Monday, October 5, 2009
Forex dealers to fix benchmark interest rate
Bangladesh's foreign exchange dealers have decided to request member commercial banks to provide data on daily basis for setting the country's benchmark interest rate for the financial market."We've decided to advise our 44-member commercial banks to quote DIBOR (Dhaka Inter-bank Offered Rate) rate on daily basis by 11 a.m. (local time)," Chairman of the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) Syed Abu Naser Bukhtear told AHN Media in the city on Monday.The decision was taken at a meeting of the executive committee of BAFEDA, held at its city office on Sunday, he said, adding that the BAFEDA would communicate the decision to all member banks shortly.Bukhtear, who is also Managing Director and Chief Executive Officer of Agrani Bank Ltd, said the BAFEDA will hold annual general meeting on Oct. 10.The DIBOR has been introduced for the first time in Bangladesh aiming to ensure transparency in the country's inter-bank money market from the first week of January this year.Currently, some commercial banks are providing inter-bank-offered rates to Reuters for publishing each working day, a treasury official said.Under the DIBOR, the banks publish five tenor rates initially to ensure transparency in the country's money market, he said, adding that the rates are overnight, one week, two weeks, one month and three months.The DIBOR is a rate at which the banks will lend to each other for a specific maturity period in the Dhaka market.It is also fixed every day for reference purpose. It indicates a key interest rate level used for setting rates on loans and floating rates on notes and for calculating cash settlement of derivative instruments of certain interest rates.In South Asia, India, Sri Lanka and Pakistan have already introduced their benchmark interest rates to help smooth operation of their financial markets.
Forex: Passage Of Bill Demonstrates U.S. Commitment To Pakistan: Kerry
(RTTNews) - Wednesday, top American Senator John Kerry welcomed the passage of a Congressional bill to triple non-military aid to Pakistan, saying this affirms United States' long term commitment to Islamabad, reports say.
Tuesday, the U.S. House of Representatives approved a newly-negotiated version of the Kerry-Lugar Pakistan aid bill that would triple the non-military aid to Pakistan to USD 7.5 billion in the next five years.
"This bill reaffirms the depth of America's long-term commitment to the people and Government of Pakistan," Senator John Kerry said soon after the bill was passed by the House of Representatives by a voice vote.
The voice vote came a week after Senate approved the measure through a process known as "Unanimous Consent"--where the Senate doesn't actually vote on the bill, but nobody raises any objections, so it goes through--to pass the measure.
The final legislation passed by both the chambers of the U.S. Congress was based on a compromise between bills passed earlier by the Senate and House. The bicameral legislation now goes to U.S. President Barack Obama for his signature.
Welcoming the passage of the measure, Congressman Howard L Berman, chairman of the House Foreign Affairs Committee stressed on the need to forge a true strategic partnership with Pakistan and its people, strengthen its democratic government, and work to make it a source of stability in a volatile region.
Warning that terrorists currently sheltered in Pakistan's lawless hinterlands are plotting to attack the United States, he said this legislation helps give Pakistan the tools to defeat the Al-Qaida.
Recipe For Disappointment And Disillusionment: Gary Ackerman
However, Congressman Gary Ackerman said that the bicameral legislation, which triples non-military aid to Pakistan and softens the conditions on Islamabad, is a recipe for disappointment and disillusionment.
Stating that U.S. success will depend chiefly on reforms taken in Pakistan by Pakistanis, Ackerman said he sees little in the bill that provides any assurance that such changes are on the way, adding that Washington is again choosing to be Islamabad's patron rather than its partner.
The bill, initially introduced in the Senate by Joe Biden, then in the capacity as the Chairman of the Senate Foreign Relations Committee and its ranking member, Senator Dick Lugar, has seen several changes and is now called Kerry-Lugar bill as it has been re-introduced by Senator John Kerry, Chairman of the Senate Foreign Relations Committee, and Senator Lugar.
Tuesday, the U.S. House of Representatives approved a newly-negotiated version of the Kerry-Lugar Pakistan aid bill that would triple the non-military aid to Pakistan to USD 7.5 billion in the next five years.
"This bill reaffirms the depth of America's long-term commitment to the people and Government of Pakistan," Senator John Kerry said soon after the bill was passed by the House of Representatives by a voice vote.
The voice vote came a week after Senate approved the measure through a process known as "Unanimous Consent"--where the Senate doesn't actually vote on the bill, but nobody raises any objections, so it goes through--to pass the measure.
The final legislation passed by both the chambers of the U.S. Congress was based on a compromise between bills passed earlier by the Senate and House. The bicameral legislation now goes to U.S. President Barack Obama for his signature.
Welcoming the passage of the measure, Congressman Howard L Berman, chairman of the House Foreign Affairs Committee stressed on the need to forge a true strategic partnership with Pakistan and its people, strengthen its democratic government, and work to make it a source of stability in a volatile region.
Warning that terrorists currently sheltered in Pakistan's lawless hinterlands are plotting to attack the United States, he said this legislation helps give Pakistan the tools to defeat the Al-Qaida.
Recipe For Disappointment And Disillusionment: Gary Ackerman
However, Congressman Gary Ackerman said that the bicameral legislation, which triples non-military aid to Pakistan and softens the conditions on Islamabad, is a recipe for disappointment and disillusionment.
Stating that U.S. success will depend chiefly on reforms taken in Pakistan by Pakistanis, Ackerman said he sees little in the bill that provides any assurance that such changes are on the way, adding that Washington is again choosing to be Islamabad's patron rather than its partner.
The bill, initially introduced in the Senate by Joe Biden, then in the capacity as the Chairman of the Senate Foreign Relations Committee and its ranking member, Senator Dick Lugar, has seen several changes and is now called Kerry-Lugar bill as it has been re-introduced by Senator John Kerry, Chairman of the Senate Foreign Relations Committee, and Senator Lugar.
Forex: USD 899 Mn Aid To Pakistan For Healthcare, Education
(RTTNews) - Thursday, the United States and Pakistan signed agreements that will provide Islamabad with USD 899 million in assistance for healthcare, education, governance and reconstruction of areas affected by the 2005 earthquake, reports say.
A statement issued by the U.S. embassy in Islamabad said that the agreements for cooperation in these fields would bring the total obligations to Pakistan through USAID this year to 920 million dollars. It said a "substantial amount" of the funds would be provided to the government and local NGOs to implement programs in these areas.
The pacts include direct budgetary support of USD 174 million for 'Benazir Income Support Program' for women, an income support scheme for persons displaced by the recent Pakistani military operations against Taliban, and aid to technical and vocational education activities under the Higher Education Commission.
The agreements would also see the U.S. increasing resources to sectors that foster economic growth, including the energy sector.
Deputy Chief of Mission, Gerald Feierstein, said these agreements demonstrate the U.S.' enduring commitment to help Pakistan enhance the lives of its citizens through improved delivery of services.
The agreements came just days after the U.S. Congress approved a newly-negotiated version of the Kerry-Lugar Pakistan aid bill that would triple the non-military aid to Pakistan to USD 7.5 billion in the next five years. The bill now awaits President Barack Obama's signature.
A statement issued by the U.S. embassy in Islamabad said that the agreements for cooperation in these fields would bring the total obligations to Pakistan through USAID this year to 920 million dollars. It said a "substantial amount" of the funds would be provided to the government and local NGOs to implement programs in these areas.
The pacts include direct budgetary support of USD 174 million for 'Benazir Income Support Program' for women, an income support scheme for persons displaced by the recent Pakistani military operations against Taliban, and aid to technical and vocational education activities under the Higher Education Commission.
The agreements would also see the U.S. increasing resources to sectors that foster economic growth, including the energy sector.
Deputy Chief of Mission, Gerald Feierstein, said these agreements demonstrate the U.S.' enduring commitment to help Pakistan enhance the lives of its citizens through improved delivery of services.
The agreements came just days after the U.S. Congress approved a newly-negotiated version of the Kerry-Lugar Pakistan aid bill that would triple the non-military aid to Pakistan to USD 7.5 billion in the next five years. The bill now awaits President Barack Obama's signature.
SC adjourns forex scam bail hearing
KarachiThe Supreme Court (SC) adjourned on Thursday, on the request of the deputy attorney general, the hearing of the bail applications of the directors of a money-exchange company, who are facing charges for money-laundering.Hanif S Kalia, Abdul Munaf Kalia and Javed Khanani are facing charges for the alleged illegal transfer of foreign exchange, evading import duties and taxes and causing colossal loss to the government in respect of foreign exchange. On July 6, the Sindh High Court (SHC) had rejected their bail applications with direction to the trial court to conclude their trial expeditiously.Deputy Attorney General Nazar Akbar sought adjournment because the special prosecutor is supposed to appear and contest the bail applications. The SC’s two member bench granted time adjourned the hearing.The applicants’ counsels, Rasheed A. Razvi and Munir A. Malik, submitted that no evidence of money-laundering had been established against the defendants who were detained for the past 10 months. They submitted that the trial court denied bail to them despite the fact that no direct complaint was filed against them by the State Bank of Pakistan (SBP).They said there was no physical transfer of foreign exchange from Pakistan by the petitioner and the case against them was based on malafide intentions, because the SBP as a licensee and regulatory body was not aggrieved by the activities and transactions of the petitioners. The SBP has therefore not filed any complaint yet against the petitioners’ company, they said.SHC employees petition: The SHC directed the provincial and federal law officers to file comments on a petition regarding the enhancement of judicial and utility allowance to SHC employees as being availed by employees of other high courts of the country.Unauthorised construction: The SHC directed the Karachi Building Control Authority (KBCA) to submit an inquiry report regarding alleged unauthorised construction at Preedy Street. The court observed that merely cosmetic actions were taken against the construction in question.The KBCA counsel was also directed to submit a report regarding action taken against the builder and the architect for the violation of building rules.
Forex reserves decline to $14.243 billion
KARACHI: The country's foreign exchange reserves have declined to $14.243 billion on the week ending on September 05 as compared with $14.307 billion last week, data released by the State Bank of Pakistan shows on Thursday.The overall reserves recorded a loss of $64 millions during the last week. The reserves held by the SBP witnessed a decrease of $52 million to reach $10.739 billion, compared with $10.791 billion last week. The reserves held by the banks other than SBP recorded a decline of $11 million to reach $3.504 billion as compared with $3.515 billion last week. The third tranche of the loan approved by the IMF recently had boosted the foreign exchange reserves of the country, but economists have criticized the approach of the government. They say that obtaining loans to increase reserves was not a good strategy. They add that government should try to increase reserves by boosting exports. They also say that reserves will start declining once again once the payments of these loans begin. By obtaining the loan in November 2008 Pakistan avoided a default on its obligations as it had to pay $500 million that it had borrowed by launching bonds a few years ago. However, government's continued reliance on IMF is not desirable, say the economists.
Moody’s keeps Pakistan economy rating ‘stable’
KARACHI: International economic rating agency Moody’s Investor Services has placed Pakistan among countries enjoying the stable economies.According to Aanand Mitra, the analyst of the Moody’s Investor Services, Pakistan is seeing the economic growing towards stability cum positive policies for gradual increment in the foreign exchange reserves.He termed the increase in Forex as positive signs for the growth and stability in economy.
Pakistan forex reserves surges by 1156 million
KARACHI: Pakistan foreign exchange reserves swelling up process continues, as it was seen recording a significant increase by 1156 million during one week.State Bank of Pakistan (SBP) data showed that foreign exchange reserves in the country has shot up to $14.47 billion, recording significant increase of $1156 million during the week ending September 19. State Bank reserves amounted to $10.94 billion, while those with the commercial banks $3.53 billion.Analysts said that following Pakistan’s international credit rating improvement, foreign investors have went into action in the stock market, which has resulted in the pouring in of forex in the country. Besides, the shrinking trade deficit was also positively impacting on the forex reserves, said the analyst.
Forex: U.S. Approves $2.4 Bn Aid Package For Pakistan
RTTNews) - The United States has approved $2.376 billion as aid for Pakistan besides the administration has also tabled an aid Bill of $2.282 billion--that includes both military and humanitarian assistance--in the Congress for the Islamic country for the financial year 2009-10.
Washington had pledged $1.5 billion of annual assistance to Pakistan, a key ally of the U.S. in the war on terror, for five years through the Kerry-Lugar Bill, which is likely to be approved by the American Senate by the month-end.
The U.S. maintains that most of the financial assistance included in the bill would be channeled through government institutions and mechanisms despite Islamabad prodding Washington to fulfill its pledge as soon as possible and reduce the administrative cost on the aid being offered.
Washington had pledged $1.5 billion of annual assistance to Pakistan, a key ally of the U.S. in the war on terror, for five years through the Kerry-Lugar Bill, which is likely to be approved by the American Senate by the month-end.
The U.S. maintains that most of the financial assistance included in the bill would be channeled through government institutions and mechanisms despite Islamabad prodding Washington to fulfill its pledge as soon as possible and reduce the administrative cost on the aid being offered.
Pakistan's forex reserves rise to $14.36 bln
KARACHI, Sept 17 (Reuters) - Pakistan's foreign exchange reserves rose to $14.36 billion in the week ending Sept. 12 compared with $14.24 billion the previous week, the central bank said on Thursday.[ For previous report, click on]
State Bank of Pakistan's reserves rose to $10.84 billion from $10.74 billion a week earlier, while reserves held by commercial banks also rose to $3.52 billion from $3.50 billion a week earlier.
Pakistan agreed in November to an International Monetary Fund emergency loan package of $7.6 billion to avert a balance of payments crisis and shore up reserves.
The fund increased the loan to $11.3 billion in July. The IMF has disbursed a total $5.148 billion so far.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November of last year, largely because of a soaring import bill.
On Aug. 1, the central bank stopped using foreign exchange to pay for diesel and other refined petroleum products, which will force importers to obtain the dollars they need in the market.
The central bank will continue to provide foreign exchange for crude oil imports until Feb. 1 next year.
State Bank of Pakistan's reserves rose to $10.84 billion from $10.74 billion a week earlier, while reserves held by commercial banks also rose to $3.52 billion from $3.50 billion a week earlier.
Pakistan agreed in November to an International Monetary Fund emergency loan package of $7.6 billion to avert a balance of payments crisis and shore up reserves.
The fund increased the loan to $11.3 billion in July. The IMF has disbursed a total $5.148 billion so far.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November of last year, largely because of a soaring import bill.
On Aug. 1, the central bank stopped using foreign exchange to pay for diesel and other refined petroleum products, which will force importers to obtain the dollars they need in the market.
The central bank will continue to provide foreign exchange for crude oil imports until Feb. 1 next year.
THE KASB REVIEW
The KSE 100 was headed only one way over the course of the week: down, a week which saw the KSE take a dive of 8.63 % dropping by almost 107 points to close the week at 1129.17. However the market would have taken strength from the fact that the positive trend being witnessed over the last few weeks subsided the apparent bear run witnessed on the day the market opened after the change in government. Though despite the economic and political uncertainty prevalent over the market, the market has demonstrated positive trend, mostly being liquidity driven.
Despite the fundamentals remaining under pressure, which saw the KSE 100 fall by 92 points in a single day, the KSE 100 closed on Friday on a positive note. Though the market did not open for the first half of trading and dropped 60 points upon the resumption of trade, positive elements in the later half of the trading time witnessed the market recouping the losses by 50%. This could also be attributed to the announcement of certain policy decisions, thus subsiding the apparent vacuum of authority after the dismissal of the previous government.
Dispelling the apparent panic selling of Thursday, the market would soon find its bottom line in the near future from where future strategy could be worked upon. For the following week we feel that initial support is likely to arrive near the 1080 while major support is likely to appear at the 1000 levels. Resistance will be felt near the 1140 while major resistance will be encountered near the 1180 levels.
Despite the fundamentals remaining under pressure, which saw the KSE 100 fall by 92 points in a single day, the KSE 100 closed on Friday on a positive note. Though the market did not open for the first half of trading and dropped 60 points upon the resumption of trade, positive elements in the later half of the trading time witnessed the market recouping the losses by 50%. This could also be attributed to the announcement of certain policy decisions, thus subsiding the apparent vacuum of authority after the dismissal of the previous government.
Dispelling the apparent panic selling of Thursday, the market would soon find its bottom line in the near future from where future strategy could be worked upon. For the following week we feel that initial support is likely to arrive near the 1080 while major support is likely to appear at the 1000 levels. Resistance will be felt near the 1140 while major resistance will be encountered near the 1180 levels.
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Interbank Forex and the US Bailout Agreement
Key bank to bank long term lending rates in Europe jumped to their highest since 1995 from 5.142 to 5.237 a move sure to reverberate through Interbank Forex markets. The six month rate also jumped to 5.315 from a former rate of 5.290. European rates are fixed by the European Central Bank. (Euribor) It is becoming painfully obvious that the financial crisis is not limited to the US.The US financial crisis has become contagious, spreading to European banks and financial institutions and Interbank Forex markets worldwide. In the UK mortgage giant Bradford and Bingley had to be rescued by the government. Shares of French bank Dexia tumbled more than 20% because of a newspaper report that the bank may launch an emergency capital increase. On Sunday the governments of Belgium, Luxembourg, and the Netherlands announced an 11.2 Euro bailout of one of Europe's largest banks.Markets, including the Interbank Forex, have been in a state of disarray with global money markets waiting for the details of the proposed US bailout. The US congress is set to vote on the compromise bailout package on Monday, September 29th. After almost a week of political haggling Democrats and Republicans have reached an agreement. Highlights of the bailout plan include;* The government would have broad powers to buy billions in mortgage related assets.* The plan lets congress block half the money. The government can access 250 billion immediately, 100 billion more if the president certified it was necessary, and 350 billion more with a separate certification.* Executives of companies who benefit from the bailout will see limited compensation.* The plan requires the government to try to renegotiate bad mortgages with the intention of lowering monthly payments.* The government would receive stock warrants in return for assistance, giving American taxpayers the opportunity to share in future profits.* After five years the government would submit a plan to congress on how to recover any losses from companies receiving assistance.Financial analysts are hoping that the passage of the US bailout plan will bring a semblance of stability to global markets. With the crisis spreading well beyond the borders of the United States passage of the compromise bailout plan is seen by many as a way to stem the tide of bank failures in Europe. Credit markets and interbank lending have all been virtually frozen by the US financial crisis and it is hoped that the infusion of billions of dollars will cause credit to flow freely again.
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Sunday, October 4, 2009
Forex News : US Dollar Facing 1Q GDP, FOMC, Earnings and G20 forecasts
First quarter earnings may have been a positive factor so far, but the outlook is still far from encouraging- Fed says recession ‘substantially reduced’ some banks’ capital though most are still well-capitalized- Do technicals support a dollar bullish forecast? Read the FX Technical Weekly to find out.
Despite a relatively light docket of scheduled economic event risk, the US dollar tumbled against most of its counterparts this past week. This was due to the market’s acute interest in risk trends and the dollar’s association to such macro concerns. In the week ahead, fundamental conditions threaten to be far more complicated which could in turn lead to far greater levels of volatility and/or momentum. To garner a sense of what could move the market and how specifically it impacts the world’s most liquid currency, we will address each of the major themes likely to influence price action one by one. However, it is important to distinguish between those drivers that will have an immediate and decisive impact on the dollar and those that could have a drawn out impression. Both the first quarter GDP release and FOMC rate announcement have clearly defined parameters for timing and influence. In contrast, there is no clear scenario for how forecasts from global policy officials and the steady flow of earnings reports could sway a currency that has to balance its place in the economic food chain with its status as a safe haven.
There is no way of telling which manner of event risk (schedule release or general risk) will have the more pervasive effect on the US dollar; but recent history suggests we follow the currency’s function as a capital refuge. Immediate concern is the cumulative and distilled outlook for global growth and policy that comes out of the various meetings scheduled over the weekend and beyond. The G7 released met on Friday; but their seemed to offer little progress towards the world-wide rescue beyond offering a forecast for a ‘weak’ recovery by the end of the year and offering a warning that toxic assets are still a serious threat. There was sideline commentary suggesting the member nations have taken steps towards realizing the G20’s Agenda points from the London summit; but there is little evidence to substantiate such claims. Going forward, market participants will actively monitor the news wires for signs that the recovery in sentiment is unrealistic. An official statement from the G20 would be read over with a fine-toothed comb, traders will gauge the sway of proposals from the IMF and World Bank meetings this weekend, and fundamental traders will never ease up on their vigilance over nation’s individual efforts to stabilize their own economies.
The other indeterminable factor for dollar traders is the ongoing release of first quarter earnings reports. On the whole, its seems revenues and net income for American firms was stronger than analysts were predicting through the first quarter. However, this is an unreliable benchmark to gauge sentiment and economic health against. Firms are still clearly struggling with the recession and lack of credit as bottom lines that are splashed in red. This is an particularly important point to make with the financial sector (and more to the point, the 19 banks that are being reviewed for the Fed’s stress test). Traders the world over are waiting for the Federal Reserve’s assessment of how the banking giants will fair should the recession linger. In a white paper that explained the examiners’ methodology for judging each institution’s health, it was said that ‘most’ of those under scrutiny had sufficient capital – suggesting some will fail.
It is far easier to prepare and scale the impact of the advanced reading of 1Q GDP and the Fed’s rate decision. There is growing consensus that the central bank will further shrink its target range, but such a move would change little. More meaningful is the growth report. There have been claims from various policy officials of initial signs of stabilization and a decelerating pace of recession. These assertions will be immediately confirmed or denied by this specific piece of event risk. As the world’s largest economy, should data confirm a slower pace of annual contraction (as economists predict), it would be the first tangible sign that conditions are indeed improving. - JK
Despite a relatively light docket of scheduled economic event risk, the US dollar tumbled against most of its counterparts this past week. This was due to the market’s acute interest in risk trends and the dollar’s association to such macro concerns. In the week ahead, fundamental conditions threaten to be far more complicated which could in turn lead to far greater levels of volatility and/or momentum. To garner a sense of what could move the market and how specifically it impacts the world’s most liquid currency, we will address each of the major themes likely to influence price action one by one. However, it is important to distinguish between those drivers that will have an immediate and decisive impact on the dollar and those that could have a drawn out impression. Both the first quarter GDP release and FOMC rate announcement have clearly defined parameters for timing and influence. In contrast, there is no clear scenario for how forecasts from global policy officials and the steady flow of earnings reports could sway a currency that has to balance its place in the economic food chain with its status as a safe haven.
There is no way of telling which manner of event risk (schedule release or general risk) will have the more pervasive effect on the US dollar; but recent history suggests we follow the currency’s function as a capital refuge. Immediate concern is the cumulative and distilled outlook for global growth and policy that comes out of the various meetings scheduled over the weekend and beyond. The G7 released met on Friday; but their seemed to offer little progress towards the world-wide rescue beyond offering a forecast for a ‘weak’ recovery by the end of the year and offering a warning that toxic assets are still a serious threat. There was sideline commentary suggesting the member nations have taken steps towards realizing the G20’s Agenda points from the London summit; but there is little evidence to substantiate such claims. Going forward, market participants will actively monitor the news wires for signs that the recovery in sentiment is unrealistic. An official statement from the G20 would be read over with a fine-toothed comb, traders will gauge the sway of proposals from the IMF and World Bank meetings this weekend, and fundamental traders will never ease up on their vigilance over nation’s individual efforts to stabilize their own economies.
The other indeterminable factor for dollar traders is the ongoing release of first quarter earnings reports. On the whole, its seems revenues and net income for American firms was stronger than analysts were predicting through the first quarter. However, this is an unreliable benchmark to gauge sentiment and economic health against. Firms are still clearly struggling with the recession and lack of credit as bottom lines that are splashed in red. This is an particularly important point to make with the financial sector (and more to the point, the 19 banks that are being reviewed for the Fed’s stress test). Traders the world over are waiting for the Federal Reserve’s assessment of how the banking giants will fair should the recession linger. In a white paper that explained the examiners’ methodology for judging each institution’s health, it was said that ‘most’ of those under scrutiny had sufficient capital – suggesting some will fail.
It is far easier to prepare and scale the impact of the advanced reading of 1Q GDP and the Fed’s rate decision. There is growing consensus that the central bank will further shrink its target range, but such a move would change little. More meaningful is the growth report. There have been claims from various policy officials of initial signs of stabilization and a decelerating pace of recession. These assertions will be immediately confirmed or denied by this specific piece of event risk. As the world’s largest economy, should data confirm a slower pace of annual contraction (as economists predict), it would be the first tangible sign that conditions are indeed improving. - JK
Australian Dollar
The AUD had another strong week - albeit primarily against the embattled USD - posting fresh 2009 highs. The surge in equity prices via “the recession is over” from Fed Chairman Ben Bernanke, surging commodity prices, and ongoing talk of Australia leading the interest tightening cycle well ahead of its OECD peers are largely responsible. AUD currently stands at $US0.8740 convincingly broke through the $US0.8650 resistance level, after a few failed attempts in recent weeks, and is revisiting levels not seen since late August 2008.
While some are more cautious on the outlook for the global and local economies, Australia’s relative economic outperformance cannot be denied.
It is also very important to note that, in stark contrast to the central banks of Canada and New Zealand, there is rarely any comment – positive or negative - on the strength of the AUD. While RBNZ Governor Bollard frequently despairs at the NZD trading well above “fundamentals” there is never any such sentiment aired by the Australian central bank.
Looking ahead, the cupboard is bare on the data and event front, so guidance will be via the performance of commodity prices and equity markets.
While some are more cautious on the outlook for the global and local economies, Australia’s relative economic outperformance cannot be denied.
It is also very important to note that, in stark contrast to the central banks of Canada and New Zealand, there is rarely any comment – positive or negative - on the strength of the AUD. While RBNZ Governor Bollard frequently despairs at the NZD trading well above “fundamentals” there is never any such sentiment aired by the Australian central bank.
Looking ahead, the cupboard is bare on the data and event front, so guidance will be via the performance of commodity prices and equity markets.
Investopedia explains AUD (Australian Dollar)
The Australian dollar was first seen on February 14, 1966, when it replaced the Australian pound. At this time, it was pegged to the Great Britain pound sterling at 2.5 dollars to one pound. In 1967, Australia abandoned the sterling peg and pegged to the U.S. dollar at .8929 Australian dollars to one U.S. dollar. In 1976, it became a moving peg to a trade-weighted index, and in December of 1983, the Australian dollar was allowed to float.The Australian dollar is a highly traded currency and as of 2008, ranked sixth in the world according to worldwide foreign exchange transactions, accounting for approximately 4-5% of trade. The high trading is due to high interest rates in Australia and a relatively stable government, which has limited intervention in the foreign exchange market.
Australian Dollar Forex Trading Forecast
The risk trade was alive and well earlier today on the hopes of economic recovery. While the excitement has subsided a bit on news out of the U.S. (and as global equities tank), there is still some speculation that the Australian dollar forex trading forecast will lead to strength.
Right now, China is increasing its demand for commodities, and that is providing some help for Australia, which is a major partner with China. GFT's Boris Schlossberg reports in FX360 that the Aussie may see an increased yield advantage soon as well:
As we noted earlier, “With Australian yields already the highest amongst the industrialized nations (currently at 3%), a move towards tightening by the RBA will attract even more capital into the currency as carry traders try to profit from rate differential especially against the US dollar and the yen. With little resistance to stand in its way, the unit could target the .9000 figure over the next several sessions if risk flows prove supportive.”
With forex traders looking for better returns, and experiencing less risk aversion, it is little surprise that the Australian dollar forex trading forecast is starting to look stronger.
Right now, China is increasing its demand for commodities, and that is providing some help for Australia, which is a major partner with China. GFT's Boris Schlossberg reports in FX360 that the Aussie may see an increased yield advantage soon as well:
As we noted earlier, “With Australian yields already the highest amongst the industrialized nations (currently at 3%), a move towards tightening by the RBA will attract even more capital into the currency as carry traders try to profit from rate differential especially against the US dollar and the yen. With little resistance to stand in its way, the unit could target the .9000 figure over the next several sessions if risk flows prove supportive.”
With forex traders looking for better returns, and experiencing less risk aversion, it is little surprise that the Australian dollar forex trading forecast is starting to look stronger.
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Pakistan’s forex reserves rise to $11.15B, KSE rockets 24% since Dec 31st 2008
It was only back on the 30th of January that we covered the foreign exchange reserve position. At the time, the reserves stood at $10.2B and we had projected that this number would continue to rise very rapidly due to import reduction, healthy export performance and other expected inflows. Well, our projection has been borne out to quite some degree. In only 90 days, Pakistan’s foreign exchange reserve position has improved by $1B and it currently stands at $11.15B.
In addition to the progress on the forex reserve front, the Karachi Stock Exchange, Pakistan’s largest stock exchange, has also been staging a healthy recovery from the bearish trend it succumbed to during the second half of 2008. The KSE is up 24% from its Dec 31st close. And this is after a recent technical correction; the KSE actually peaked at 7,902 or a 36% increase over the Dec 31st close.
Through slightly more subjective information gathering, we’ve also determined that the real estate market is showing signs of very strong acceleration once again. While the mortgage crisis never really hit Pakistan since much of the privately owned property is owned outright, demand had receded somewhat through the second half of 2008. This is, however, no longer the case. The property business is picking up in a healthy way in Lahore and Islamabad, and prices are continuing to rise. One benchmark that we obtained specific information on is the price of plots in Lake City. A reference home that was available for Rs. 13.4M 18 months ago is now priced at Rs. 16M, showing 12% appreciation in just a year and a half. As compared to most international property markets, this is phenomenal growth, even if it is slow by historic Pakistani standards.
With the recent 1% cut in the State Bank’s interest rates, credit is on its way to becoming cheaper. There is still lots of room to go, but easing the rate certainly indicates that the inflationary threat is receding.
Overall, this news bodes very well for Pakistan’s economy. There is a lot more to look forward to. Within the next 9 months the new power generation capacity coming online will positively affect manufacturing outputs and exports. In fact, extrapolating from year to date performance, Pakistan’s trade gap is sure to shrink, foreign inflows will increase even beyond optimistic projections made a few months ago, credit will be more readily available and the KSE and real estate market will demonstrate strong growth. Stay tuned!
In addition to the progress on the forex reserve front, the Karachi Stock Exchange, Pakistan’s largest stock exchange, has also been staging a healthy recovery from the bearish trend it succumbed to during the second half of 2008. The KSE is up 24% from its Dec 31st close. And this is after a recent technical correction; the KSE actually peaked at 7,902 or a 36% increase over the Dec 31st close.
Through slightly more subjective information gathering, we’ve also determined that the real estate market is showing signs of very strong acceleration once again. While the mortgage crisis never really hit Pakistan since much of the privately owned property is owned outright, demand had receded somewhat through the second half of 2008. This is, however, no longer the case. The property business is picking up in a healthy way in Lahore and Islamabad, and prices are continuing to rise. One benchmark that we obtained specific information on is the price of plots in Lake City. A reference home that was available for Rs. 13.4M 18 months ago is now priced at Rs. 16M, showing 12% appreciation in just a year and a half. As compared to most international property markets, this is phenomenal growth, even if it is slow by historic Pakistani standards.
With the recent 1% cut in the State Bank’s interest rates, credit is on its way to becoming cheaper. There is still lots of room to go, but easing the rate certainly indicates that the inflationary threat is receding.
Overall, this news bodes very well for Pakistan’s economy. There is a lot more to look forward to. Within the next 9 months the new power generation capacity coming online will positively affect manufacturing outputs and exports. In fact, extrapolating from year to date performance, Pakistan’s trade gap is sure to shrink, foreign inflows will increase even beyond optimistic projections made a few months ago, credit will be more readily available and the KSE and real estate market will demonstrate strong growth. Stay tuned!
State Bank of Pakistan removes cap on forex deposits for FDI, Donations
KARACHI: State Bank of Pakistan has decided that FE-25 Deposits in the form of Foreign Direct Investment and funds received for social and economic uplift through international donor agencies / welfare organisations may be excluded, by the banks / DFIs, from the calculation of limit on FE-25 Deposits.
The central bank has taken this decision to promote Foreign Direct Investment and facilitate social and economic uplift through donor agencies / welfare organizations.
This will, however, be subject to the condition that the banks / DFIs will obtain an undertaking from the Account Holder that such funds are remitted from abroad and would be used for poverty alleviation and socio-economic uplift.
The genuineness of all such exclusions will be verified by the SBP Inspectors during the subsequent inspections.
All such FE-25 deposits excluded from the calculation of limit under Prudential Regulation O-5 shall be reported in the footnote to FE-25 Deposits (Note # 10) in the Weekly Statement of Position, says an SBP communique.
The central bank has taken this decision to promote Foreign Direct Investment and facilitate social and economic uplift through donor agencies / welfare organizations.
This will, however, be subject to the condition that the banks / DFIs will obtain an undertaking from the Account Holder that such funds are remitted from abroad and would be used for poverty alleviation and socio-economic uplift.
The genuineness of all such exclusions will be verified by the SBP Inspectors during the subsequent inspections.
All such FE-25 deposits excluded from the calculation of limit under Prudential Regulation O-5 shall be reported in the footnote to FE-25 Deposits (Note # 10) in the Weekly Statement of Position, says an SBP communique.
Pakistan forex reserves swells up by 1156 million
Pakistan foreign exchange reserves swelling up process continues, as it was seen recording a significant increase by 1156 million during one week. State Bank of Pakistan (SBP) data showed that foreign exchange reserves in the country has shot up to $14.47 billion, recording significant increase of $1156 million during the week ending September 19. State Bank reserves amounted to $10.94 billion, while those with the commercial banks $3.53 billion. Analysts said that following Pakistan's international credit rating improvement, foreign investors have went into action in the stock market, which has resulted in the pouring in of forex in the country. Besides, the shrinking trade deficit was also positively impacting on the forex reserves, said the analyst
Forex: US dollar now costs at Rs71.05
KARACHI: The value of rupee remained under persistent pressure due to rising demand of dollar, as dollar moved to record high of Rs71.05.
Political and economic doldrums and the traders’ hiking demand for dollar continued battering Pakistani rupee these days, while there seems to be no respite in sight. Importers at the onset of trading today also resorted to forward buying of dollars, which saw the rupee sinking to a new low against dollar at Rs71.05.
The demand for dollar, especially for buying oil continued soaring, while the foreign exchange reserves gradually shrank to near $11 billion from a record level of $16 billion.
Rupee value has already eroded by over 14 percent during the last six months of the year. Analysts said that the political wrangling has distracted the attention of the government from the economy, where such major problems like hyper- inflation and trade deficit were taking roots stronger and the rupee also remained under constant pressure.
Political and economic doldrums and the traders’ hiking demand for dollar continued battering Pakistani rupee these days, while there seems to be no respite in sight. Importers at the onset of trading today also resorted to forward buying of dollars, which saw the rupee sinking to a new low against dollar at Rs71.05.
The demand for dollar, especially for buying oil continued soaring, while the foreign exchange reserves gradually shrank to near $11 billion from a record level of $16 billion.
Rupee value has already eroded by over 14 percent during the last six months of the year. Analysts said that the political wrangling has distracted the attention of the government from the economy, where such major problems like hyper- inflation and trade deficit were taking roots stronger and the rupee also remained under constant pressure.
Pakistan’s FOREX Scandal
In an attempt to staunch an illegal hemorrhage of US dollars out of the country mainly through the officially banned Hawala system, Pakistani authorities have come down heavily on the country’s ace moneychangers, Kalia and Khanani International (KKI). Their head office in Karachi was raided and sealed by the FIA (Federal Investigating Agency) on November 7, their computers and records were seized, and both senior executives, Munaf Kalia and Javed Khanani, along with three other currency dealers, were taken into custody for investigation. Subsequently, they were placed under judicial custody by a Karachi magistrate. The State Bank of Pakistan has suspended KKI’s license for a month. The company had 24 branches and 9 franchises.
Some $10 billion is stated to have been remitted abroad in the past one year through Hawala. Interior Ministry claimed that in October alone $500 million were sent abroad. Such illegal transfers have helped drive rapid depletion in the country’s foreign exchange reserves that have shrunk from $16.5 billion last year to $6.75 billion last month. That has also caused a loss of confidence in the stock market that was constrained to keep its doors closed for the past three months in order to avoid a total crash. Rupee has, over the past few months, lost value against the dollar by 1/3rd.
In a relevant development, nearly 1,000 lost and fake identity cards have also been seized from functionaries of Pakistan Post and National Database Registration Authority (NADRA).
Pakistan’s foreign exchange reserves having almost touched the bottom, the country had to approach friendly governments as well as the IMF for help. China has offered $500 million, Saudi Arabia has offered to supply oil on credit for two years, and the IMF has agreed to lend $7.6 billion as emergency loan, and the 14-member Friends of Pakistan (FOP) group has also pledged support to the country.
It would be quite unfair to attribute the dire financial position of the country to the illegal activities of forex dealers. They did play a role in the depletion of the country’s reserves, but the major responsibility rests with the nonchalant approach of present leaders. They have expanded the cabinet to 60 members and decided to reinstate 6,000 officials who had been recruited en mass by the PPP government in 1993-96 and shown the door after the change of regime in 1996. Both actions were politically motivated and the decision about the reinstatement with arrears of pay is much more so, and would cost the exchequer billions of rupees. The conditions attached to the IMF loan might be constraining and unpleasant but they will effect some discipline among the policy makers.
Like a dented gramophone record, the present managers of the economy of the country blame the former Prime Minister, Shaukat Aziz, for all and any set back they experience. The common man is intelligent enough to realize who is to be blamed if a mother is constrained to leave her children with Eidhi Trust for her inability to feed and clothe them.
Similarly, it would be futile to blame Shaukat Aziz for any act of omission or commission that has led to the forex dealers’ irresponsible conduct. During his period, the begging bowl was discarded and the national debt kept declining with the direct foreign investment (DFI) graph moving northward.
Actually the government is barking up the wrong tree. The money- changers were but the vehicle of the big guns who have transmitted their money to foreign, more secure and safe lands. How many families in Pakistan have wealth in such quantities that they could remit tens of billions of dollars within a few months? At the most, a couple of thousand families. Small amounts, no doubt, might have been sent by a vast number for the tuition and sustenance of their wards” schooling abroad, or for the payment of some other encumbrance, legal or illegal. Why is it then that the Interior Ministry has not disclosed this far a single name of the big fish?
The Financial Adviser, Shaukat Tareen, has declared quite emphatically that the authorities will not let go any culprit no matter how well connected he might be. That is exactly where the rub is! For, the general perception is that the concerned persons have so much political and administrative clout that no government could dare lay its hands on them. They are not just businessmen like Kalia and Khanani who could be arrested and humiliated.
Numerous media reports have hinted at the involvement of senior civil and military officers, political figures and influential families in the transfer of funds to foreign lands. The Interior Adviser, Mr. Rehman Malik, has declared, on the other hand, that no evidence was yet available concerning the role of the big fish in the scam. But, Mr. Malik has come out with so many statements on the subject that are not necessarily in harmony with each other.
Perceptions often rank higher among the common people of Pakistan than realities. The reputation of Mr. Zardari continues to remain tainted as Mr. 10%, and Mr. Malik, his closest confidant, compatriot and hatchet man in the current dispensation of power, carries the perception of having been a cloak and dagger man of the FIA surreptitiously tapping the telephones of VIPs.
Mr. Zardari, an exceptionally shrewd person, is trying hard to superimpose the image of a sober and reliable Head of State over the perception of Mr. 10 percent. Yet the perception lingers on. An analysis of the forex scam on the blog, Pakspectator, contended on Nov.11: “Some people are claiming that as the money exchangers refused to pay extortion money to the front men of Zardai, that is why they are being made an example for others to follow the lead silently.”
Another comment on a different blog, Tradercurrencies.com, said: “Money market analysts suspect KKI’s political-business rivals are playing a game for the benefit of Mr. 10% and his mafia gang including Interior Adviser Rehman Malik….”
The flight of capital is essentially the outcome of the loss of confidence of the moneyed classes in the stability of the present regime or its ability to steer forward the ship of state on an even keel.
Since the forex case is now sub judice, it would be unwise to say anything on the substance of the charge. Defense side of the case will be known only after the hearings start. Meanwhile we may consider a couple of points having a bearing on the crux of the matter.
Hawala system has its origin in classical Islamic law going back to the 8th century. Aval in French law and Avallo in Italian law have been derived from Hawala. This was a very effective system for transferring money from cities to villages having no bank. It has been in existence for over a millennium. After 9/11 it was banned in the US as certain Muslim charities were suspected of transferring money to Al Queda through this system. Pakistan too placed a restriction on it. But, the country licensed private money exchangers who operated a more efficient system than banks for the flow of expatriates’ money, totaling $7 billion annually, to their families many of whom lived in villages.
With the advent of the World Trade Organization in 1993 (Pakistan is a member) customs and foreign exchange barriers were brought down making it possible for goods and money to move to any part of the world without any hindrance. Would the present regime in Pakistan defy the commitments made under WTO and go back to the erstwhile pattern of official controls? The less the controls, the better the market economy functions.
Some $10 billion is stated to have been remitted abroad in the past one year through Hawala. Interior Ministry claimed that in October alone $500 million were sent abroad. Such illegal transfers have helped drive rapid depletion in the country’s foreign exchange reserves that have shrunk from $16.5 billion last year to $6.75 billion last month. That has also caused a loss of confidence in the stock market that was constrained to keep its doors closed for the past three months in order to avoid a total crash. Rupee has, over the past few months, lost value against the dollar by 1/3rd.
In a relevant development, nearly 1,000 lost and fake identity cards have also been seized from functionaries of Pakistan Post and National Database Registration Authority (NADRA).
Pakistan’s foreign exchange reserves having almost touched the bottom, the country had to approach friendly governments as well as the IMF for help. China has offered $500 million, Saudi Arabia has offered to supply oil on credit for two years, and the IMF has agreed to lend $7.6 billion as emergency loan, and the 14-member Friends of Pakistan (FOP) group has also pledged support to the country.
It would be quite unfair to attribute the dire financial position of the country to the illegal activities of forex dealers. They did play a role in the depletion of the country’s reserves, but the major responsibility rests with the nonchalant approach of present leaders. They have expanded the cabinet to 60 members and decided to reinstate 6,000 officials who had been recruited en mass by the PPP government in 1993-96 and shown the door after the change of regime in 1996. Both actions were politically motivated and the decision about the reinstatement with arrears of pay is much more so, and would cost the exchequer billions of rupees. The conditions attached to the IMF loan might be constraining and unpleasant but they will effect some discipline among the policy makers.
Like a dented gramophone record, the present managers of the economy of the country blame the former Prime Minister, Shaukat Aziz, for all and any set back they experience. The common man is intelligent enough to realize who is to be blamed if a mother is constrained to leave her children with Eidhi Trust for her inability to feed and clothe them.
Similarly, it would be futile to blame Shaukat Aziz for any act of omission or commission that has led to the forex dealers’ irresponsible conduct. During his period, the begging bowl was discarded and the national debt kept declining with the direct foreign investment (DFI) graph moving northward.
Actually the government is barking up the wrong tree. The money- changers were but the vehicle of the big guns who have transmitted their money to foreign, more secure and safe lands. How many families in Pakistan have wealth in such quantities that they could remit tens of billions of dollars within a few months? At the most, a couple of thousand families. Small amounts, no doubt, might have been sent by a vast number for the tuition and sustenance of their wards” schooling abroad, or for the payment of some other encumbrance, legal or illegal. Why is it then that the Interior Ministry has not disclosed this far a single name of the big fish?
The Financial Adviser, Shaukat Tareen, has declared quite emphatically that the authorities will not let go any culprit no matter how well connected he might be. That is exactly where the rub is! For, the general perception is that the concerned persons have so much political and administrative clout that no government could dare lay its hands on them. They are not just businessmen like Kalia and Khanani who could be arrested and humiliated.
Numerous media reports have hinted at the involvement of senior civil and military officers, political figures and influential families in the transfer of funds to foreign lands. The Interior Adviser, Mr. Rehman Malik, has declared, on the other hand, that no evidence was yet available concerning the role of the big fish in the scam. But, Mr. Malik has come out with so many statements on the subject that are not necessarily in harmony with each other.
Perceptions often rank higher among the common people of Pakistan than realities. The reputation of Mr. Zardari continues to remain tainted as Mr. 10%, and Mr. Malik, his closest confidant, compatriot and hatchet man in the current dispensation of power, carries the perception of having been a cloak and dagger man of the FIA surreptitiously tapping the telephones of VIPs.
Mr. Zardari, an exceptionally shrewd person, is trying hard to superimpose the image of a sober and reliable Head of State over the perception of Mr. 10 percent. Yet the perception lingers on. An analysis of the forex scam on the blog, Pakspectator, contended on Nov.11: “Some people are claiming that as the money exchangers refused to pay extortion money to the front men of Zardai, that is why they are being made an example for others to follow the lead silently.”
Another comment on a different blog, Tradercurrencies.com, said: “Money market analysts suspect KKI’s political-business rivals are playing a game for the benefit of Mr. 10% and his mafia gang including Interior Adviser Rehman Malik….”
The flight of capital is essentially the outcome of the loss of confidence of the moneyed classes in the stability of the present regime or its ability to steer forward the ship of state on an even keel.
Since the forex case is now sub judice, it would be unwise to say anything on the substance of the charge. Defense side of the case will be known only after the hearings start. Meanwhile we may consider a couple of points having a bearing on the crux of the matter.
Hawala system has its origin in classical Islamic law going back to the 8th century. Aval in French law and Avallo in Italian law have been derived from Hawala. This was a very effective system for transferring money from cities to villages having no bank. It has been in existence for over a millennium. After 9/11 it was banned in the US as certain Muslim charities were suspected of transferring money to Al Queda through this system. Pakistan too placed a restriction on it. But, the country licensed private money exchangers who operated a more efficient system than banks for the flow of expatriates’ money, totaling $7 billion annually, to their families many of whom lived in villages.
With the advent of the World Trade Organization in 1993 (Pakistan is a member) customs and foreign exchange barriers were brought down making it possible for goods and money to move to any part of the world without any hindrance. Would the present regime in Pakistan defy the commitments made under WTO and go back to the erstwhile pattern of official controls? The less the controls, the better the market economy functions.
Pakistan's forex reserves rise to $14.49 bln
KARACHI, Oct 1 - Pakistan's foreign exchange reserves rose to $14.49 billion in the week that ended on Sept. 26 compared with $14.48 billion the previous week, the central bank said on Thursday.
Reserves held by the State Bank of Pakistan were flat at $10.94 billion from a week earlier, while those held by commercial banks edged up to $3.55 billion from $3.54 billion a week earlier, said bank spokesman Syed Wasimuddin.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November last year, largely because of a soaring import bill.
However, an International Monetary Fund emergency loan package of $7.6 billion agreed in November helped avert a balance of payments crisis and shore up reserves.
Reserves held by the State Bank of Pakistan were flat at $10.94 billion from a week earlier, while those held by commercial banks edged up to $3.55 billion from $3.54 billion a week earlier, said bank spokesman Syed Wasimuddin.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November last year, largely because of a soaring import bill.
However, an International Monetary Fund emergency loan package of $7.6 billion agreed in November helped avert a balance of payments crisis and shore up reserves.
IMF pumps $250b into global forex reserves
WASHINGTON - The International Monetary Fund has pumped about $250 billion into foreign-exchange reserves worldwide, acting on an April call from leaders of the Group of 20 nations to boost global liquidity.Countries will be able to convert the money, to come from so-called Special Drawing Rights, into hard currencies through “voluntary trading arrangements” with other members, the IMF said. The SDRs are the institution’s unit of account based on a basket of currencies. There are no notes or coins denominated in SDRs, nonetheless the SDR does play a role as an interest-bearing international reserve asset. The allocation, approved by the IMF’s board of governors earlier this month, will not increase the fund’s pool of money available for lending, the IMF said. “It will, however, provide members with an additional method to obtain hard currencies.”Another smaller reserves allocation of about $33 billion will take place Sept. 9 and will be limited to members that joined the lender after 1981, such as countries from the former Soviet bloc, the IMF said. About $110 billion of the total allocation will go to emerging-market and developing countries and $20 billion to low-income nations.“A number of members with sufficiently strong external positions” have already said they are ready to set up or expand existing arrangements enabling the sale or purchase of SDRs, the IMF said. The lender typically acts as a broker and arranges transactions between parties at no cost.
NAB to investigate three forex companies
Islamabad: The Executive board of the National Accountability Bureau (NAB) has approved inquiries of three forex companies alleged for illegal business activities and suspected money laundering.
To this effect, a meeting of the Executive Board of NAB was held on Thursday and presided over by Nawid Ahsan, the Chairman of NAB, and was attended by the Director General Financial Crimes Investigation Wing, Director General Operations, Deputy Prosecutor General Accountability, Chief of Staff and Directors.
The Board held in-depth discussion on various cases of corruption and approved inquiries into alleged illegal activities by various businesses. They include Tianshi International, AR Enterprises and Ahsan Enterprises Karachi.
The Inquiry was authorized against M/s Tianshi International Pakistan Co (Pvt) Ltd on a complaint filed by the Securities & Exchange Commission of Pakistan (SECP).
The company is accused of giving deceptive incentives to prospective buyers of their products.
The Executive Board authorized inquiries against the proprietors of AR Enterprises and Ahsan Enterprises on the basis of Suspicious Transactions reported to NAB by the Financial Monitoring Unit (FMU).
Both the entities are suspected to be involved in fraud in obtaining rebates. The amount of the fraud is said to be over Rs. 50.000 million.
To this effect, a meeting of the Executive Board of NAB was held on Thursday and presided over by Nawid Ahsan, the Chairman of NAB, and was attended by the Director General Financial Crimes Investigation Wing, Director General Operations, Deputy Prosecutor General Accountability, Chief of Staff and Directors.
The Board held in-depth discussion on various cases of corruption and approved inquiries into alleged illegal activities by various businesses. They include Tianshi International, AR Enterprises and Ahsan Enterprises Karachi.
The Inquiry was authorized against M/s Tianshi International Pakistan Co (Pvt) Ltd on a complaint filed by the Securities & Exchange Commission of Pakistan (SECP).
The company is accused of giving deceptive incentives to prospective buyers of their products.
The Executive Board authorized inquiries against the proprietors of AR Enterprises and Ahsan Enterprises on the basis of Suspicious Transactions reported to NAB by the Financial Monitoring Unit (FMU).
Both the entities are suspected to be involved in fraud in obtaining rebates. The amount of the fraud is said to be over Rs. 50.000 million.
Pakistan faces bankruptcy with $3bn forex reserves: report
London, Oct 7 (IANS) Pakistan’s foreign exchange reserves are on the brink at a mere $3 billion - enough to buy only a month’s supply of oil and food, a newspaper reported Tuesday.The Daily Telegraph said that on paper the country’s central bank holds $8.14 billion of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion.
It said Pakistan had $16 billion of foreign exchange nine months ago, but high oil prices “have combined with endemic corruption and mismanagement to inflict huge damage on the economy”.
The report comes after President Asif Ali Zardari told the Wall Street Journal newspaper his country needs a $100 billion bail out package.
“If I can’t pay my own oil bill, how am I going to increase my police? The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful,” Zardari said in an interview published Saturday.
The Daily Telegraph said Pakistan’s efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, and that the government has failed to raise loans on favourable terms from “friendly countries”.
It said Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month.
It said Pakistan had $16 billion of foreign exchange nine months ago, but high oil prices “have combined with endemic corruption and mismanagement to inflict huge damage on the economy”.
The report comes after President Asif Ali Zardari told the Wall Street Journal newspaper his country needs a $100 billion bail out package.
“If I can’t pay my own oil bill, how am I going to increase my police? The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful,” Zardari said in an interview published Saturday.
The Daily Telegraph said Pakistan’s efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, and that the government has failed to raise loans on favourable terms from “friendly countries”.
It said Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month.
FOREX/METALS Forecasts: Tuesday, September 29th, 2009
Thdollar’s pace of weakness against most currencies appears to be slowing, with the possible near-term exception of the Japanese yen.e Japanese yen continued to strengthen today, reaching an 8-month gain against the U.S. dollar and the Canadian dollar, the loonie, began to recover from several days of losses. The The next day or so of trading will likely respond to the Consumer Confidence Index and the anticipated growth and employment numbers for the U.S. and Europe for the 3rd Quarter and September.
The stock market rose today across all three indices as the Dow Jones Industrial Average rose 124.17 points, or 1.28% to 9789.36, the Nasdaq rose 39.82 points, or 1.90% to 2130.74, and the S&P 500 rose 18.60 points, or 1.78% to 1062.98. Boeing and The Traveler’s Company gained strongly and IBM and Kraft fell strongly on the day. This marks the first gain for each market in three days of trading, and the Nasdaq and S&P rose the highest, percent-wise, in two and one months, respectively.
Trading tomorrow will be dependent on the Consumer Confidence Index report, but we predict a volatile yet mostly unchanged euro to U.S. dollar currency pair. The dollar should recover somewhat against the Japanese yen coming off an 8-month low from Monday. More volatile trading between the British pound and the dollar with a slight gain to the dollar, while the dollar will not change from the Australian dollar and give a large gain to the Canadian dollar.
The stock market rose today across all three indices as the Dow Jones Industrial Average rose 124.17 points, or 1.28% to 9789.36, the Nasdaq rose 39.82 points, or 1.90% to 2130.74, and the S&P 500 rose 18.60 points, or 1.78% to 1062.98. Boeing and The Traveler’s Company gained strongly and IBM and Kraft fell strongly on the day. This marks the first gain for each market in three days of trading, and the Nasdaq and S&P rose the highest, percent-wise, in two and one months, respectively.
Trading tomorrow will be dependent on the Consumer Confidence Index report, but we predict a volatile yet mostly unchanged euro to U.S. dollar currency pair. The dollar should recover somewhat against the Japanese yen coming off an 8-month low from Monday. More volatile trading between the British pound and the dollar with a slight gain to the dollar, while the dollar will not change from the Australian dollar and give a large gain to the Canadian dollar.
G-7 May Break With Currency Tradition as Status Fades (Update4)
Oct. 2 (Bloomberg) -- Group of Seven finance officials meet this weekend in Istanbul debating whether to surrender the weapon that helped shape currency markets for three decades.
One week after the Group of 20 anointed itself the world economy’s main policy forum, G-7 finance ministers and central bankers may break with tradition and choose not to release a statement on the global economy and currencies, said officials who declined to be identified. That would deprive traders of the commentary that policy makers frequently use to influence exchange rates.
The debate over the G-7 role comes as European Central Bank President Jean-Claude Trichet, U.S. Treasury Secretary Timothy Geithner and French Finance Minister Christine Lagarde head to Turkey endorsing a “strong dollar.” The diversity of the G-20, which includes China and India, means investors may have to deal with conflicting signals as its members seek common ground.
“There may be communication difficulties as policy makers misspeak and inject volatility into markets,” said Stephen Jen, a managing director at BlueGold Capital Management LLP in London. “It will take a few rounds of G-7 and G-20 meetings to form a collective opinion on currencies.”
Narrowing Imbalances
The euro fell against the dollar yesterday after Trichet said “disorderly movements” in exchange rates have “adverse implications” for economies. The euro traded at $1.4546 per dollar at 12:55 p.m. in Istanbul after falling 0.7 percent yesterday. It has gained 16 percent since the start of March.
Officials gather tomorrow, a week after President Barack Obama and other G-20 leaders left Pittsburgh pledging to work together to narrow so-called imbalances such as the U.S. trade deficit and China’s current-account surplus.
“They clearly believe the G-20 will be the appropriate place to discuss currency,” said Simon Derrick, chief currency strategist at BNY Mellon Corp.
The embrace of the G-20 reflects China’s increased role in the global economy and the view that its policy of managing the yuan’s value against a basket of currencies means its opinions can’t be ignored.
“Only the G-20 can say anything meaningful about currencies because the big policy issue is the dollar-China peg,” said Bilal Hafeez, Deutsche Bank AG’s London-based head of foreign-exchange strategy. China has kept the yuan little changed against the dollar for more than a year.
International Monetary Fund Managing Director Dominique Strauss-Kahn said today in Istanbul that while the G-7 remains useful, its “progressive replacement by the G-20 seems to be a done deal.”
Faster Yuan Easing
Canadian Finance Minister Jim Flaherty told reporters in Ottawa yesterday that China should accelerate efforts to ease restrictions on its currency and that exchange rates are “regularly” discussed at G-7 meetings. Strauss-Kahn today called the yuan undervalued.
The biggest industrial nations first started to meet regularly in the 1970s after the Bretton Woods currency framework that had governed the global economy since World War II collapsed.
Their power to steer currencies reached its pinnacle in the 1980s when five of its members signed the Plaza Accord to weaken the dollar. The Louvre Accord was introduced two years later to buoy it. In September 2000, the G-7 rescued the euro -- the last time it intervened.
Three years later in Dubai, it began to lobby China to allow the yuan to appreciate with a call for “more flexibility in exchange rates.”
Currency Study
A study last year by ECB economist Marcel Fratzscher found the G-7 was successful in moving currencies on 80 percent of the 29 occasions it tried to do so since 1975 within a year.
“G-7 currency statements were not always effective straight away, but there have been times when they have signaled clear preferences,” said Thomas Stolper, a currency strategist at Goldman Sachs Group Inc. in London.
This time, balancing the world economy will likely weaken currencies such as the dollar and sterling, while boosting the euro and yuan, whose economies are export-led, said Marco Annunziata, chief economist at UniCredit Group in London.
That may concern some in the G-7 as the dollar’s 13 percent slide against a basket of seven currencies since the start of March impedes their recovery by making exports more expensive.
‘Extremely Important’
Lagarde told reporters today in Gothenburg, Sweden that a strong dollar is in “everyone’s interest,” four days after Trichet said it was “extremely important” for the world economy.
Bank of Canada Governor Mark Carney said Sept. 28 that the Canadian dollar’s gain is a “major risk.”
Japanese Finance Minister Hirohisa Fujii said on Sept. 29 that the government may act to stabilize the foreign-exchange market and denied that he supported a stronger yen. He reiterated today that he won’t discuss the currency’s gains at the meeting, Kyodo News reported.
“There is definitely rising concern about currencies as we’re at a delicate moment for economies,” Annunziata said.
While the dollar’s slide may buoy the U.S. economy by easing lopsided flows in trade and investment, World Bank President Robert Zoellick this week became the latest official to question its role as the world’s only reserve currency. Such speculation could undermine the U.S.’s ability to draw the foreign finance it needs to fund its $11.8 trillion debt.
Geithner yesterday repeated that a “strong dollar is very important” to the U.S., while Federal Reserve Chairman Ben S. Bernanke said there’s “no immediate risk” to the currency.
The trend away from the G-7 has been building since it stopped backing up its talk with money, said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut. It took almost two years for China to heed the request for more currency flexibility.
“I have a G-7 bias, I was weaned on currency accords,” Gilmore said. “On G-7 weekends now I go fishing.”
One week after the Group of 20 anointed itself the world economy’s main policy forum, G-7 finance ministers and central bankers may break with tradition and choose not to release a statement on the global economy and currencies, said officials who declined to be identified. That would deprive traders of the commentary that policy makers frequently use to influence exchange rates.
The debate over the G-7 role comes as European Central Bank President Jean-Claude Trichet, U.S. Treasury Secretary Timothy Geithner and French Finance Minister Christine Lagarde head to Turkey endorsing a “strong dollar.” The diversity of the G-20, which includes China and India, means investors may have to deal with conflicting signals as its members seek common ground.
“There may be communication difficulties as policy makers misspeak and inject volatility into markets,” said Stephen Jen, a managing director at BlueGold Capital Management LLP in London. “It will take a few rounds of G-7 and G-20 meetings to form a collective opinion on currencies.”
Narrowing Imbalances
The euro fell against the dollar yesterday after Trichet said “disorderly movements” in exchange rates have “adverse implications” for economies. The euro traded at $1.4546 per dollar at 12:55 p.m. in Istanbul after falling 0.7 percent yesterday. It has gained 16 percent since the start of March.
Officials gather tomorrow, a week after President Barack Obama and other G-20 leaders left Pittsburgh pledging to work together to narrow so-called imbalances such as the U.S. trade deficit and China’s current-account surplus.
“They clearly believe the G-20 will be the appropriate place to discuss currency,” said Simon Derrick, chief currency strategist at BNY Mellon Corp.
The embrace of the G-20 reflects China’s increased role in the global economy and the view that its policy of managing the yuan’s value against a basket of currencies means its opinions can’t be ignored.
“Only the G-20 can say anything meaningful about currencies because the big policy issue is the dollar-China peg,” said Bilal Hafeez, Deutsche Bank AG’s London-based head of foreign-exchange strategy. China has kept the yuan little changed against the dollar for more than a year.
International Monetary Fund Managing Director Dominique Strauss-Kahn said today in Istanbul that while the G-7 remains useful, its “progressive replacement by the G-20 seems to be a done deal.”
Faster Yuan Easing
Canadian Finance Minister Jim Flaherty told reporters in Ottawa yesterday that China should accelerate efforts to ease restrictions on its currency and that exchange rates are “regularly” discussed at G-7 meetings. Strauss-Kahn today called the yuan undervalued.
The biggest industrial nations first started to meet regularly in the 1970s after the Bretton Woods currency framework that had governed the global economy since World War II collapsed.
Their power to steer currencies reached its pinnacle in the 1980s when five of its members signed the Plaza Accord to weaken the dollar. The Louvre Accord was introduced two years later to buoy it. In September 2000, the G-7 rescued the euro -- the last time it intervened.
Three years later in Dubai, it began to lobby China to allow the yuan to appreciate with a call for “more flexibility in exchange rates.”
Currency Study
A study last year by ECB economist Marcel Fratzscher found the G-7 was successful in moving currencies on 80 percent of the 29 occasions it tried to do so since 1975 within a year.
“G-7 currency statements were not always effective straight away, but there have been times when they have signaled clear preferences,” said Thomas Stolper, a currency strategist at Goldman Sachs Group Inc. in London.
This time, balancing the world economy will likely weaken currencies such as the dollar and sterling, while boosting the euro and yuan, whose economies are export-led, said Marco Annunziata, chief economist at UniCredit Group in London.
That may concern some in the G-7 as the dollar’s 13 percent slide against a basket of seven currencies since the start of March impedes their recovery by making exports more expensive.
‘Extremely Important’
Lagarde told reporters today in Gothenburg, Sweden that a strong dollar is in “everyone’s interest,” four days after Trichet said it was “extremely important” for the world economy.
Bank of Canada Governor Mark Carney said Sept. 28 that the Canadian dollar’s gain is a “major risk.”
Japanese Finance Minister Hirohisa Fujii said on Sept. 29 that the government may act to stabilize the foreign-exchange market and denied that he supported a stronger yen. He reiterated today that he won’t discuss the currency’s gains at the meeting, Kyodo News reported.
“There is definitely rising concern about currencies as we’re at a delicate moment for economies,” Annunziata said.
While the dollar’s slide may buoy the U.S. economy by easing lopsided flows in trade and investment, World Bank President Robert Zoellick this week became the latest official to question its role as the world’s only reserve currency. Such speculation could undermine the U.S.’s ability to draw the foreign finance it needs to fund its $11.8 trillion debt.
Geithner yesterday repeated that a “strong dollar is very important” to the U.S., while Federal Reserve Chairman Ben S. Bernanke said there’s “no immediate risk” to the currency.
The trend away from the G-7 has been building since it stopped backing up its talk with money, said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut. It took almost two years for China to heed the request for more currency flexibility.
“I have a G-7 bias, I was weaned on currency accords,” Gilmore said. “On G-7 weekends now I go fishing.”
Dollar falls before US jobs data
LONDON — The dollar fell against the euro and yen on Friday as traders awaited key jobs data from the United States, the world's biggest economy and which remains stuck in recession.
The European single currency rose to 1.4557 dollars from 1.4543 dollars late in New York on Thursday.
Against the Japanese currency, the dollar dropped to 89.34 yen from 89.61 yen on Thursday.
Investors were awaiting the US employment report for September, which analysts expect to show 150,000-188,000 job losses, after 216,000 in August. The unemployment rate is expected to rise to 9.9 percent from 9.7.
The payrolls data are the "fear factor" for the market, Barclays Capital analysts wrote in a note to clients.
Worries deepened after a disappointing survey of US manufacturing stoked fears that job losses may show little signs of easing, dimming the chances of a sustainable recovery in the United States, analysts said.
The Institute of Supply Management said its index of the factory sector, also known as the purchasing managers index, fell to 52.6 percent in September from 52.9 percent in August.
Traders were also eyeing a meeting of finance chiefs from the Group of Seven major industrialised nations, starting on Friday, to discuss the state of the global economy and financial market stability.
But the event in Istanbul is seen as less important this time around because it comes soon after a summit of the Group of 20, which declared itself a week ago the world's top international economic forum.
There is uncertainty about whether the G7 will even publish a final statement after its gathering.
Japan's Finance Minister Hirohisa Fujii said he would not raise the issue of the yen's recent strength, which is hurting Japanese exporters.
The Japanese currency hit an eight-month high early this week of 88.25 to the dollar, its highest since late January.
The yen may hit 85 to the greenback by the end of the year as Japanese interest rates are relatively high when adjusted for deflation, Morgan Stanley analysts predicted.
In London on Friday, the euro was changing hands at 1.4557 dollars against 1.4543 dollars late on Thursday, at 130.02 yen (130.34), 0.9149 pounds (0.9115) and 1.5128 Swiss francs (1.5139).
The dollar stood at 89.34 yen (89.61) and 1.0392 Swiss francs (1.0408).
The pound was at 1.5909 dollars (1.5951).
On the London Bullion Market, the price of gold fell to 998.52 dollars an ounce from 1,004.75 dollars an ounce late on Thursday.
The European single currency rose to 1.4557 dollars from 1.4543 dollars late in New York on Thursday.
Against the Japanese currency, the dollar dropped to 89.34 yen from 89.61 yen on Thursday.
Investors were awaiting the US employment report for September, which analysts expect to show 150,000-188,000 job losses, after 216,000 in August. The unemployment rate is expected to rise to 9.9 percent from 9.7.
The payrolls data are the "fear factor" for the market, Barclays Capital analysts wrote in a note to clients.
Worries deepened after a disappointing survey of US manufacturing stoked fears that job losses may show little signs of easing, dimming the chances of a sustainable recovery in the United States, analysts said.
The Institute of Supply Management said its index of the factory sector, also known as the purchasing managers index, fell to 52.6 percent in September from 52.9 percent in August.
Traders were also eyeing a meeting of finance chiefs from the Group of Seven major industrialised nations, starting on Friday, to discuss the state of the global economy and financial market stability.
But the event in Istanbul is seen as less important this time around because it comes soon after a summit of the Group of 20, which declared itself a week ago the world's top international economic forum.
There is uncertainty about whether the G7 will even publish a final statement after its gathering.
Japan's Finance Minister Hirohisa Fujii said he would not raise the issue of the yen's recent strength, which is hurting Japanese exporters.
The Japanese currency hit an eight-month high early this week of 88.25 to the dollar, its highest since late January.
The yen may hit 85 to the greenback by the end of the year as Japanese interest rates are relatively high when adjusted for deflation, Morgan Stanley analysts predicted.
In London on Friday, the euro was changing hands at 1.4557 dollars against 1.4543 dollars late on Thursday, at 130.02 yen (130.34), 0.9149 pounds (0.9115) and 1.5128 Swiss francs (1.5139).
The dollar stood at 89.34 yen (89.61) and 1.0392 Swiss francs (1.0408).
The pound was at 1.5909 dollars (1.5951).
On the London Bullion Market, the price of gold fell to 998.52 dollars an ounce from 1,004.75 dollars an ounce late on Thursday.
Pakistan’s forex reserves rise to $11.15B, KSE rockets 24% since Dec 31st 2008
It was only back on the 30th of January that we covered the foreign exchange reserve position. At the time, the reserves stood at $10.2B and we had projected that this number would continue to rise very rapidly due to import reduction, healthy export performance and other expected inflows. Well, our projection has been borne out to quite some degree. In only 90 days, Pakistan’s foreign exchange reserve position has improved by $1B and it currently stands at $11.15B.
In addition to the progress on the forex reserve front, the Karachi Stock Exchange, Pakistan’s largest stock exchange, has also been staging a healthy recovery from the bearish trend it succumbed to during the second half of 2008. The KSE is up 24% from its Dec 31st close. And this is after a recent technical correction; the KSE actually peaked at 7,902 or a 36% increase over the Dec 31st close.
Through slightly more subjective information gathering, we’ve also determined that the real estate market is showing signs of very strong acceleration once again. While the mortgage crisis never really hit Pakistan since much of the privately owned property is owned outright, demand had receded somewhat through the second half of 2008. This is, however, no longer the case. The property business is picking up in a healthy way in Lahore and Islamabad, and prices are continuing to rise. One benchmark that we obtained specific information on is the price of plots in Lake City. A reference home that was available for Rs. 13.4M 18 months ago is now priced at Rs. 16M, showing 12% appreciation in just a year and a half. As compared to most international property markets, this is phenomenal growth, even if it is slow by historic Pakistani standards.
With the recent 1% cut in the State Bank’s interest rates, credit is on its way to becoming cheaper. There is still lots of room to go, but easing the rate certainly indicates that the inflationary threat is receding.
Overall, this news bodes very well for Pakistan’s economy. There is a lot more to look forward to. Within the next 9 months the new power generation capacity coming online will positively affect manufacturing outputs and exports. In fact, extrapolating from year to date performance, Pakistan’s trade gap is sure to shrink, foreign inflows will increase even beyond optimistic projections made a few months ago, credit will be more readily available and the KSE and real estate market will demonstrate strong growth. Stay tuned!
In addition to the progress on the forex reserve front, the Karachi Stock Exchange, Pakistan’s largest stock exchange, has also been staging a healthy recovery from the bearish trend it succumbed to during the second half of 2008. The KSE is up 24% from its Dec 31st close. And this is after a recent technical correction; the KSE actually peaked at 7,902 or a 36% increase over the Dec 31st close.
Through slightly more subjective information gathering, we’ve also determined that the real estate market is showing signs of very strong acceleration once again. While the mortgage crisis never really hit Pakistan since much of the privately owned property is owned outright, demand had receded somewhat through the second half of 2008. This is, however, no longer the case. The property business is picking up in a healthy way in Lahore and Islamabad, and prices are continuing to rise. One benchmark that we obtained specific information on is the price of plots in Lake City. A reference home that was available for Rs. 13.4M 18 months ago is now priced at Rs. 16M, showing 12% appreciation in just a year and a half. As compared to most international property markets, this is phenomenal growth, even if it is slow by historic Pakistani standards.
With the recent 1% cut in the State Bank’s interest rates, credit is on its way to becoming cheaper. There is still lots of room to go, but easing the rate certainly indicates that the inflationary threat is receding.
Overall, this news bodes very well for Pakistan’s economy. There is a lot more to look forward to. Within the next 9 months the new power generation capacity coming online will positively affect manufacturing outputs and exports. In fact, extrapolating from year to date performance, Pakistan’s trade gap is sure to shrink, foreign inflows will increase even beyond optimistic projections made a few months ago, credit will be more readily available and the KSE and real estate market will demonstrate strong growth. Stay tuned!
Forex trends: yen gains ground versus majors on stock prices fall
Friday, during early Asian deals, the Japanese unit surged against its key counterparts, hitting a new multi-month high against its European and Swiss counterparts as a fall in stock prices prompted investors to seek the safety of the Japanese currency. The yen also rose to a 4-day high against the US dollar and the British pound.The Japanese stock market opened sharply lower Friday after weak US economic data overnight stoked concerns about the strength of an economic recovery. Additionaly, the yen's continuing rise against the U. dollar dragged down exporter stocks. Thus, the benchmark Nikkei 225 Index finished the morning session at 9,733.42, losing 245.22 points or 2.46%. This set the lowest intraday level since July 22, when the index touched 9,667.69.Against the US dollar, the Japanese yen edged higher during early Asian deals on Friday. At 11:05 pm ET, the yen reached a 4-day high of 89.23 against the dollar, compared to 89.62 hit late New York Thursday. The next upside target level for the yen is seen around 89.61.The Japanese unit that closed Thursday's North American session at 130.36 against the European currency rose to 129.66 during Friday's early Asian trading. This set the highest point for the Japanese yen since July 14, 2009. If the yen gains further, 128.1 is seen as the next target level.Against the British pound, the Japanese currency traded higher during today's early Asian deals. At 8:10 pm ET, the yen climbed to a 4-day high of 142.00 versus the pound, compared to Thursday's closing value of 143.02. On the upside, 139.0 is seen as the next target level for the yen. The yen advanced to 85.68 against the Swiss franc at 8:10 pm ET. This set the highest point for the Japanese currency since July 14, 2009. The franc-yen pair is presently trading at 85.90 with 85.2 seen as the next resistance level.
Pakistan forex reserves surges by 1156 million
KARACHI: Pakistan foreign exchange reserves swelling up process continues, as it was seen recording a significant increase by 1156 million during one week.State Bank of Pakistan (SBP) data showed that foreign exchange reserves in the country has shot up to $14.47 billion, recording significant increase of $1156 million during the week ending September 19. State Bank reserves amounted to $10.94 billion, while those with the commercial banks $3.53 billion.Analysts said that following Pakistan’s international credit rating improvement, foreign investors have went into action in the stock market, which has resulted in the pouring in of forex in the country. Besides, the shrinking trade deficit was also positively impacting on the forex reserves, said the analyst.
Pak forex reserves climb to $ 14.4911 bln
KARACHI: Pakistan's total liquid foreign reserves increased further to 14.4911 billion dollars, said a SBP statement.On Sept. 26, 2009 the foreign reserves held by State Bank amounted dollars 10.9354 billion, whereas net foreign reserves held by banks other than SBP figured 3.5557 billion dollars.One week earlier, the forex were figured $ 14.4763 billion ranking the highest in last two years.The foreign reserves held by State Bank stand at 10.9415 billion dollars while 3.5348 billion dollars are with banks other than SBP.
Saturday, October 3, 2009
Forex Club Opens New Office in Chinatown!http://bankofcurrency.blogspot.com
After months of preparation, Forex Club proudly opens the doors of its brand new Chinatown Office to the public!The Chinatown Grand Opening will take place on September 25th, 2009 at the brand new office on 90 Bowery, in downtown Manhattan, New York. This office is unlike any other Forex office, as its only goal is to educate its users with onsite lessons. This momentous day is history in the making, as this is the first time a Forex company has ever opened an office to educate its customers.The Grand Opening will take place from 11:00am (EST) until 1:00pm (EST). In attendance will be Forex Club’s President and Vice President, as well as representatives from Bloomberg L.P., Dow Jones Newswires, Autochartists, MDIO Software, Rumus Software Sdn Bhd, and TD Bank Financial Group. Also in attendance will be Forex Club staff members, who will gladly be able to answer any and all questions you have pertaining to our trading platforms.Guests are due to arrive at 11:00am (EST). A very entertaining lion dance is scheduled to start at 11:45am (EST). The ribbon cutting ceremony will take place at 12:00pm (EST), following by a speech from by the President and Vice President.
Saturday, September 26, 2009
Forex Trading vs Stock Markethttp://bankofcurrency.blogspot.com
Two of the main differences between (and some would say advantages over) the forex market compared to the stock market are:
1. Trading hours. The forex market is open 24 hours a day. Trading is done over three continents, allowing a trader to trade continuously and to react immediately to events and new developments. The market opens on Sunday evening and closes Friday night.
2. Commissions. Electronic trading and competition have brought about a sizeable reduction in the bid-offer spread (the equivalent of commissions). The spread covers the risk of the market maker. The spread for the majors remain very low, but can increase as the liquidity of a specific currency drops. Despite recent reductions of commissions through online stock brokers, the Forex market is considered, by some, to have the lowest commissions relative to trade size when compared to other financial markets. This is also in part due to the 100:1 leverage offered by most trading houses. A client with a $10,000 deposit can leverage this to $1,000,000. Some electronic communication network brokerages have introduced a per trade commision alongside a narrow pip spread.
Many retail trading houses would suggest that the large size of the market makes it impossible for a speculator to affect the market. This is not quite the truth - the stakes are higher, larger quantities of money are involved, and the bigger banks spend a lot of time and effort trying to manipulate the market. Governments have been known to step in and affect prices.
1. Trading hours. The forex market is open 24 hours a day. Trading is done over three continents, allowing a trader to trade continuously and to react immediately to events and new developments. The market opens on Sunday evening and closes Friday night.
2. Commissions. Electronic trading and competition have brought about a sizeable reduction in the bid-offer spread (the equivalent of commissions). The spread covers the risk of the market maker. The spread for the majors remain very low, but can increase as the liquidity of a specific currency drops. Despite recent reductions of commissions through online stock brokers, the Forex market is considered, by some, to have the lowest commissions relative to trade size when compared to other financial markets. This is also in part due to the 100:1 leverage offered by most trading houses. A client with a $10,000 deposit can leverage this to $1,000,000. Some electronic communication network brokerages have introduced a per trade commision alongside a narrow pip spread.
Many retail trading houses would suggest that the large size of the market makes it impossible for a speculator to affect the market. This is not quite the truth - the stakes are higher, larger quantities of money are involved, and the bigger banks spend a lot of time and effort trying to manipulate the market. Governments have been known to step in and affect prices.
Wednesday, September 16, 2009
Japan 'opposes yen intervention'
Japan's incoming finance minister has said he opposes intervention in the currency market.Hirohisa Fujii said currency intervention was not necessary as long as the yen moved gradually, and added other countries would not support it.
Mr Fujii also said a strong yen had merits - which is unusual, considering Japan is such a large exporter.
The yen is up 6.7% against the dollar since June. A stronger yen makes Japanese exports less competitive.
Japan has in the past intervened in the currency markets to weaken the yen when the government thought its rise was threatening growth in the world's second-largest economy.
But the authorities have not intervened since 2005.
New direction
"We can't conduct intervention because the current foreign exchange markets won't move without a joint intervention," Mr Fujii said.
"I can't think other countries will conduct joint intervention even though the yen rises slightly."
Japan's parliament has confirmed Yukio Hatoyama as prime minister, handing power to his untested Democratic Party of Japan (DPJ) and ending more than 50 years of almost unbroken rule by the Liberal Democratic Party.
Mr Hatoyama will appoint key members of his cabinet over the next few days.
His comments about a strong yen reflect the DPJ view that a strong yen can be in the country's interest, and are a marked departure from the former ruling party's long-standing view.
Dollar Falls to 2009 Low Versus Euro; Yen Strengthens Toward 90
Sept. 16 (Bloomberg) -- The dollar dropped to the weakest level this year against the euro on speculation a report on manufacturing will encourage investors to sell the greenback and buy higher-yielding assets outside the U.S.
The yen appreciated toward 90 per dollar after incoming Finance Minister Hirohisa Fujii said Japan’s new government is opposed to intervening in currency markets unless swings become excessive. The Australian and New Zealand dollars rose to the highest level in more than a year against the greenback as the MSCI World Index advanced for a second day.
“It’s very clear that the bullish trend in the euro against the dollar is being driven by improved risk appetite,” said Roberto Mialich, a senior global currency strategist in Milan at UniCredit Markets & Investment Banking. “There are signs the global economy is getting brighter.”
The dollar dropped 0.2 percent to $1.4680 per euro at 7:24 a.m. in New York, from $1.4658 yesterday. It earlier reached $1.4714, the weakest level since Dec. 18. The dollar may decline to $1.55 against the single European currency during the first half of 2010, Mialich said. The median forecast of 45 analysts and strategists compiled by Bloomberg News is for the dollar to trade at $1.42 by the end of June 2010.
Japan’s currency traded at 132.51 per euro, compared with 133.47 yesterday. It was at 90.27 per dollar, compared with 91.05. The last time the yen was stronger than 90 was on Feb. 12. Australia’s currency bought 87.08 U.S. cents, after rising to 87.28 cents, the strongest since August 2008. New Zealand’s dollar fetched 71.23 U.S. cents as much as 71.40 earlier today.
Lending Rates
Signs that the U.S. is emerging from its deepest recession since World War II are encouraging investors to buy higher- yielding currencies at the expense of the dollar. The benchmark rate is 3 percent in Australia and 2.5 percent in New Zealand, compared with Japan’s 0.1 percent and as low as zero in the U.S.
U.S. production rose 0.6 percent last month, the biggest gain since October, according to the median forecast of 75 economists surveyed by Bloomberg News. The report from the Federal Reserve is due at 9:15 a.m. New York time.
The MSCI World Index added 0.9 percent, while Europe’s Dow Jones Stoxx 600 Index rose 1 percent. Futures on the Standard & Poor’s 500 Index expiring in December increased 0.5 percent.
The Dollar Index, which tracks the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, traded at 76.322, from 76.544 yesterday. It earlier fell to 76.187, the lowest since Sept. 23, 2008.
Greenspan on Debt
Former Fed Chairman Alan Greenspan, speaking in a broadcast to Tokyo clients of Deutsche Bank Securities Inc. today, said if there was a significant issuance of Treasury securities that increased the national debt, “there would be of necessity downward pressure on the dollar.”
At the same time, he said, “you can’t say that without saying what the counterparty currency would be.”
A government report today will probably show the U.S. current-account deficit narrowed in the second quarter to $92 billion, the least since 2001, according to a Bloomberg survey of 39 economists. A narrowing deficit reduces pressure on the dollar by making the country less reliant on foreign capital. The current account is the broadest measure of trade because it includes transfer payments and investment income.
The yen rose against the dollar after Fujii, 77, told reporters in Tokyo that recent currency movements “aren’t excessive.” Asked if he’s opposed to intervention, Fujii said, “In principle, yes. Such actions can destroy a free economy.”
Intervention in 2004
Japan hasn’t entered the foreign-exchange market since the central bank, at the request of the Finance Ministry, sold a record 14.8 trillion yen ($160 billion) in the first quarter of 2004 in an effort to weaken the currency.
“They’ve tried to make it clear they are more tolerant of a strong yen and have also suggested they aren’t convinced intervention is effective,” said Daragh Maher, deputy head of global currency strategy in London at Calyon, the investment- banking arm of Credit Agricole SA. “I think they’ll leave it alone to be honest.”
The pound stayed near a four-month low against the euro as a report showed the U.K. jobless rate rose to the highest level since 1995, supporting the case for the Bank of England to keep the benchmark interest rate at a record low of 0.5 percent.
The central bank Governor Mervyn King said yesterday policy makers are considering lowering the rate they pay financial institutions to hold reserves at the bank to encourage lending.
“It’s real rollercoaster ride for sterling at the moment,” Tom Levinson, a currency strategist in London at ING Bank NV, said in a Bloomberg Television interview. “Comments from Governor King were pretty dovish. That’s obviously put sterling back under pressure.”
The pound was at 88.88 pence per euro after earlier reaching 89.31 pence, the weakest level since May 15. Sterling increased 0.2 percent to $1.6520.
The yen appreciated toward 90 per dollar after incoming Finance Minister Hirohisa Fujii said Japan’s new government is opposed to intervening in currency markets unless swings become excessive. The Australian and New Zealand dollars rose to the highest level in more than a year against the greenback as the MSCI World Index advanced for a second day.
“It’s very clear that the bullish trend in the euro against the dollar is being driven by improved risk appetite,” said Roberto Mialich, a senior global currency strategist in Milan at UniCredit Markets & Investment Banking. “There are signs the global economy is getting brighter.”
The dollar dropped 0.2 percent to $1.4680 per euro at 7:24 a.m. in New York, from $1.4658 yesterday. It earlier reached $1.4714, the weakest level since Dec. 18. The dollar may decline to $1.55 against the single European currency during the first half of 2010, Mialich said. The median forecast of 45 analysts and strategists compiled by Bloomberg News is for the dollar to trade at $1.42 by the end of June 2010.
Japan’s currency traded at 132.51 per euro, compared with 133.47 yesterday. It was at 90.27 per dollar, compared with 91.05. The last time the yen was stronger than 90 was on Feb. 12. Australia’s currency bought 87.08 U.S. cents, after rising to 87.28 cents, the strongest since August 2008. New Zealand’s dollar fetched 71.23 U.S. cents as much as 71.40 earlier today.
Lending Rates
Signs that the U.S. is emerging from its deepest recession since World War II are encouraging investors to buy higher- yielding currencies at the expense of the dollar. The benchmark rate is 3 percent in Australia and 2.5 percent in New Zealand, compared with Japan’s 0.1 percent and as low as zero in the U.S.
U.S. production rose 0.6 percent last month, the biggest gain since October, according to the median forecast of 75 economists surveyed by Bloomberg News. The report from the Federal Reserve is due at 9:15 a.m. New York time.
The MSCI World Index added 0.9 percent, while Europe’s Dow Jones Stoxx 600 Index rose 1 percent. Futures on the Standard & Poor’s 500 Index expiring in December increased 0.5 percent.
The Dollar Index, which tracks the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, traded at 76.322, from 76.544 yesterday. It earlier fell to 76.187, the lowest since Sept. 23, 2008.
Greenspan on Debt
Former Fed Chairman Alan Greenspan, speaking in a broadcast to Tokyo clients of Deutsche Bank Securities Inc. today, said if there was a significant issuance of Treasury securities that increased the national debt, “there would be of necessity downward pressure on the dollar.”
At the same time, he said, “you can’t say that without saying what the counterparty currency would be.”
A government report today will probably show the U.S. current-account deficit narrowed in the second quarter to $92 billion, the least since 2001, according to a Bloomberg survey of 39 economists. A narrowing deficit reduces pressure on the dollar by making the country less reliant on foreign capital. The current account is the broadest measure of trade because it includes transfer payments and investment income.
The yen rose against the dollar after Fujii, 77, told reporters in Tokyo that recent currency movements “aren’t excessive.” Asked if he’s opposed to intervention, Fujii said, “In principle, yes. Such actions can destroy a free economy.”
Intervention in 2004
Japan hasn’t entered the foreign-exchange market since the central bank, at the request of the Finance Ministry, sold a record 14.8 trillion yen ($160 billion) in the first quarter of 2004 in an effort to weaken the currency.
“They’ve tried to make it clear they are more tolerant of a strong yen and have also suggested they aren’t convinced intervention is effective,” said Daragh Maher, deputy head of global currency strategy in London at Calyon, the investment- banking arm of Credit Agricole SA. “I think they’ll leave it alone to be honest.”
The pound stayed near a four-month low against the euro as a report showed the U.K. jobless rate rose to the highest level since 1995, supporting the case for the Bank of England to keep the benchmark interest rate at a record low of 0.5 percent.
The central bank Governor Mervyn King said yesterday policy makers are considering lowering the rate they pay financial institutions to hold reserves at the bank to encourage lending.
“It’s real rollercoaster ride for sterling at the moment,” Tom Levinson, a currency strategist in London at ING Bank NV, said in a Bloomberg Television interview. “Comments from Governor King were pretty dovish. That’s obviously put sterling back under pressure.”
The pound was at 88.88 pence per euro after earlier reaching 89.31 pence, the weakest level since May 15. Sterling increased 0.2 percent to $1.6520.
Wednesday, September 9, 2009
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