Asia cbanks ready to boost coactions

HANOI: Southeast Asian leaders, faced with rocketing exchange rates that risk destabilising their economies, called Thursday for more cooperation between regional central banks to calm the currency tensions. While China has kept a tight grip on the yuan, many emerging Asian economies have seen their currencies soar against the US dollar, making their exports less competitive and inviting a massive inflow of foreign capital.

The leaders of Thailand and the Philippines believe stronger coordination would give Association of Southeast Asian Nations (Asean) countries more clout as China and the United States trade blows over currency.
“It’s important for us to be more coordinated and speak with one voice, particularly with regard to things like currency,” said a spokesman for Philippine President Benigno Aquino on the sidelines of the Asean summit.
Currency tensions were set to be a hot issue at the meeting of the 10-member Association of Southeast Asian Nations, and wider 16-nation talks Saturday that also include China, Japan, South Korea, Australia, India and New Zealand.
Host nation Vietnam is something of an anomaly as its dong currency is under pressure amid spiraling inflation.
Aquino and Thailand’s Prime Minister Abhisit Vejjajiva discussed their concerns on rising exchange rates at two-way talks Wednesday, said spokesman Ricky Carandang.
“The agreement (with Abhisit) was that central bankers and finance ministers talk a little bit more frequently because right now the actions have been taken on an individual rather than a coordinated basis,” he said. “So we feel that if we talk to each other more and perhaps coordinate our efforts more then they would be more effective.” Washington has long accused China of keeping the yuan artificially low.
Beijing in turn says the Federal Reserve’s loose monetary policy risks undermining emerging economies, now grappling with an influx of hot money as investors seek higher returns amid low interest rates elsewhere. -Reuters

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First Gulf Bank Q3 profit down

DUBAI: Abu Dhabi-based First Gulf Bank posted a 9.0 per cent drop in net profits for the third quarter on Thursday as it announced allocating new provisions for bad debts. The bank said its net earnings fell to 849 million dirhams (231.3 million dollars) for the quarter ending September 30, compared to 930 million dirhams in the corresponding period last year.

Revenues for the core banking operation were up 3.0 per cent in the third quarter to 1.52 billion dirhams, but total revenues for the group as a whole, including its property arm and overseas operation, dropped 8.0 per cent to 1.55 billion dirhams.
Revenues from subsidiaries and associates fell 86 per cent to 31 million dirhams in the third quarter, putting pressure on the bank’s overall profit.
The financial statement to the Abu Dhabi Securities Exchange said that the profit of the bank, excluding subsidiaries and associates, had effectively increased 15 per cent to 821 million dirhams in the third quarter.
The statement revealed that the bank has provisioned 406 million dirhams for doubtful debts and impairments, compared to 510 million dirhams in the third quarter of 2009. -Agencies

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FWBL promised full govt backing

ISLAMABAD: The National Assembly’s Standing Committee on Finance, Revenue, Planning, and Development met here under the chair of Fauzia Wahab and discussed the performance of the First Women Bank Limited (FWBL).  The Standing Committee took serious note of the problems and the challenges faced and assured its management of solving them at priority basis so that this special purpose public entity could successfully be run and made an asset for Pakistan financial sector and provide fair opportunities to the women of Pakistan.

According to National Assembly Spokesman, President, First Women Bank Limited, told the committee that FWBL’s paid up capital stands at Rs284 million and the shareholders equity at Rs1093 million. The bank president further stated that FWBL has Rs11,566 million deposits and has advanced Rs7,393 million. The bank has gathered Rs13,596 million as total assets with the profit of Rs44 million and, net asset value of per share of Rs.38.55, she added.
The bank not only provides complete banking service but also some support services exclusively for the women like computer literacy etc and the bank has a collaboration with different national, international private, public and non-governmental organisations like UNDP, MOWD, NRSP etc, she told the body. The standing committee was also informed that since the government has earmarked the bank for the privatisation, its activities have been stopped.
She further elaborated that the Bank is facing challenges like implementation of Basel II, minimum capital requirement, organisational restructuring and human resource re-organisation etc wherein it looks forward to the government for immediate intervention.
Meeting was attended by, Syed Faisal Saleh Hayat, Abdul Rashid Godil, Nighat Parveen Mir, MNAs Kashmala Tariq and Khwaja Muhammad Asif besides officers from Ministry of Finance, Revenue, Planning and Development and FWBL.-Online

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UBL posts record net

KARACHI: United Bank Limited (UBL) has posted a record consolidated profit before tax of Rs7.907 billion for nine months ending September 30, 2010.

According to financial results sent to Karachi Stock Exchange (KSE), the pre-tax profit of the bank also surged to Rs12.804 billion as earning per share also improved to Rs6.50 during the period under review compared to Rs5.66 in 2009.

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Silkbanks loss down

KARACHI: Silkbank Ltd has reported a lower loss after tax of Rs700.335 million for the third quarter ending September 30, 2010 compared to Rs1.33 billion in the corresponding period last year.

According to financial results of the company dispatched to Karachi Stock Exchange (KSE) here Thursday, the pre-tax loss also declined to Rs0.83 billion as loss per share dropped to Rs0.32 compared to Rs0.99 billion in the same period last year.

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Swiss franc gains vs dollar

ZURICH: The Swiss franc rose against the dollar on Thursday as the greenback paused for breath after its recent rally on doubts about the size of an expected asset purchase programme by the US Federal Reserve.

The franc was up 0.3 per cent against the dollar at 0.9875 per dollar. Commerzbank technical analysts said they expected the dollar to continue to recover from the all-time low of 0.9461 set earlier this month with interim support at 0.9683 and resistance at 0.9932, with a medium-term target of parity.
The franc was 0.14 per cent weaker against the euro compared to the New York close, trading at 1.3652 per euro at 0634 GMT. UBS economist Reto Huenerwadel noted that volumes in euro/franc trades were off the highs prompted by the Swiss National Bank’s (SNB) intervention earlier in the year and said economic fundamentals were playing a bigger role. -Reuters

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NEW YORK: The dollar fell on Thursday in tandem with Treasury yields, driving back to the weaker end of a well-worn range below $1.40 per euro, on talk Federal Reserve quantitative easing could be larger than expected. A New York Federal Reserve survey of dealers and investors on the size of the stimulus program included scenarios of up to $1 trillion, a figure larger than recent estimates

The bigger the move by the US central Bank to effectively print money, the more it will push down US Treasury yields and reduce the attractiveness of dollar-based assets.
Dollar selling against the euro and other currencies by reserve managers also sent the US currency lower.
“The issue is whether the market believes the Fed will deliver significant quantitative easing over a definitive time line,” said Peter Frank, a currency strategist at Societe Generale in London. “If they do, the dollar will weaken.”
In early New York trade, the euro had risen 0.9 per cent on the day to $1.3898. This helped to push the dollar 1 per cent lower versus a currency basket on the day though it is down only a marginal 0.6 per cent for the year to date.
Analysts said the dollar was also weighed down by a narrowing spread between 10-year US and euro-zone government bonds.
Euro gains kept it above a one-week low around $1.3734 hit on electronic trading platform EBS on Wednesday, even as debt concerns in Ireland and Greece and a breakdown in budget talks in Portugal highlighted problems facing periphery euro-zone countries.
Frank said support for the euro despite sovereign debt issues illustrated the resilience of the single currency, and that he expected it to rise back above $1.40 in the near term.
But worries about the banking sector and the region’s debt problems could check the euro’s gains. The European Central Bank’s quarterly Bank Lending Survey said more banks expect to tighten their credit standards for corporate loans in Q4.
Against the yen, the dollar fell 0.9 per cent to 80.93 yen. Small stop loss were cited by traders in the 80.90 area with bids at 80.60 and 80.40. There are also solid 80.00 barriers.
The Japanese currency showed little reaction to a Bank of Japan decision to keep interest rates virtually at zero while holding off from new policy initiatives. -Reuters

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LONDON: Sterling rose one per cent against a broadly weaker dollar and outperformed the euro on Thursday as investors looked to push the currency higher in a choppy market, offsetting disappointing UK housing data. Nationwide data showing UK house prices in October fell for the third month in four earlier knocked the pound to session lows, but traders said persistent buying from Middle East accounts helped it rebound higher.

The pound climbed to a 10-day high of $1.5954, with gains accelerating after stop loss orders were triggered through $1.5900 and $1.5910 as the dollar weakened versus a basket of currencies. By 1504 GMT, it was up 1 per cent at $1.5935.
“These are intra-day fast money flows. There’s a lot of stop hunting going on, people are looking for targets and trying to push sterling in the direction they want,” said Peter Luxton, a market analyst with Informa Global Markets.
Traders said a buy sterling, sell euro order at the 1215 GMT fix also helped the pound rally. The euro traded down 0.1 per cent at 87.25 pence.
Sterling’s broad gains took it to a three-week high on a trade-weighted basis of 80.0.
Analysts said trading volumes were thin, however, as most investors were sidelined ahead of a key US policy decision next week, with uncertainty about how much quantitative easing the Federal Reserve will opt for keeping them cautious. “No one really wants to stay in extended positions ahead of next week,” Luxton said, adding he expected sterling to stay choppy and range-bound between $1.5700 and $1.6000 over the next few days. -Reuters

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Forex reserves down at $16.88bn

KARACHI: Pakistan’s foreign exchange reserves fell to $16.88 billion in the week ending Oct 22, down from a record $17.10 billion the previous week, the central bank said Thursday.

Reserves held by the State Bank of Pakistan (SBP) fell to $13.09 billion from $13.26 billion, while those held by commercial banks also fell to $3.79 billion from $3.84 billion, said Syed Wasimuddin, chief spokesman of the SBP.
“These were regular debt payments,” said Wasimuddin.
Pakistan’s reserves hit a record high in the week ending Oct 15 because of an increase in remittances from overseas Pakistanis and a narrowing trade deficit.
They were further boosted last month after the IMF sent Pakistan $450 million and said that the money would go toward the budget to help with additional spending for flood relief and immediate foreign exchange needs. This was separate from the $11 billion IMF bailout programme, agreed in 2008.

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Germany Feels First Chinese Rare Earths Squeeze

German high-tech companies have reported their first supply shortages of rare earths following a rapid diminution of Chinese export quotas on the precious metals, which are used in everything from wind turbines to mobile phones and hybrid cars.
According toSpiegel Online, China 's blockade of shipments of rare earth metals is already causing some German companies to suffer shortages.
German companies say they are being pressured by Chinese officials to increase their investment in China if they want to be assured of access to rare earth minerals.
Since 2005, China has imposed a "rapid diminution of export quotas" on a number of rare metals and is planning afull export ban as of 2015.
Although reserves are sufficient, over 95% of production is currently located in China and it is feared that potential supply disruptions will hamper the development of the green economy.
German Economy MinisterRainer Brüderlesaid yesterday (21 October) that attempts to monopolise rare earths presented a global challenge that needs to be addressed at the G8 andG20next month.
Chinese policy
China 's policy on rare earths has sat atop the trade agenda since it emerged that China had halted shipments to Japan during a territorial dispute.
Chinese export restrictions on rare earths have already been challenged at the WTO by the United States , the EU and Mexico , which say the policy helps Chinese producers who use the minerals at the expense of foreign competitors.
Sun Zhenyu, China 's ambassador to the World Trade Organisation, said this week that China 's own stocks of the rare metals were depleting fast and that Beijing had to conserve them for environmental reasons.
Curtailing production would affect both foreign customers and domestic producers, he said.
"We would like our partners to also start working on some kind of production of rare earths of their own resources," Sun said. "So we are very glad to see that some of our trading partners are starting to do so."
Alternative sources
Rising prices and concerns about Chinese supply have prompted companies in the United States and other countries to reopen mines that had been considered uneconomic.
Countries are also realising the importance of recycling these materials.
According to geologists, the best hope for untapped rare earth metal depositories lie in Greenland and Canada . But a number of other countries, including Russia , Ukraine , Kazakhstan , India and South Africa , have them.
However, according to industry, it could take three to five years for new mines to achieve full production.

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Japan's Igarashi Says Yen Sales Most Effective When 'Surprise'

Currency-market intervention is most effective when it’s a “surprise,” a senior Japanese Finance Ministry official said, sending a warning to traders that Japan is prepared to act again to stem the yen’s advance.
“A surprise move would probably be effective to some extent,” Japanese Vice Finance Minister Fumihiko Igarashi said in an interview in Tokyo yesterday. “We can’t make an announcement in advance that we will act, but, on the other hand, we can’t say that we won’t act either.”
Group of 20 finance authorities said last weekend that while countries should refrain from “competitive devaluations” of exchange rates, advanced economies should also be vigilant about excessive currency moves. Taking that as a cue, Finance Minister Yoshihiko Noda repeated after the G-20 meeting that Japan remains ready to sell yen.
Japan’s currency has appreciated more than 5 percent since authorities intervened in currency markets for the first time in six years on Sept. 15. It strengthened to 80.41 to the dollar yesterday, a 15-year high, and traded at 80.83 at 9:02 a.m. in Tokyo today. “The recent strengthening in the yen has been abrupt,” Igarashi said.
‘Gravitational Pull’
“The gravitational pull of 80.0” yen to the dollar “now looks unavoidable,” Adrian Schmidt, foreign exchange strategist at Lloyds TSB Bank PLC, wrote in a note yesterday. That means that Japan “could be persuaded to intervene if a global plan to tackle imbalances and more concrete details to combat excessive market volatility in exchange rates come to nothing” at the G- 20 summit in Seoul on Nov. 11-12.
Igarashi said that he didn’t know how “accepting” U.S. Treasury Secretary Timothy Geithner and other policy makers would be of further foreign-exchange intervention, and that “there needs to be a sense of trust among authorities as well as among governments.”
The Japanese currency has gained more than 15 percent against the dollar this year, threatening to erode exporters’ repatriated earnings from abroad.
“Yen intervention risks remain high,” Mansoor Mohi-uddin, foreign-exchange strategy chief at UBS AG, wrote in a note yesterday. “Japan can point to the reference about being vigilant against ‘the risk of disorderly movements in exchange rates’ if it wants to intervene again,” he wrote, referring to the G-20’s Oct. 23 statement.
Watching Markets
Cabinet ministers have signaled that intervention remains an option. Noda said today that yen movements have been “one- sided” and he will continue to watch currency markets with great interest. Economy Minister Banri Kaieda said in an Oct. 22 interview that intervention is permissible when currencies are volatile and that overseas opposition shouldn’t deter policy makers from combating abrupt yen moves.
“Of course, the basic rule is that manipulative forces should be stripped from markets,” Igarashi said. “But when price moves are extreme and based on speculation, that can disrupt the economy” and authorities must take a “bold stance,” he said.
Igarashi, who was appointed to his post last month, is a ruling Democratic Party of Japan politician who once cited traders as saying Japan’s intervention efforts were “foolish.” The 61-year-old lawmaker early in his career served as a political reporter at news agency Jiji Press.
Restraining Movements
Igarashi said on Oct. 7 that Japan wouldn’t weaken the yen to enhance its export competitiveness and that any intervention is aimed at restraining excessive movements.
Group of 20 finance chiefs vowed to avoid weakening currencies to lift exports to calm fears of a trade war stemming from using cheaper currencies to spur growth. They called for reduced trade imbalances while stopping short of a U.S. proposal for targets that was aimed at making a yuan advance more palatable to China. Leaders may take up the debate at the November Seoul summit.
Among major economies, conducting intervention has “not been popular because of doubts about its potential for success, and the reluctance of governments to be seen to be opposing market forces, and in particular to be defeated by them,” wrote Lloyds TSB’s Schmidt. “This looks to be less a problem for Japan than most other countries, as they have a history of being more prepared to intervene.”
Japanese Prime Minister Naoto Kan has pledged more than 5 trillion yen ($62 billion) in stimulus packages and the Bank of Japan unexpectedly cut its benchmark interest rate near zero this month while also creating an asset-purchase fund to buy government and corporate debt as well as exchange-traded funds.
Japan’s exports grew at the slowest pace this year in September, increasing 14.4 percent from a year earlier, a sign the country is losing its chief engine for growth as its currency rises just as overseas demand cools.
Reports this week are projected to show that industrial production slid and deflation persisted, adding to concern that the expansion is losing momentum.

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China's energy demand growth to ease in Q4

BEIJING - Energy demand growth in China in the fourth quarter is expected to slow as governments step up efforts to save energy and cut emissions, National Energy Administration official Wang Siqiang said Monday.
Growth in energy demand eased in the third quarter on government curbs, Wang noted.Growth in coal imports will slow in the fourth quarter as China's appetite for coal has shrank and supply will be plentiful during the period, he said.

China will import 120 million tons of coal this year, up 16 percent year on year, he estimated.
He also forecast China to produce 200 million tons of crude oil and 95 billion cubic meters of natural gas this year. Total power generating capacity will be 950 million kilowatts by the end of the year, with wind-power capacity at 35 million kilowatts and solar-power at 600,000 kilowatts, Wang added.

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Pound Falls as UK Mortgage Approvals Declined in September

The Great Britain pound fell today against the Japanese yen after report showed the number of the mortgage approval decreased more than expected. The pound gained against the US dollar, which fell against all other currencies.
The number of new mortgages approved for home purchase during the September was 31,104, compared to the August value of 31,781. The analysts expected the value near 31,600. The analysts also expect the house prices to continue their decline.
The bad economic reports may spur the Bank of England to perform the quantitative easing sooner than anticipated. The preliminary GDP report tomorrow should provide more evidences to support such outlook if the GDP declined as the analysts estimated.
GBP/USD rose from 1.5663 to 1.5710 today as of 22:20 GMT, following the jump to 1.5771. GBP/JPY fell from 127.44 to 126.88 after it reached the intraday low level of 126.45.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

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SBP lowers fiscal year 2011 growth

KARACHI   : Forecasting a 2 to 3 percent real GDP growth against the target of 4.  5 percent for FY11, State Bank of Pakistan on Monday said the negative shocks stemming from floods have further exposed the existing structural weaknesses in the economy and to address these will require improvement in macroeconomic discipline as well as continued reforms to improve the resilience of the economy. The State Bank in its Annual Report on the State of the Economy for the year 2009-10, said that the required reforms include: improve productivity, strengthen public institutions, improve economic governance and build social safety nets to protect vulnerable segments of the population.  Referring to recent devastating floods in the country, the report pointed out that various FY11 macroeconomic targets have suffered serious setbacks early in the year as large areas of the country were devastated by widespread rains and unprecedented floods.   It said that even a cursory assessment of the broad contours of the losses indicates that their repercussions will continue to stress the economy for many years.   It is therefore obvious that the economic priorities and targets for FY11, in particular, will see substantial revision and all key macroeconomic indicators will likely to record deterioration, the report observed.  In this backdrop, the report indicated that chief economic targets such as GDP, inflation, monetary growth, fiscal deficit, and current account deficit would be missed.   The report projected that GDP growth is likely to be between 2 percent to 3 percent in FY11, average annual inflation is expected to be 13.  5 percent to 14.  5 percent against target of 9.  5 percent while the fiscal and current account deficits are likely to be between 5.  0 percent to 6.  0 percent of GDP, and between 3.  0 percent to 4.  0 percent of GDP over the target of 4 percent and 3.  4 percent respectively.  Furthermore, it projected that workers remittances are likely to stay between $9.  5 billion to $10.  5 billion while exports and imports are likely to be between $20 billion to $21 billion and $34 billion to $35 billion, respectively.   The macroeconomic framework embedded in the FY11 Annual Development Programme targets have suffered a serious setback early into the year as large areas of the country were devastated by widespread rains and unprecedented floods.   Large parts of the country s agricultural heartland were particularly hit hard by these floods, with significant damages to standing Kharif crops (eg, cotton, rice and, sugarcane) and livestock.  Preliminary assessments in the aftermath of the flood indicate a much lower growth expectation.   Indeed, the agri-sector growth risks turning negative unless Pakistan achieves very good wheat harvest.   Conventional wisdom, would suggest that the improved water availability and increased fertility of alluvial soil (silt) deposited by floods would help support better crop harvests, the report said.  Realising this potential, however, entails a very quick and systematic effort to address key bottlenecks in affected areas, including restructuring of farmers debts, rapid deployment of resources for drainage of low-lying areas, provision of quality inputs (seed, fertiliser, etc), the report suggested.   It must also be recognised that farmers would be inclined to invest first in the provision of shelter for their families and only then in crops, the report said and added that therefore this suggests the need to support farmers with cash grants for rebuilding as well as with the supply of inputs, if production is to be brought back to pre-flood scenario soon.  Industrial growth will also suffer because of obvious direct losses include those of manufacturing units dependant on the cotton, sugarcane, and rice crops, as well as those suffering temporary supply disruptions.   Also significant could be the indirect losses, as aggregate demand weakens, particularly from the flood stricken areas.   Already, it seems likely that the consumer durable industries will see a substantial decline in demand, it added.  Not surprisingly, demands on the public exchequer are expected to rise sharply in FY11 to finance relief and reconstruction activities in the wake of the floods.   The government correctly proposes to extract a temporary enhancement in revenue from the relatively affluent segments of the tax base, but the needs are still likely to exceed any reasonable increase in receipts.   This raises two issues: First, it must be understood that while government interventions, in the terms of resources and policy, are essential to the scale and speed of any recovery, the government has neither the capacity nor the resources to deliver on all public expectations for relief and support.  A large part of the reconstruction effort over the years will therefore depend substantially on private enterprise and on the broad support of civil society.   Second, the expected increase in fiscal pressures in FY11 is also an opportunity to undertake fundamental changes, the report said.  The impact of flood and rain damages and shortages of minor crops are not expected to persist beyond 2 to 3 months as supply line improves and as fresh crops enter the market.   Similarly, for some other products, any rise in domestic prices would be capped by low international prices.   The worsening in most of Pakistan s macroeconomic variables, further complicate the monetary debate in FY11.   On the one hand, there is the argument that the central bank should respond to the rising inflationary pressures and excessive increase in the fiscal deficit, and on the other, the demand shock stemming from the flood damages argues for a countervailing monetary easing to help revive the faltering economy, the report noted.  Finally, although a slight deterioration in the current account deficit was envisaged for FY11, reflecting the rising requirements for food imports (sugar, edible oil, etc) as well as increased imports to support an anticipated improvement in economic activity.   This outlook has deteriorated somewhat, post-floods, it added.

If fears of substantial losses in agricultural production (particularly cotton) prove correct, this could potentially lead to a higher trade deficit, offset only partially by an anticipated increase in current transfers.   However, the report indicated, financing even this moderate increase in the current account deficit may prove stressful for the economy, with rising pressures on the country s foreign exchange reserves and exchange rate.
============================================================
Major Economic Indicators
=============================================================
                      FY11
                     Annual     SBP
               FY10P    Plan  Projections
                    Targets
=============================================================
Growth rates in percent
GDP               4.  1     4.  5   2.  0 - 3.  0
Average CPI Inflation     11.  7     9.  5  13.  5 - 14.  5
Monetary assets (M2)      12.  5      -  12.  0 - 13.  0
Billion US Dollars
Workers remittances      8.  9     9.  0  9.  5 - 10.  5
Exports (fob-BoP data)     19.  6    20.  0  20.  0 - 21.  0
Imports (fob- BoP data)    31.  0    31.  7  34.  0 - 35.  0
Percent of GDP
Fiscal deficit         6.  3    4.  0*   5.  0 - 6.  0
Current account deficit     2.  0     3.  4   3.  0 - 4.  0
============================================================
P: Provisional

-- This was announced in the budget; however, this number rose to 5.  2 percent of GDP as per announced consolidated federal and provincial budgets.

Note: Targets of fiscal and current account deficit to GDP ratios are based on Nominal GDP in the Budget document for FY11, while their projections are based on projected (higher) nominal GDP for the year. 

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Budget deficit rises to Rs 929. 1 billion, against targeted Rs 722. 1 billion in fiscal year 2010

KARACHI   : The overall budget deficit rose to 6.  3 percent of the GDP at Rs 929.  1 billion against the target of Rs 722.  1 billion.   According to State Bank of Pakistan report on economy the government envisaged a narrowing of budget deficit from 5.  3 percent of GDP to 4.  9 percent with a sharp increase in revenues (particularly tax revenues) and containment of current expenditures in the budget estimates for FY10.
However, in terms of actual performance, all fiscal targets of the government were missed during the year.   The report said that the worsening of the fiscal outlook was broadly a result of greater than budgeted disbursement of subsidies, increased security outlays on war on terror and below target tax revenue generation, both by FBR and provinces, during FY10.   On the financing side, the non-availability of budgeted external financing caused pressures on domestic sources, almost throughout FY10.   Although a large share of the total financing requirement was met through non-bank sources, the government had to resort to monetisation of the deficit as well.   As a result, the limits imposed by IMF on borrowings from the SBP were breached during last two quarters of FY10, the report said. 

 

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Oil prices may be increased

ISLAMABAD : The government is expected to increase oil prices by nearly Rs 5 per litre from November 1, 2010, in line with the hike in global oil prices, Business Recorder has learnt.

Global oil prices are posing rising impact in domestic oil prices by Rs 4-5 per litre which will be passed on to the consumers from November 1, 2010, sources said. The international oil prices are showing rising trends as Brent (London) was traded at $82. 25 a barrel and the basket of Opec (Organisation of Petroleum Exporting Countries) rose from $78. 71 to $79. 26 per barrel of oil on Monday. Average Arab light crude oil price stood at $74. 39 per barrel during September, which forced the government to announce nominal cut in prices of petroleum products in line with reduction in global prices, effective from October 1, 2010. However, the government had raised the prices of some products such as kerosene oil, JP-1, JP-4 and JP-8, due to increase in global prices. In addition to Petroleum Levy (PL), the government is currently charging 17 percent general sales 

 tax (GST) on petroleum products. The surge in domestic oil prices would provide an opportunity for the government to collect more revenue on account of GST on petroleum products, official added. The government is currently charging Rs 9. 73 per litre GST on petrol, Rs 11. 56 per litre on HOBC, 9. 56 per litre on kerosene oil and Rs 9. 06 per litre on light diesel oil (LDO). The Economic Co-ordination Committee (ECC) of the Cabinet has recently fixed margins of oil marketing companies (OMCs) and dealers in new pricing mechanism. OMCs and dealers margins may be slashed if ECC s decision is to be implemented from November 1, 2010, official said

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Lenders’ deposits vault to Rs4.71tn

KARACHI: State Bank of Pakistan has released the combined balance sheet of all scheduled banks in the country as of October 1, 2010 which was the first weekend of the current month. According to the data, total deposits in the first nine months of CY10 (January to September), increased by 6.8 per cent to Rs4.71 trillion as compared to Rs4.42 trillion at the beginning of current year.

However, in the third quarter of the calendar year (3QCY10) the deposits decreased by 1.2 per cent QoQ against a growth of 5.4 per cent in the previous quarter (April-June-10).
In sharp contrast to the deposit performance, gross advances marginally went down by 1 per cent to Rs3.28 trillion on October 1, 2010 against Rs3.321 trillion at beginning of the calendar year.
Similarly, provisioning grew by 18 per cent to Rs327 billion against Rs227.7 billion recorded at the beginning of the year 2010. That’s why net advances fell 2.7 per cent to Rs2.96 trillion from Rs3.04 trillion during the period.
Due to deteriorating quality of assets, where NPLs were at higher levels, banks preferred to grow their investment portfolio rather than lending to borrowers. This was evident from the fact that investment grew by a hefty 9.5 per cent to Rs1.81 trillion compared Rs1.65 trillion in CY09. IDR ratio surged to nearly 38.33 per cent from 37.4 per cent at CY09.
Furthermore, overall balance sheet size of the sector improved by 3.7 per cent as total assets reached Rs6.3 trillion in 9MCY10 from Rs6.07 trillion at CY09.

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Indian rupee snaps 7-wk rally on outflow concerns

MUMBAI: The Indian rupee on Friday snapped a seven-week rally and posted its biggest daily loss in a month-and-a-half as traders positioned for dollar outflows post the country’s largest initial public offer allocation.

However, most of the foreign funds are likely to have hedged a significant part of their positions, which could reduce the quantum of outflows, traders said. Coal India’s $3.5 billion IPO, the country’s largest, was more than 15 times subscribed on its final day, giving the government power to price the issue towards the top of its range and building momentum for other state offers.
The partially convertible rupee closed at 44.59/60 per dollar, 0.65 per cent below Thursday’s close of 44.30/31. This is the rupee’s biggest one-day fall since the week of Sept. 7, when it had dropped 0.66 per cent on the day.
Some analysts expect foreign funds to stay invested in the Indian markets ahead of other large share sales in coming months which would also reduce the total outflows post the Coal India allocation.
One-month offshore non-deliverable forward contracts were quoted at 44.92, weaker than the onshore spot rate.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 44.6075, 44.62 and 44.62 respectively, with traded volume on the three exchanges at a low $6.9 billion. -Reuters

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Won, Singapore dollar rise after Geithner’s remarks

Asian currencies
BANGKOK: The South Korean won and the Singapore dollar rose on Friday after US Treasury Secretary Timothy Geithner urged G20 members to avoid a currency war, but there was little reaction in other Asian currencies. Geithner said in letter to a G20 finance ministers’ meeting in South Korea that the group’s members should refrain from currency policies aimed at gaining a competitive edge.

The won shot up to 1,122.6 per dollar in afternoon trade after his remarks from 1,135.0 earlier. The Singapore dollar firmed to 1.2974 per dollar from 1.3009 in the morning and 1.3020 late on Thursday. The reaction in other Asian currencies was more modest.
The South Korean won rallied after Geithner urged G20 countries not to weaken or prevent appreciation of undervalued currencies. The remarks prompted investors to short the dollar.
The Malaysian ringgit trimmed its losses in the afternoon, when the spot rate was quoted at 3.1055 per dollar, against 3.1095 in the morning and 3.1045 late on Thursday.
“If there is no solid discussion from the G20 meeting, I think the market will continue to sell the dollar next week,” a dealer in Kuala Lumpur said.
The ringgit has appreciated 10.2 per cent against the dollar this year. The Thai baht eased to around 29.88 per dollar in sluggish trade while the market watched for statements coming out of the G20 meeting.
“We don’t expect any meaningful results from the G20 meeting in terms of changing the bearish dollar outlook. It is basically a US-China conflict. After expected pledges against market intervention, most members of the group will probably return to steering their currencies in favour of their economies,” a dealer at a Thai bank said.
Dollar/baht was bid at 29.87 at 0700 GMT against 29.83 late on Thursday. The baht has gained 11.6 per cent this year, making it the second-strongest Asian currency after the yen. -Reuters

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Afghan peace hinges on Pakistan: Gilani

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani Friday said Pakistan must be involved in the “negotiation process” as it is part of the solution to the Afghan problem. Talking to office bearers of Diplomatic Correspondent Association of Pakistan (DCAP) here at Prime Minister House, he said, “Without involving Pakistan, no negotiation process can succeed.”

The Prime Minister said Pakistan has taken initiative on the Afghanistan issue and is making sincere efforts to ensure peace and security in the region. Gilani said, “Pakistan is part of the solution to Afghan issue and not the problem.”

About Pakistan’s role in reconciliation process in Afghanistan, he pointed out that during the last visit of President Hamid Karzai to Islamabad it was agreed that Afghanistan would share the plan with Pakistan.   He said so far this plan has not been shared with Pakistan and once information is provided a decision would be taken as to how Pakistan can cooperate.
He said Pakistan’s relations with Afghanistan have improved and these are far better today than yesterday. Replying to a question about the recent efforts of Afghanistan government to start negotiation process with the Taliban, the Prime Minister said we want Afghanistan to lead any such process but Pakistan should be a part of it.
He said the Afghan leadership has yet to discuss its new initiative of dialogue process with United States and expressed the hope that it would also discuss it with Pakistan before going after it. The Prime Minister said Pakistan has high stakes in Afghanistan’s stability, unity, territorial integrity, and prosperity.
He said, “The Af-Pak concept is inherently flawed. We have strongly rejected such concept.” Syed Yousuf Raza Gilani said the United States has been told in categorical terms that drone attacks were counter-productive.
The Prime Minister said Pakistan is pursuing strategic dialogue with the United States on the basis of mutual respect and its national interests.  Gilani said Pakistan is demanding of the United States civil nuclear technology cooperation on the pattern of its agreement with India.-Online

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America must fully trust Pakistan: Musharraf

CHICAGO: Former President Pervez Musharraf Friday reiterated that US must respect the sentiments of people and government of Pakistan to reduce trust deficit. During his address at the Chicago University, Former President Pervez Musharraf said that Pakistan is a frontline ally in war against terrorism and US knows this very well.

Pakistan has paid a heavy price and lost more than it gained, he underlined. He said that US must realise that we must move forward to augment Pak-US relations, as it is better for both the countries.-Online

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US announces $2bn mily aid

US has no ally in WoT stronger than Pakistan: Clinton

Aid to Pakistan spanning over 5yrs subject to Congress OK

WASHINGTON: The US has announced a $2bn package of military and security aid to Pakistan on the final day of the latest Washington-Islamabad strategic talks. Secretary of State Hillary Clinton unveiled the five-year deal, which is subject to Congressional approval.

Announcement of the military assistance, which would be delivered over five years from 2012 to 2016, came at the formal opening session of the third round of the US-Pakistan Strategic Dialogue, a series of bilateral meetings that began on Wednesday.
In a joint press conference with Foreign Minister Shah Mehmood Qureshi US Secretary of State Hillary Rodham Clinton said that Pakistan is facing a number of challenges but America will help the country in these difficult times.
Clinton told the press conference that President Barack Obama’s administration would ask the US Congress to approve the military assistance to complement the $7.5 billion in civilian projects it already has approved.
She promised to expedite the process regarding military aid bill in the Congress, reminding that America had already signed an energy accord with Pakistan in July regarding various water and power projects.
“More active cooperation and further projects are also on the anvil, in accordance with Pakistan-American Strategic dialogue”, she said.
“The United States has no stronger partner when it comes to counterterrorism efforts against the extremists who threaten us both than Pakistan,” Clinton said.
Clinton said Pakistani and US officials had “productive discussions” this week about eliminating extremist groups operating in Pakistan.
Secretary of State said that America was closely working with Pakistan Army in rehabilitation of the flood affectees, and assured that America would go to any lengths to promote its friendship and mutual ties with Pakistan.
Foreign Minister Shah Mehmood Qureshi said it was time to counter naysayers who argue that Islamabad’s heart is not in the fight against the insurgents.
“Prophets of doom are back in business, painting doomsday scenarios about our alliance,” he said. “They are dead wrong.”
Qureshi urged Obama to press India for a solution to the disputed region of Kashmir, where the Muslim majority population has participated in violent protests in recent months against Indian rule.
“President Obama has always understood the importance of a Kashmir solution,” Qureshi said. “His coming visit to the region is the time to begin to redeem the pledge.” The strategic dialogue is organized into 13 working groups, ranging from water and agriculture to communications and defense.-Agencies

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FO welcomes Obama’s Pak visit plan

WASHINGTON: US President Barack Obama will not visit Pakistan during his trip to Asia next month, but he is committed to a trip there in 2011, as well as welcoming Pakistani President Asif Ali Zardari to Washington, the White House said on Wednesday.

Obama would be traveling to India, Indonesia, South Korea and Japan from next month. Managing the complex US relationship with Pakistan, including Islamabad’s role in the US-led Afghanistan war, is one of Washington’s most difficult foreign policy challenges.
Despite a commitment of $7.5 billion in US aid over five years and substantial US aid after Pakistan’s devastating floods, Pakistanis remain skeptical of US intentions. Some commentators had said it would be an insult if Obama failed to visit Pakistan while touring the country’s arch-rival and neighbor, India.
On the other hand, Pakistan Wednesday praised US President Barack Obama for saying he would visit the country next year, calling it a sign of commitment between the troubled war partners.
Foreign Minister Shah Mehmood Qureshi, speaking afterward at the Brookings Institution think-tank, called his meeting with Obama “very satisfying.”
“The fact that he has agreed to visit Pakistan next year, the fact that he has decided to invite the president of Pakistan to the United States of America, that is the level of engagement that is taking place,” Qureshi said. -Agencies

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Asia leads recovery amid risks: IMF

JAKARTA: Asia is leading the global recovery but must beware of some risks like inflation and “excessively easy” domestic finance fuelled by foreign capital inflows, the International Monetary Fund said on Thursday.

The Fund’s latest economic outlook for the Asia-Pacific region said growth would moderate in 2011 in the advanced economies while remaining “particularly strong” in China, India and Indonesia.
It also said “greater exchange rate appreciation” may be needed to shield countries from hot money inflows.
“Greater exchange rate flexibility offers an important buffer against the risk posed by large capital inflows,” the report said.
China’s allegedly undervalued yuan has been the target of strong complaints from the United States and Europe, who say Beijing is unfairly gaining a trade advantage by cheapening its exports.
Global currency wars are expected to be high on the agenda at a Group of 20 finance ministers’ and central bankers’ meeting in South Korea this weekend.
A draft communiqué issued ahead of the meeting promises a more “market-determined exchange-rate system”, reflecting an often-used US expression meant to discourage countries from intervening in currency markets.
The IMF called on Asia to boost investment in infrastructure to encourage private sector investment and underpin domestic demand, which would be a key to the region’s long-term growth.
It said exports would slow from the very high rates of 2009 and early 2010, helping to at least narrow some of the international trade gaps that have given rise to fears of protectionism and currency wars.
Asia’s current account surplus would shrink to about 3.0 per cent of regional GDP in 2010 and 2011, from about 5.0 per cent in 2007, making a “modest contribution to the narrowing of global imbalances,” the IMF said.
But it added: “The relatively limited reduction in projected surpluses over the medium term would contribute to global imbalances remaining elevated.”
Asia’s strong economic expansion and growing signs of inflation suggested the region had “reached the threshold to normalise policy stances across the region”.
“Many economies have started to take steps in this direction,” it said, two days after Beijing announced its first interest rate rise in three years.
Other Asian countries such as India, Singapore and Thailand have also increased the cost of borrowing recently to curb rising consumer prices.
Chinese consumer prices rose at their fastest pace in nearly two years in September, official data showed Thursday.
Monetary tightening and other measures would also help reduce the risk of overheating as foreign capital, seeking better returns than currently available in Europe and the United States, pours into the region, the Fund said.
“Continued capital inflows may also pose risks to financial stability if they are associated with excessively easy domestic financial conditions,” the report said. -Agencies

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Curfew, operation loom over Karachi

PM rules out Army deployment in metropolis

New extortion group present in city: Malik

KARACHI: Sindh Home Department decided to launch an operation amidst curfew in various areas of Karachi adversely affected by the target killings. A high-ranking meeting under the chair of secretary interior, Arif Khan, contemplated the deteriorating situation of law and order and decided on many steps to ameliorate it.

The meeting decided to undertake search operation in various badly affected areas after clamping curfew in the areas.
The meeting was attended by IG Sindh, Sultan Salahuddin Babar Khattak, CCPO Karachi Fayyaz Leghari, deputy director general Rangers and DIGs of all zones.
Briefing the media after meeting, the secretary interior informed that various options had been mulled in order to deal with situation arising out of 3-day volatile rioting, arson, looting and ever-continuous target killings, and it had been decided to conduct strict search operations in sensitive areas; even reverting to such extreme measures as curfews if required, with the consent and advice of CM, Sindh.
Replying to a question, the secretary interior rejected the notion and need for deployment of Army in Sindh to avert any crisis, as there was sufficient volume of police and Rangers available.
He said that any area requiring curfews and /or operations would be decided after a complete report by concerned DIGs.
He also informed that so far 105 persons had been arrested, who were being interrogated.
Five of those arrested have been identified as required by various police stations in connection with target killings. An additional 220 culprits were arrested in connection with target killings, and massive weaponry confiscated from them.
He however refused to give any final statement regarding the political affiliation of those arrested, and also said that so far the issue of implementing curfews had yet to be decided.
Meanwhile, Prime Minister Gilani again made it clear that there is no possibility whatsoever to summon Army in Karachi urging some handful of elements are trying to create chaos in Karachi who will not succeed in their nefarious designs at any cost. While talking to host of journalists during his visit to CDA, Prime Minister said that we need to remain calm stressing all political parties to shun differences in view to pull Karachi out of the unremitting bloodbath.
“I have given directives to Rehman Malik to conduct methodical inquiry into Karachi mayhem”, he said. Regarding statement of Nabeel Gabol, PM said that his statement was personal and it had no link with party policy and in this regard Nabeel Gabol has been summoned to Islamabad.
He said the army could be called in to assist the civil government, but added “the political leadership of the country was able to contain it.”
Addressing the establishment of first Day Care Center by the Women Police Station of Islamabad police here Wednesday Interior Minister said that a new extortion group in Karachi has emerged which is acting in Lyari and Shershah.

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Gold Rises:,Fed intent report knocks USD

LONDON: Gold climbed on Wednesday as the dollar fell sharply against the euro and yen after a report suggested the US Federal Reserve planned to boost growth by purchasing $500 billion in US Treasury debt over six months.

Spot gold was bid at $1,344.00 an ounce at 1625 GMT, against $1,336.00 late in New York on Tuesday. US gold futures for December delivery rose $8.30 an ounce to $1,344.30.
The precious metal fell 2.5 per cent on Tuesday, its biggest one-day loss since July 1, after China raised its benchmark interest rates by 25 basis points, sparking a dollar recovery.
While fresh weakness in the US currency helped prices to rise back above $1,340 an ounce, its move has been relatively muted after Tuesday’s hefty losses.
“We’re seeing a pretty big move in the dollar to the downside and we’re not seeing that reflected as much in the gold market to upside,” said Jeff Pritchard, an analyst at Altavest Worldwide Trading.
“It looks like the market maybe got ahead of itself and that correction yesterday put things back in perspective a little bit. I definitely don’t think the uptrend is over, but it might be a little less fierce upside than we’ve seen recently.”
Silver was at $23.80 an ounce against $23.32, having also slipped by the most since July 1 on Tuesday with a 4.1 per cent fall. It is still one of the biggest climbers of the precious metals so far this year, up 41 per cent.
Platinum was at $1,676.49 an ounce against $1,667.50, while palladium was at $584.99 against $573.08.
The white metals also fell on Tuesday in gold’s wake, but analysts say their firm underlying fundamentals are expected to lend support.
Demand for the autocatalyst metals is expected to improve this year as the car industry continues its recovery, while mine supply in South Africa is expected to be constrained. -Reuters

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Posted in: Gold Silver Rates,World News

Sharif to honor his agreement

Stay clear of politics  Saudis ask
LONDON/ ISLAMABAD: Representative of Saudi King Abdullah met with PML-N chief Mian Nawaz Sharif in London for three-hour in which he once again relate the message to abide by the agreement made during the tenure of former President Pervez Musharraf.

Sources told Online that three days before a representative of Saudi King met with Nawaz Sharif in UK, during which the message of the Saudi King was conveyed by asking Sharif to abide by his agreement for not participating in politics till 20th December, 2010 and also not to indulge in any talk against former president Musharraf. Due to this agreement, Nawaz Sharif has not made any new statement against former president in or outside the country.PML sources told that Sharif does not want to be in the bad books of Saudi King Abdullah hence want to spend the remaining two months of his agreement peacefully. Sources added that Nawaz Sharif had expressed his sheer desire to meet Saudi King Abdullah after coming back from London but the latter in a message refused saying that he will call him when he wants. It must be worthwhile mentioning that Saudi Arabia is fuming and annoyed with Sharif brothers over participation of Shahbaz Sharif in elections thus Nawaz Sharif refrained from by-elections in view to avoid putting fuel on fire.On the other hand, when media coordinator of the PML-N Asim Khan was contacted he was of a clear-cut stance that he is not aware of the representative of Saudi King Abdullah meeting with PML-N Chief Mian Nawaz Sharif in London. -Online

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Tax structure makeover afoot: Gilani

PM says Pakistan faces a new phase of challenges

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani Monday said that government is reshaping the existing tax structure with a view to widen tax net not only to increase tax-to-GDP ratio but also to mobilise local resources to help out millions of affected people in the country.

Premier expressed these views while addressing representatives of NGOs during an interaction here. Prime Minister Gilani said that the country has entered a new phase of fundamental challenges following floods but our resolve stands solid to rebuild a better Pakistan.
He was Prime Minister said Ministry of Finance is already reviewing the budget so that maximum resources can be made available to meet the needs of rehabilitation. Expenditure of the government has been frozen to last year’s level besides cutting down nondevelopment expenditure and promoting the culture of austerity in government departments.
Prime Minister said 40 billion rupees have already been earmarked for distribution among affected people as compensation for damaged houses. Besides this, Benazir Income Support Programme, Pakistan Bait-ul Maal and other agencies are busy in providing relief and assistance.
Prime Minister said the crisis triggered by floods was so comprehensive and damaging that it impacted about 20 million people and transformed fundamental aspects of the entire country’s development and progress.
Syed Yousuf Raza Gilani said according to an estimate of the ILO, about 5.3 million jobs have been lost. Damage to communication and energy sector has also been phenomenal.
He said we are facing serious challenges in economic, energy, environment, education, food security, livelihood, physical infrastructure and regeneration of economic opportunities.
Prime Minister said it is national duty of all citizens of the country to rise above all differences and divisions and work together to face this unprecedented crisis.
He again held out an assurance that the money received for reconstruction and rehabilitation would be spent in a transparent manner.
A National Oversight Management Council is in place and Chairman of the Public Accounts Committee as well as Auditor General of Pakistan has been asked to monitor the entire process. He lauded the role of the hundreds of NGO during relief and rescue phase and hoped that they would continue to do so during rehabilitation phase. He said the Government is fully committed to complete transparency and accountability in the receipt, management and use of funds and resources and hoped that the NGO sector too would ensure transparency and accountability. -Agencies

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KSE off-mkt news-system from Nov 1

KARACHI: Karachi Stock Exchange (KSE) has decided to introduce a new negotiated deal reporting system (NDRS) for equity and debt market segments, with effect from November 1, to make the reporting of all off market transactions on real-time and more transparent. According to KSE notice issued here Monday, presently, all off market transactions are reported via the special interface provided to members on their NCHS terminal. The members are obliged to report to the exchange all off-market transactions before 5:00PM or in case the deal takes place after market hours they are reported next day before 5:00 pm.

The same gets disseminated on the following day to the market, via daily quotations, with quantity, price and members code. All charges and taxes payable pertaining to off market transactions presently applicable shall remain in place, like wise.To implement the new system smoothly, the existing reporting interface on members’ NCHS terminals shall remain operative in parallel with new NDRS for further 15 days from November 01, 2010. Thereafter, all off market transaction shall mandatorily be reported to the Exchange via NDRS of the Exchange. -APP

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Heads bound to heed orders: SC

Supreme Court reminds govt of Article 190

AG told to submit govt stance on
NAB (Amend) Ord

Special Correspondent/ Agencies
ISLAMABAD: Supreme Court of Pakistan Monday while hearing a suo moto regarding “alleged withdrawal of executive orders of judges’ restoration”, said that under Article 190 of the Constitution government is bound to follow Courts orders.

Chief Justice of Pakistan, heading the 17-member bench, said in its short order that Court’s October 15th restraining order on judges’ restoration issue was binding upon all the constitutional and administrative heads in term of Article 190 of the Constitution.
“It is mandatory for all the state institutions under Article 190 to comply with the orders of the court. Article 190 of the Constitution is a mandatory provision under which there is no alternative for the executive but to act in aid of the Court orders,” court remarked.
CJP added “judiciary is discharging its obligations as per constitution”.
A 17-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry put off hearing till the receipt of a report by the six-member inquiry committee set up by the government.
The bench also directed the committee to correct the inappropriate extraction made in one of the paragraph contained in its preliminary report mentioning ‘a standoff’ between judiciary and executive.
At the outset of proceedings, Attorney General for Pakistan Maulvi Anwar-ul Haq apprised the bench that an inquiry committee had been formed by the government.
Attorney General (AG) had told Supreme Court (SC) that no government functionary had shown willingness to file statement in the court on news item about withdrawal of judges’ restoration notification, adding in the eyes of government when chief executive of the country had contradicted the report then it stood to no justification to file written reply.
AG presented the interim report of the committee constituted by the Prime Minister (PM) on this count and sought time till the final report reached.
According to report news channels reporters had sought more time and this was their stance that name of the person who had provided news and source of news would not be disclosed. Committee had summoned the concerned reporters on October, 22.
He further told copies of court’s orders issued on Friday had been provided to president, prime minister, chief minister, secretaries and all other constitutional and executive functionaries.
Furthermore, Supreme Court directed Attorney-General Pakistan Maulvi Anwar-ul Haq to present the government’s written point-of-view regarding the National Accountability (Amendment) Ordinance, 2010. The amended ordinance was challenged in the apex court by Senator Syed Zafar Ali Shah of the Pakistan Muslim League – Nawaz (PML-N).
Shah had prayed before the apex court to suspend the operation of the ordinance by declaring it as unconstitutional and illegal. The ordinance was promulgated by President Asif Ali Zardari on September 16 and was consequently tabled in the Senate by Minister for Law and Parliamentary Affairs Babar Awan on October 1, the last day of the upper house’s 12-day session.
Senator Shah, at the time of the ordinance’s tabling in the upper house, had criticised the government for keeping it secret till the last working day of the house and led the opposition’s walkout from the house. He had made the federation of Pakistan, through the Ministry of Law and Parliamentary Affairs, a party in his petition.

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Reformed General Sales Tax

ISLAMABAD : The exemptions, to be retained under the reformed general sales tax (RGST), include newspapers, wheat, pulses, vegetables, peas, salt and water, excluding those sold under brand names or trademarks.

Sales tax exemption would be applicable on the goods imported under the President s Salary, Allowances and Privileges Act, 1975; goods imported under the Prime Minister s Salary, Allowances and Privileges Order, 1975; goods imported under the Governor s Salary, Allowances and Privileges, Order, 1975 and goods imported under the Acting Governor s (Allowance and Privileges) Order, 1978. Sources told Business Recorder here on Saturday that the Federal Board of Revenue (FBR) has proposed a list of sales tax exemptions, to be retained under the RGST, to the Ministry of Finance. According to the exemption list, to be retained under the RSGT, sales tax exemption would be available on table salt including iodised salt excluding salt sold in retail packing bearing brand names and trademarks. The sales tax exemption would also be applicable on books, ambulances, fire-fighting trucks, diapers for adults (patients) and dextrose and saline infusion-giving sets along with empty non-toxic bags for infusion solution, and dextrose and saline infusion giving sets. Sales tax exemption would continue on the Holy Quran in whatever form or on whatever media. Under the exemption list of the RGST, the exemption would be applicable on artificial parts of the body, intra-ocular lenses and glucose testing equipment and contraceptives and accessories thereof. The sales tax exemption would also be applicable on personal wearing apparel and bona fide baggage imported by overseas Pakistanis and tourists exempt from customs duty under the Customs Act 1969.The proposed list further shows that sales tax exemption may not be applicable on vehicles in CKD condition, imported by recognised local manufacturer for supply to diplomats, diplomatic missions, privileged persons (as per model rules) and organisations, etc, eligible to import duty-free vehicles, subject to the procedure laid down by the Board. The sales tax exemption has been retained on the goods imported by various agencies of the United Nations under the United Nations (Privileges and Immunities) Act, 1948, as certified by the Ministry of Foreign Affairs; goods imported by Diplomats/Embassies/Consulates under the Diplomatic and Consular Privileges Act,1972 as certified by the Ministry of Foreign Affairs and RGST exemption would be available on the goods imported by privileged personnel/organisations under grant-in-aid agreements signed by the Economic Affairs Division (EAD). The sales tax exemption would be applicable on household articles and personal effects including vehicles and goods for donation to projects established in Pakistan, imported by the rulers and dignitaries of UAE and Qatar. The RGST would not be applicable on articles, value of which does not exceed Rs 10,000 per parcel, if imported through post or courier service as unsolicited gift parcel. Sales tax exemption would continue on samples of no commercial value imported by manufacturers-cum-exporters. The sales tax exemption would continue on relief goods donated by foreign government/agencies for free distribution among victims of natural disaster or other catastrophe, as are certified by the authorised officer of federal/provincial government. The exemption would be available on goods imported by Abdul Sattar Edhi Foundation and Bilques Edhi Foundation; gifts or donations received by a charitable non-profit making hospital or institution, solely for the purpose of advancing the declared objectives of such hospital or institution; equipment, apparatus, reagents, disposables and spares, imported by charitable non-profit making institutions operating hospitals of fifty beds or more and hospitals run by the Federal Government or a Provincial Government; goods imported by or donated to non profit making educational and research institutions and goods supplied free of cost as replacement of identical goods previously imported including goods imported within warranty period not exceeding one year or such extended period as allowed by the Collector of Customs. Sales tax exemption would be applicable on the goods (PCT heading 9919) heading, imported temporarily for a period not exceeding 6 months into Pakistan with a view to subsequent exportation and goods (PCT heading 9920) heading, imported temporarily into Pakistan with a view to subsequent exportation. The RGST exemption would also be applicable on the container for transportation of cargo if imported by the shipping companies for use on board the ships and for transportation of cargo to and from inland container depots or container freight stations. Sales tax exemption would also be applicable on the ship spares, stores and equipment imported for use in ships registered in Pakistan under the Merchant Shipping Act, subject to the condition that the importer satisfies the respective Collector of Customs that the items imported would be used by such vessels. The sales tax exemption would also be applicable on some other PCT headings of Chapter 99 of the Pakistan Customs Tariff, sources added.

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Crude Oil Fails to Break Resistance Gold Slides on Traders Lock in Gains

Crude Oil Fails to Break Resistance

Crude Oil (WTI) - $80.73 // $0.52 // 0.64%

Commentary: Crude oil is lower in the overnight session as traders continue to take profits after a blistering run from the low-$70’s. The push-pull dynamic between a bullish global economic outlook and ample supplies continues. So far these two factors have offset each other, which has allowed crude oil to stay within its 12-month range between the high-$60’s and low-$80’s. With prices now at the top end, it is only natural that traders would look to lock in gains. The question now becomes, is oil now poised to head toward the lower end of the range or will it breakout to the upside?

While another trip into the $70’s is possible, we would look for opportunities to buy rather than sell. Risk assets are overbought, which will likely lead to a round of profit taking, but the global economy seems to be on firm footing. Surging demand for commodities including crude should begin eating into the supply surplus. We wouldn’t be buyers here mind you, but things begin to look interesting in the mid-$70’s.

Technical Outlook: Prices continue to consolidate, with positioning effectively unchanged for the past ten days after prices put in a Bearish Engulfing candlestick pattern following a test of resistance at Augusts’ swing near the 83.00 figure, hinting that a move lower is ahead. A break below initial support at $81.20 – the 23.6% Fibonacci retracement of the latest upswing – exposes the 38.2% and 50% levels at $79.21 and $77.60, respectively.

Commodities – Metals

Gold Slides on Traders Lock in Gains

Gold - $1358.55 // $9.85 // 0.72%

Commentary: Gold is continuing lower to kick off the new week after tumbling almost one percent on Friday. But even with Friday’s decline, gold rallied almost $35 last week, so a bit if giveback is to be expected. There is no way to tell whether this is the start of the next major correction in the metal, but we sure would not be buying this dip. It was only a few weeks ago that prices first surpassed $1300 and yet prices are still well above that level.

Gold’s recent correlation with U.S. equity markets is extremely strong at 0.93, suggesting that if stocks sell off from here, gold will come along for the ride. And as gold has risen much farther and much faster than stocks, it is likely that it will fall much farther and faster as well.

Technical Outlook: Prices have turned lower to meet support at the bottom of a minor rising channel in place since late September at $1354.99. Negative RSI divergence points toward the likelihood of a larger downswing ahead, with a break of the channel bottom exposing $1332.99, the 23.6% Fibonacci retracement of the 7/28-10/14 advance.

Silver - $23.81 // $0.51 // 2.12%

Commentary: With gold selling off, it is no surprise that silver is as well, only to a much larger degree. The metal fell 1.32% on Friday and is now down another 2%+ on overnight trade. This market has literally gone parabolic so prices could fall extremely hard once the correction begins. The gold/silver ratio stands at 57, near the levels of August 2008.

Technical Outlook: Prices are pushing lower though support at the bottom of a rising channel set from late September, eyeing the $23.50 level. A break below this juncture targets rising trend line support at $22.61.

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