the report also cited risk factors including worsening housing starts, falling capital expenditure and deteriorating employment.

It also said that weak employment and private spending posed difficulties going ahead. The government's view was largely echoed by the Bank of Japan, which also upgraded its evaluation, saying in its June report that the economy had "begun to stop worsening." Bank of Japan governor Masaaki Shirakawa said Tuesday that the Japanese economy was in the process of hitting the bottom thanks to improving exports and production as well as increased public spending. Looking forward, Shirakawa said uncertainty remained but the economy was likely to pick up.

(BRecorder)

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Thursday, June 18, 2009

WASHINGTON: US consumer prices edged up in May on higher gasoline prices, but fell over the past 12 months by the most since 1950, in a sign that inflation was no threat for now as the country fights a brutal recession. The Labour Department said on Wednesday its Consumer Price Index edged up 0.1 percent month on month, after being flat in April, below market expectations for a 0.3 percent increase.

-- Consumer prices post largest 12-month drop since 1950

-- Current account deficit smallest since Q4 2001

Compared to the same period last year, however, consumer prices fell 1.3 percent, the largest decline since April 1950. Concerns have grown in recent weeks that inflation could resurface this year, given massive efforts by the US government and the Federal Reserve to pull the economy out of the longest recession since the Great Depression of the 1930s.

"These numbers today and yesterday clearly show that at least for now the immediate concerns over inflation are not justified," said Marc Pado, market strategist at Cantor Fitzgerald & Co in San Francisco. US stock index futures were barely higher, while Treasury debt prices trimmed losses on the data.

A separate report from the Commerce Department showed the US current account deficit shrank in the first quarter to $101.5 billion, the lowest since the fourth quarter of 2001. The CPI data showed that core prices, excluding food and energy, also rose only 0.1 percent, slower than April's 0.3 percent monthly increase, as prices for tobacco and smoking products fell after surging the last two months on the back of a federal excise tax increase.

The rise in the monthly core CPI was the smallest advance since December 2008. The increase came as new vehicle prices rose for a fifth straight month. Shelter and medical costs also contributed to the gain in the core index. Core prices increased 1.8 percent year-over-year after a 1.9 percent 12-month rise in April.

Gasoline prices rose 3.1 percent from April versus a 2.8 percent drop a month earlier. The food index fell 0.2 percent in the month, declining by the same margin for two straight months. Data released on Tuesday showed producer inflation was muted in May, despite higher gasoline prices. Compared to the same period last year, prices paid at the farm and factory gate experienced their steepest fall since 1949.

Investors have been pricing in rising inflation risks in the bond market. Benchmark Treasury debt yields spiked to an eight-month high last week. The yield difference between Treasury Inflation-Protected Securities and Treasuries has grown since the beginning of the year.

But analysts reckon the bond market is getting ahead of itself and argue the economy is more at risk of deflation than inflation, citing excessive slack in productive capacity and huge stocks of unsold goods. According to Fed data on Tuesday, US capacity utilisation dropped to a record low 68.3 percent in May. "The worries that everyone has about inflation, it's something that may occur, and it's certainly not an imminent threat to the economy," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.

The first-quarter current account deficit equalled 2.9 percent of US gross domestic product, a sharp drop from 4.4 percent in the fourth quarter and the lowest since 2.8 percent in the first quarter of 1999, a Commerce Department official said. The current account is the broadest measure of total US trade with the rest of the world, covering goods, services and income transfers.

US exports and imports both fell in the first quarter as severe world recession hit consumer demand and crimped trade. Exports dropped to $509.6 billion, from $591.7 billion in the previous three months, while imports shrank more steeply, to $581.5 billion from $715.1 billion.

(BRecorder)

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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: The currency market on Monday welcomed the new budget as the rupee depicted firm trend against both the dollar and the euro, dealers said. The rupee gained 10 paisa in relation to dollar on the interbank market for buying and selling at 80.95 and 81.00, they said.

Explaining the impact of new measures of the 2009-10 budget on money circulation, they said that withholding tax on commercial imports has been raised to 4 percent from 2 percent. This factor may be a hurdle in achieving the government's claim of bringing down inflation rate and the interest rate to single digit.

It was announced in the budget speech that inflation decreased from 25 percent to 14 percent and present interest rate is 14 percent. The State Bank of Pakistan (SBP) cut its discount rate on 20 April, 2009, the key policy rate by 100 basis points to 14 percent for the rest of the fiscal year ending on June 30, On that occasion, the State Bank of Pakistan Governor Salim Raza had said that inflation was expected to come down to 8 percent by next year.

In the first Asian trade, the dollar rose broadly as investors took profits on other major currencies, which had climbed to multi-month highs on hopes for a recovery in the global economy.

Some traders said a cautious tone from policy makers who gathered at a Group of Eight finance ministers meeting on the weekend helped temper recent optimism about the economy, encouraging bets in riskier assets to be cut further. Commodity currencies, including the Canadian and Australian dollars, also fell after sharp gains this week in tandem with a drop in oil prices, and as G8 finance ministers prepared to meet in Italy.


(BRecorder)

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Tuesday June 16, 2009


LONDON: The euro fell sharply against the dollar on Monday, hit by a spike in eurozone job losses and fresh concerns the credit crunch could stifle tentative signs of recovery, dealers said.

Britain's Telegraph newspaper at the weekend quoted a top German industry group official as saying that a deepening credit crunch in Germany was threatening to slam the brakes on an economic recovery there.

Meanwhile EU data showed a record 1.2 million people lost their jobs across the 16 euro countries in the first three months of the year.

The figure, up sharply from 526,000 in the last quarter of 2008, marked the biggest jump on record, raising fears about the regional outlook

Dealers said there was little new in a Group of Eight statement over the weekend but noted that statements of support for the dollar by Russia seemed to have also helped the US unit.

In late Monday London trade, the euro fell to 1.3786 dollars from 1.4021 dollars in New York late on Friday.

Against the Japanese currency, the dollar slipped to 97.98 yen from 98.40 yen on Friday.

The eurozone "data and survey evidence point to serious weakness in eurozone labour markets in the second quarter," said IHS Global Insight analyst Howard Archer.

Following the unemployment figures, investors were braced for Germany's ZEW business sentiment survey out Tuesday, which measures the confidence of financial market players.

Investors were also awaiting Tuesday's meeting of the world's top emerging economies -- Brazil, Russia, India and China -- which will likely discuss reducing the dollar's role as the world's reserve currency.

It comes after a meeting of G8 finance ministers at the weekend that ended in disarray because of differences among the world's richest economies over how best to handle the weak banking sector.

"The G8 statement ... contained few surprises," Barclays Capital analysts wrote in a note.

Amid concerns that some countries -- especially China -- could be seeking to reduce the role of the dollar in the international financial system, the analysts said Tuesday's meeting will be closely watched.

"While there is unlikely to be explicit calls for a shift away from the (dollar) ... discussion of trade finance in local currencies and the purchase of IMF bonds could keep the issue in focus," they said.

In late trade in London, the euro was changing hands at 1.3786 dollars against 1.4021 dollars late on Friday, at 135.67 yen (137.89), 0.8470 pounds (0.8515) and 1.5097 Swiss francs (1.5124).

The dollar stood at 97.98 yen (98.40) and 1.0902 Swiss francs (1.0789).

The pound was at 1.6394 dollars (1.6442).

On the London Bullion Market, the price of gold fell to 932.25 dollars an ounce from 937.25 dollars an ounce late on Friday.


(AFP)

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Tuesday, June 16, 2009

TOKYO: The dollar and yen rose against the euro in Asia on Tuesday on renewed risk aversion after weak US and European data raised fresh doubts over the pace of global economic recovery, dealers said.

The euro dropped to 1.3769 dollars in Tokyo morning trade from 1.3793 in New York late Monday, and to 133.93 yen from 134.92. The dollar fell to 97.30 yen from 97.83. The greenback and yen gained ground following the release of data from Western economies which raised "doubts over the speed and timing of the global recovery," NAB Capital strategists wrote in a note.

The dollar and yen have been the preferred safe-haven currencies since last year's market meltdown, although the greenback has recently gained more on hopes America will make a quick exit from its recession.

The euro has meanwhile taken a beating due to weak employment data in the eurozone and worries that the region's crisis-hit banks will suffer bigger-than-expected write-downs, dealers said.

"Risk appetite is retreating. Eurozone risks remain high," Societe Generale forex chief Yuji Saito told Dow Jones Newswires.

The European Central Bank "spooked investors with its estimates of credit crisis related write-downs," wrote NAB Capital analysts.

The ECB estimates lenders' potential write-downs related to toxic assets and soured loans to total 649 billion dollars from the 2007-2010 period, much more than the 366 billion dollars forecast previously.

The International Monetary Fund has forecast the full amount could come to 900 billion euros.

The 16-nation eurozone is in the midst of a recession which is the worst for some members since World War II. Employment in the region fell 1.2 percent in the first quarter of 2009 from a year earlier, data released Monday showed.

Investors will keep a close eye on the release later Tuesday of Germany's ZEW business sentiment survey, which measures the confidence of financial market players.

Meanwhile US data for June undermined recent optimism for "green shoots" of recovery in the world's biggest economy.

The NAHB housing index was below market expectations while factory activity in the New York area fell at a faster pace than in May, according to the Federal Reserve Bank of New York's Empire Manufacturing Survey.


(AFP)

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Tuesday, June 16, 2009

SINGAPORE: Oil prices fell below 70 dollars in Asian trade Tuesday, mirroring a dive on Wall Street amid a strengthening US dollar, but traders were closely watching developments in Iran, analysts said.

New York's main futures contract, light sweet crude for delivery in July, shed 69 cents to 69.93 dollars a barrel.

Brent North Sea crude for August delivery eased 66 cents to 69.58 dollars. The July contract expired on Monday.

A strengthening greenback as well as losses on Wall Street sparked the pullback in oil, analysts said.

"The firmer tone of the US dollar and declines on US equity markets were negatives for the oil price," the Commonwealth Bank of Australia said in its daily commodities report.

A stronger dollar makes crude more expensive for buyers holding weaker currencies and that in turn tends to dampen demand and push the market lower.

The US currency particularly rose against the euro Monday following a spike in eurozone job losses and fresh concerns the credit crunch could stifle tentative signs of recovery there.

Traders are also "likely monitoring political developments in Iran," which is a member of the Organization of Petroleum Exporting Countries (Opec), the report added, referring to violent post-election protests in Tehran.

Iran is traditionally a price hawk among Opec members and is usually the leading advocate of a cut in production.

"The unrest if it continues will attract the attention of oil traders," said Phil Flynn of Alaron Trading.


(AFP)

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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

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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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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Friday, June 12, 2009

The International Monetary Fund has revised its 2010 growth forecast sharply upwards, a source said on Thursday, and surging Chinese investment in May fuelled hopes of a global recovery. But underscoring the unclear outlook, World Bank President Robert Zoellick said the global economy is set to contract by close to 3 percent this year, worse than the previous estimate of a decline of 1.75 percent.

-- China investment surges, adding to recovery hopes

-- Japan Q1 GDP record low, slow rebound seen

"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," Zoellick said ahead of the Group of Eight finance ministers meeting in Italy. The IMF has raised global growth estimates for 2010 to 2.4 percent from 1.9 percent in April, a G8 source who has seen the latest figures said.

"The estimate has improved thanks to the impact of stimulus measures taken in recent months," said the source, who had access to an IMF briefing note, containing the figures, prepared for the G8 meeting this weekend. Global data has given increasing signals of a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough.

However, financial markets remain concerned that huge government spending and central bank cash injections, led by the United States but mirrored in Europe and Japan, will spark inflation and undercut any budding rebound. Analysts also expect job losses to remain high even as the economy begins to recover, as companies remain wary of hiring.

A record slump in Japan's first quarter GDP also highlighted expectations that any rebound would be slow, and European officials said jobs would lag any return to growth. "The (global) economy should start to turn into positive territory somewhere between the end of this year and the middle of next year," European Central Bank policymaker Christian Noyer told Hong Kong businessmen on Thursday.

China has sought to cushion the blow from falling exports with a 4 trillion yuan ($585 billion) economic stimulus plan. Data showed annual growth of fixed asset investment in Chinese urban areas accelerated to 32.9 percent in the January-May period from 30.5 percent in the first four months of the year, suggesting the stimulus is working.

Underpinned by this optimism, commodity-related stocks in Asia rose for a third straight day while oil prices extended gains to seven-month highs. The International Energy Agency upgraded its 2009 world oil demand forecast for the first time in almost a year, saying 2009 demand would fall to 83.3 million barrels per day, a less steep decline than previously forecast.

China's need for government pump-priming was underlined by May customs data that showed exports fell 26.4 percent on the year, while imports fell 25.2 percent, resulting in a trade surplus of $13.4 billion, compared with $13.1 billion in April and $18.6 billion in March.

Meanwhile, Japan's economy contracted a revised 3.8 percent in the first three months of the year, less than the initial 4.0 percent estimate, but still the fastest pace since World War Two. Weak capital spending and personal consumption are expected to remain a drag.



Courtesy: BRecorder

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Thursday June 11, 2009


Kenya is seeking $500 million in funds to help cushion the economy after the global economic crisis cut exports and foreign investment, Prime Minister Raila Odinga said.

The funds are over and above the $200 million loan that Kenya has secured from the International Monetary Fund, Odinga said in an interview in Cape Town yesterday, where he was attending the World Economic Forum on Africa.

The global recession has curbed Kenya’s foreign currency earnings as exports fell and remittances from Kenyans living abroad declined. Foreign currency reserves of about $2.6 billion cover three months of import needs, compared with the government’s target of four months, Scott Rogers, the IMF’s senior representative in Kenya, said on May 29.

“We are hoping we will get more support at this very critical moment to be able to bridge the gap,” Odinga said. “We seek particularly balance of payments support, which will help us to import” food and other goods.

Kenya has approached the African Development Bank and potential donors such as the European Union to help plug the funding gap, Odinga said. The government would prefer not to raise the money through domestic borrowing because that would have “negative” consequences for interest rates on government debt, he added.

Kenya may also revive a plan to sell bonds to international investors next year, Odinga said. The government in December scrapped plans to sell $500 million of bonds after borrowing costs rose and credit markets seized up. The funds had been earmarked for projects such as power plants and roads.

Tourism Recovery

East Africa’s biggest economy will probably expand between 2.5 percent and 3 percent this year, boosted by a recovery in agriculture and tourism, Odinga said. Growth slumped to 1.7 percent in 2008 from 7 percent in 2007, as the economy was hurt by the global recession and by post-election violence in the first quarter.

Odinga became prime minister last year after signing a power-sharing accord with President Mwai Kibaki to end two months of clashes between ethnic groups after a disputed election. About 1,500 people were killed in the fighting.


Courtesy: Bloomberg

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Thursday, June 11, 2009


Japan’s economy shrank less than the government initially estimated as business investment and inventories fell at a slower pace.

Gross domestic product shrank at a record 14.2 percent annual pace in the three months ended March 31, less than the 15.2 percent reported last month, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 15 percent contraction.

The decline may represent the low point for an economy forecast to expand this quarter as demand from China helps stabilize exports and leaner inventories allow manufacturers to increase output. Still, with factories sitting idle and profits falling, companies are slashing investment and jobs, casting doubt on whether the revival will last.

“Today’s revised report confirms that the first quarter was disastrous, but the worst for the economy has already passed,” said Junko Nishioka, a senior economist at RBS Securities Japan Ltd. in Tokyo. “But a rebound doesn’t guarantee that Japan’s economy will regain momentum.”

The yen traded at 98.03 per dollar at 10:50 a.m. in Tokyo from 98.20 before the report was published. The Nikkei 225 Stock Average fell 0.3 percent to 9,958.98 after touching 10,000 for the first time in eight months. The gauge has climbed 42 percent since tumbling to a 26-year low on March 10.

Worst Contraction

Fourth-quarter GDP was revised to a 13.5 percent decline from 14.4 percent, today’s report showed. That’s still the worst contraction since the government began keeping records in 1955.

Capital spending fell 8.9 percent compared with a preliminary 10.4 percent, while inventories shaved 0.2 percentage point from GDP, compared with an earlier estimate of 0.3 point. Exports fell 26 percent, unchanged from the initial reading.

The recession has shown signs of easing since then. Japan’s manufacturers have benefited from revived demand in China, where the government is spending $586 billion on roads, hospitals and housing. Exports and factory production increased in March and April on a month-on-month basis.

Japanese Prime Minister Taro Aso’s record stimulus spending that includes loan guarantees for smaller businesses, cash handouts to households and incentives for buying cars and appliances are starting to work.


Courtesy: Bloomberg

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Thursday June 11, 2009

The International Energy Agency raised its global oil-demand forecast for the first time in 10 months on signs that the economic slowdown is abating.

The adviser to 28 nations increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day, driven by consumption in U.S. and China. Consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981, the agency said in its monthly report today.

“These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession,” the Paris-based agency said. “It’s a fairly modest uptick. Underlying demand levels remain weak.”

Oil prices have climbed 61 percent this year. They traded above $72 a barrel in New York today for the first time in seven months on growing optimism about an economic recovery and as a weaker dollar drives investors toward commodities. Futures in New York rebounded to a seven-month high of $72.30 after the release of the report from as low as $71.32 earlier in the day.

Confidence in the world economy rose for a third month as U.S. job losses slowed and global production improved, a Bloomberg survey of users showed yesterday. A U.S. Labor Department report on June 5 showed the country lost the fewest number of jobs since September last month.

Tighter Fundamentals

Rallying crude prices have been driven by both tighter supply-demand fundamentals and “short-term flows” of speculative capital, David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris.

Analysts expect prices to average $61 a barrel in the fourth quarter of this year, according to the median of forecasts compiled by Bloomberg. Goldman Sachs Group Inc. said this month it expects oil to reach $85 by the end of the year,

The outlook for 2009 consumption in the most industrialized countries, the Organization for Economic Cooperation and Development, was raised “marginally” to 45.2 million barrels a day. Inventories of crude and refined products in these nations amounted to 62 days of demand as of the end of April.

The forecast change in demand was countered by expectations for higher output from outside the Organization of Petroleum Exporting Countries.

Courtesy: Bloomberg

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Thursday, June 11, 2009

Japan’s Nikkei 225 stock average on Thursday broke through the psychological threshold of 10,000 for the first time in eight months, led by steelmakers and financial stocks.

It came as Tokyo revised the country’s gross domestic production in the first quarter to a 3.8 per cent contraction, slightly better than the preliminary estimate of a 4 per cent contraction.

Courtesy: Financial Times

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