Oct. 10 (Bloomberg) -- Remittances from Pakistanis living overseas rose to a record $806.1 million in September as workers sent more money home from the U.A.E. and Saudi Arabia.
Transfers of funds rose by $145.7 million, or 22.1 percent, in the third month of the fiscal year that began July 1, the Karachi-based State Bank of Pakistan said today in an e-mailed statement.
Workers in the Emirates transferred $504 million, up from $312.2 million a year earlier. Pakistanis in Saudi Arabia sent home $430.75 million, up from $398 million, and Pakistanis in the U.S. transferred $498.7 million, compared with $499.5 million.
Remittances from overseas Pakistanis rose to a record $7.81 billion in the year ended June 30, according to the central bank. The government is appealing to its 8 million expatriates to help resuscitate an economy that has slumped after a seven-year boom.
Saturday, October 10, 2009
Infosys raises forecast as outsourcing rises
Infosys Technologies said on Friday it had begun adding staff again and awarded its workforce a pay rise as India’s information technology outsourcing sector shows signs of life following the economic crisis.
S. Gopalakrishnan, chief executive of Infosys, said revenue grew 2.8 per cent during the three months ended September 30 against the June quarter, the first time in the past three quarters that sales have shown quarter-on-quarter growth.
EDITOR’S CHOICE
Cost cuts to boost Indian IT - Sep-29
Consolidation moves in China’s outsourcing - Sep-15
“You want to be cautious because it’s not completely out of the woods but we clearly see some growth,” said Mr Gopalakrishnan.
The improving outlook came as most Indian IT companies are forecasting an increase in outsourcing by their developed world clients, which are looking to cut costs to aid their recovery from the crisis. Infosys added 35 clients during the quarter.
Pricing pressure, which weighed heavily on the industry earlier this year, has also eased thanks to the new demand.
“The pricing environment seems to have stabilised,” said S.D. Shibulal, Infosys chief operating officer.
India’s second-largest computer services group gave its Indian staff an average wage increase of 8 per cent and international staff 2 per cent for this year.
The group had deferred any decision on the pay rise at the beginning of its fiscal year in April because of the uncertain global outlook.
The group also added a net 1,548 employees in the September quarter, bringing its workforce to nearly 105,500, reversing the trend in the first quarter of this fiscal year, when its workforce shrank for one of the first times in the company’s history.
Mr Gopalakrishnan forecast that Infosys would report a 1 per cent quarter-on-quarter increase in revenue and volume over the next two quarters.
“It has definitely been one of the toughest periods for us – for the first time in the history of the company we saw negative growth,” Mr Gopalakrishnan said.
But he added: “We are predicting the next two quarters of sequential growth, again only 1 per cent, but definitely growth.”
Infosys said sales grew 3.1 per cent year-on-year to Rs56bn ($1.2bn), based on the Indian GAAP accounting standard. Net profit rose 7.5 per cent to Rs15.4bn, compared with a Bloomberg forecast of Rs14.9bn.
Based on the international IFRS standard, however, net income fell 0.9 per cent from a year ago to $317m on a stronger rupee against the dollar.
S. Gopalakrishnan, chief executive of Infosys, said revenue grew 2.8 per cent during the three months ended September 30 against the June quarter, the first time in the past three quarters that sales have shown quarter-on-quarter growth.
EDITOR’S CHOICE
Cost cuts to boost Indian IT - Sep-29
Consolidation moves in China’s outsourcing - Sep-15
“You want to be cautious because it’s not completely out of the woods but we clearly see some growth,” said Mr Gopalakrishnan.
The improving outlook came as most Indian IT companies are forecasting an increase in outsourcing by their developed world clients, which are looking to cut costs to aid their recovery from the crisis. Infosys added 35 clients during the quarter.
Pricing pressure, which weighed heavily on the industry earlier this year, has also eased thanks to the new demand.
“The pricing environment seems to have stabilised,” said S.D. Shibulal, Infosys chief operating officer.
India’s second-largest computer services group gave its Indian staff an average wage increase of 8 per cent and international staff 2 per cent for this year.
The group had deferred any decision on the pay rise at the beginning of its fiscal year in April because of the uncertain global outlook.
The group also added a net 1,548 employees in the September quarter, bringing its workforce to nearly 105,500, reversing the trend in the first quarter of this fiscal year, when its workforce shrank for one of the first times in the company’s history.
Mr Gopalakrishnan forecast that Infosys would report a 1 per cent quarter-on-quarter increase in revenue and volume over the next two quarters.
“It has definitely been one of the toughest periods for us – for the first time in the history of the company we saw negative growth,” Mr Gopalakrishnan said.
But he added: “We are predicting the next two quarters of sequential growth, again only 1 per cent, but definitely growth.”
Infosys said sales grew 3.1 per cent year-on-year to Rs56bn ($1.2bn), based on the Indian GAAP accounting standard. Net profit rose 7.5 per cent to Rs15.4bn, compared with a Bloomberg forecast of Rs14.9bn.
Based on the international IFRS standard, however, net income fell 0.9 per cent from a year ago to $317m on a stronger rupee against the dollar.
Pakistan’s Trade Gap Narrows 55.9% in September as Imports Fall
Oct. 10 (Bloomberg) -- Pakistan’s trade deficit narrowed by 55.9 percent in September as imports fell faster than exports.
The trade gap narrowed to $897.9 million in the third month of the fiscal year, from $2.03 billion a year ago, according to data posted on the Web site of the Federal Bureau of Statistics in Islamabad.
Overseas sales fell 14.2 percent to $1.52 billion, while imports fell 36.4 percent to $2.42 billion, according to the data.
Pakistan is seeking to boost exports to sustain growth in a country where the World Bank estimates two-thirds of the population of 160 million people survive on less than $2 a day.
Pakistan’s trade deficit narrowed 18.5 percent to $17 billion in the fiscal year ended June 30, from $20.7 billion in the previous 12 months, according to the statistics agency. Exports fell 6.7 percent to $17.8 billion and imports dropped 12.9 percent to $34.8 billion.
The trade gap narrowed to $897.9 million in the third month of the fiscal year, from $2.03 billion a year ago, according to data posted on the Web site of the Federal Bureau of Statistics in Islamabad.
Overseas sales fell 14.2 percent to $1.52 billion, while imports fell 36.4 percent to $2.42 billion, according to the data.
Pakistan is seeking to boost exports to sustain growth in a country where the World Bank estimates two-thirds of the population of 160 million people survive on less than $2 a day.
Pakistan’s trade deficit narrowed 18.5 percent to $17 billion in the fiscal year ended June 30, from $20.7 billion in the previous 12 months, according to the statistics agency. Exports fell 6.7 percent to $17.8 billion and imports dropped 12.9 percent to $34.8 billion.
Lobbyists Fight Last Big Plans to Cut Health Care Costs
WASHINGTON — As the health care debate moves to the floor of Congress, most of the serious proposals to fulfill President Obama’s original vow to curb costs have fallen victim to organized interests and parochial politics.
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Doug Mills/The New York Times
Labor leaders and insurance and health industry executives joined President Obama as he discussed cost-cutting efforts in May.
Prescriptions Blog
A blog from The New York Times that tracks the health care debate as it unfolds.
* More Health Care Overhaul News
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Health Care Conversations
Share your thoughts about the health care debate.
Top Discussions: The Public Option | Medicare and the Elderly | A Single-Payer System
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Obama Cites G.O.P. Officials in Call to Action on Bill (October 11, 2009)
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Susan Walsh/Associated Press
Peter R. Orszag, the White House budget director, says containing costs will be a priority as health care legislation advances.
And now the last two initiatives with real bite that are still in contention — a scaled-back “Cadillac tax” on high-cost health plans and a nonpartisan Medicare budget-cutting commission — are under furious assault.
Most economists’ favorite idea for slowing the growth of health care spending was ending the income tax exemption for employer-paid health insurance to make lower-cost plans more attractive. But that would hurt workers with big benefit plans, and a labor-union lobbying blitz helped kill that idea by the Fourth of July.
Lobbying by doctors, hospitals and other health care providers, meanwhile, dimmed the prospects of various proposals to cut into their incomes, including allowing government negotiation of Medicare drug prices and creating a government insurer with the muscle to lower fee payments.
“The lobbyists are winning,” said Representative Jim Cooper, a conservative Tennessee Democrat who teaches health policy.
Total health care costs in the last 20 years have doubled to about 16 percent of the economy, with no signs of tapering. Along with universal coverage, Mr. Obama has made controlling those costs a central pillar of his health care overhaul, calling the current course “unsustainable.” The effort is a pivotal test of his campaign promise to break the stranglehold of special interests.
In his weekly radio address on Saturday, Mr. Obama applauded the bill set for a vote next week in the Senate Finance Committee. “By attacking waste and fraud within the system,” he said, “it will slow the growth in health care costs, without adding a dime to our deficits.”
In an interview, Peter R. Orszag, the White House budget director and the official most associated with the drive to cut costs, singled out the proposed Medicare commission and the “Cadillac tax” as evidence of progress. “A key priority now,” Mr. Orszag said, “is to make sure cost containment holds up as we move through the legislative process."
Neither element appears in any of the other four health care bills on Capitol Hill, and both face dug-in resistance in the House.
Although the bills contain other measures aimed at medical costs, most of the surviving ones do not antagonize any organized interest. Among them are voluntary efficiency measures like encouraging the coordination of medical records, disseminating information comparing the effectiveness of treatments and various pilot projects.
White House officials argue that in any case it is prudent to start with such tests, and that many could be expanded to more comprehensive programs. But their real impact is hard to gauge, and the nonpartisan Congressional Budget Office assigns them little weight. (The budget office credited the Finance Committee bill with reducing the federal deficit, but how much it will slow the growth of total public and private health spending is another question.)
The tax on gold-plated insurance plans is the last vestige of most economists’ favorite idea, eliminating the tax exemption for employer plans. The finance bill would impose a 40 percent excise tax on insurance plans that cost more than $8,000 a year for an individual or $21,000 for a family.
The bill has aroused the frantic opposition of labor and business lobbyists who appear to have found friends in the Capitol. On Wednesday, 157 House Democrats — a majority of the party — signed a letter to Speaker Nancy Pelosi opposing the tax.
“It has no legs in the House,” said Representative Pete Stark, the California Democrat who is chairman of the health subcommittee of the tax-writing panel.
The proposed Medicare commission, aimed at providers instead of consumers, is becoming a case study in the political difficulty of reducing medical payments.
The commission was intended to side-step the interest-group pressure that often stymies Congress. Modeled after the nonpartisan commission for military base closings, it would present a roster of Medicare cuts that Congress could block only with legislation.
But along the way, the White House and the Senate Finance Committee have cut deals for political support with lobbyists that may circumscribe the cost cuts, potentially including the recommendations of the commission.
For example, the White House and the panel’s chairman, Senator Max Baucus, Democrat of Montana, reached an agreement with the drug industry for its companies to contribute a total of $80 billion — but no more — over 10 years in reductions to their government payments.
Many Democrats would like to see the government negotiate far lower prices for the Medicare drugs it buys. But drug industry lobbyists say — and the debate on the finance bill appears to confirm — that Mr. Baucus’s agreement to limit the industry’s costs excludes such price negotiations. Now the drug lobbyists are pushing to be sure the Medicare commission could not force negotiations either. The relevant text of the bill is still being written.
Skip to next paragraph
Enlarge This Image
Doug Mills/The New York Times
Labor leaders and insurance and health industry executives joined President Obama as he discussed cost-cutting efforts in May.
Prescriptions Blog
A blog from The New York Times that tracks the health care debate as it unfolds.
* More Health Care Overhaul News
conversations
Health Care Conversations
Share your thoughts about the health care debate.
Top Discussions: The Public Option | Medicare and the Elderly | A Single-Payer System
Related
Obama Cites G.O.P. Officials in Call to Action on Bill (October 11, 2009)
Enlarge This Image
Susan Walsh/Associated Press
Peter R. Orszag, the White House budget director, says containing costs will be a priority as health care legislation advances.
And now the last two initiatives with real bite that are still in contention — a scaled-back “Cadillac tax” on high-cost health plans and a nonpartisan Medicare budget-cutting commission — are under furious assault.
Most economists’ favorite idea for slowing the growth of health care spending was ending the income tax exemption for employer-paid health insurance to make lower-cost plans more attractive. But that would hurt workers with big benefit plans, and a labor-union lobbying blitz helped kill that idea by the Fourth of July.
Lobbying by doctors, hospitals and other health care providers, meanwhile, dimmed the prospects of various proposals to cut into their incomes, including allowing government negotiation of Medicare drug prices and creating a government insurer with the muscle to lower fee payments.
“The lobbyists are winning,” said Representative Jim Cooper, a conservative Tennessee Democrat who teaches health policy.
Total health care costs in the last 20 years have doubled to about 16 percent of the economy, with no signs of tapering. Along with universal coverage, Mr. Obama has made controlling those costs a central pillar of his health care overhaul, calling the current course “unsustainable.” The effort is a pivotal test of his campaign promise to break the stranglehold of special interests.
In his weekly radio address on Saturday, Mr. Obama applauded the bill set for a vote next week in the Senate Finance Committee. “By attacking waste and fraud within the system,” he said, “it will slow the growth in health care costs, without adding a dime to our deficits.”
In an interview, Peter R. Orszag, the White House budget director and the official most associated with the drive to cut costs, singled out the proposed Medicare commission and the “Cadillac tax” as evidence of progress. “A key priority now,” Mr. Orszag said, “is to make sure cost containment holds up as we move through the legislative process."
Neither element appears in any of the other four health care bills on Capitol Hill, and both face dug-in resistance in the House.
Although the bills contain other measures aimed at medical costs, most of the surviving ones do not antagonize any organized interest. Among them are voluntary efficiency measures like encouraging the coordination of medical records, disseminating information comparing the effectiveness of treatments and various pilot projects.
White House officials argue that in any case it is prudent to start with such tests, and that many could be expanded to more comprehensive programs. But their real impact is hard to gauge, and the nonpartisan Congressional Budget Office assigns them little weight. (The budget office credited the Finance Committee bill with reducing the federal deficit, but how much it will slow the growth of total public and private health spending is another question.)
The tax on gold-plated insurance plans is the last vestige of most economists’ favorite idea, eliminating the tax exemption for employer plans. The finance bill would impose a 40 percent excise tax on insurance plans that cost more than $8,000 a year for an individual or $21,000 for a family.
The bill has aroused the frantic opposition of labor and business lobbyists who appear to have found friends in the Capitol. On Wednesday, 157 House Democrats — a majority of the party — signed a letter to Speaker Nancy Pelosi opposing the tax.
“It has no legs in the House,” said Representative Pete Stark, the California Democrat who is chairman of the health subcommittee of the tax-writing panel.
The proposed Medicare commission, aimed at providers instead of consumers, is becoming a case study in the political difficulty of reducing medical payments.
The commission was intended to side-step the interest-group pressure that often stymies Congress. Modeled after the nonpartisan commission for military base closings, it would present a roster of Medicare cuts that Congress could block only with legislation.
But along the way, the White House and the Senate Finance Committee have cut deals for political support with lobbyists that may circumscribe the cost cuts, potentially including the recommendations of the commission.
For example, the White House and the panel’s chairman, Senator Max Baucus, Democrat of Montana, reached an agreement with the drug industry for its companies to contribute a total of $80 billion — but no more — over 10 years in reductions to their government payments.
Many Democrats would like to see the government negotiate far lower prices for the Medicare drugs it buys. But drug industry lobbyists say — and the debate on the finance bill appears to confirm — that Mr. Baucus’s agreement to limit the industry’s costs excludes such price negotiations. Now the drug lobbyists are pushing to be sure the Medicare commission could not force negotiations either. The relevant text of the bill is still being written.
Friday, October 9, 2009
Japan’s Bonds Decline as Global Equity Gains Damp Safety Demand
Oct. 10 (Bloomberg) -- Japanese bonds declined after advancing stocks worldwide reduced investor demand for the relative safety of government debt.
Benchmark yields increased from near an eight-month low after Alcoa Inc. started the earnings season with an unexpected profit and U.S. jobless claims dropped. Japan’s machinery orders, an indicator of capital spending in the next three to six months, rose 0.5 percent in August, rebounding from a 9.3 percent decline in July, the Cabinet Office said yesterday in Tokyo.
“Good earnings and economic data enhance risk sentiment,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., part of Japan’s fourth-largest banking group. “Ample liquidity from active stimulus and monetary easing will continue to shift to riskier assets from safe-haven assets.”
The yield on 10-year bonds rose three basis points this week to 1.280 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker.
Ten-year bond futures for December delivery dropped 0.48 this week to 139.13 yen, while the Nikkei 225 Stock Average advanced 2.9 percent.
Japan’s 10-year yields had a correlation of 0.7 with the Nikkei 225 in the past three weeks, according to Bloomberg data. A value of 1 means the two moved in lockstep.
Ten-year yields reached 1.24 percent on Oct. 6, the lowest since Jan. 27. A basis point is 0.01 percentage point.
No ‘Double-Dip’ Recession
“Bond yields, which are already at unsustainable levels, will rise,” said Taro Saito, senior economist in Tokyo at NLI Research Institute Ltd., a unit of Japan’s biggest life insurer. “The Japanese economy won’t slip into a double-dip recession, even though the recovery path is slow.”
The MSCI World Index of stocks gained more than 4 percent this week after the U.S. government said first-time jobless claims slid to 521,000 last week, the lowest since January. Economists in a Bloomberg News survey estimated 540,000 claims.
Global shares also advanced after Alcoa, the first company in the Dow Jones Industrial Average to report earnings, said profit excluding certain items was 4 cents a share, beating the average analyst estimate for a 9-cent loss.
Japan’s Ministry of Finance will sell 2.3 trillion yen ($25.9 billion) in five-year notes on Oct. 15. Primary dealers, which are required to bid at government debt sales, often reduce holdings of bonds in case prices decline before they can pass on the new securities to investors.
Debt Supply
“Given the fact that supply and demand conditions for short- and mid-term notes are gradually deteriorating, the yield curve may flatten,” said Kazuhiko Sano, chief strategist in Tokyo at Citigroup Global Markets Japan Inc., one of the 23 primary dealers that are required to bid at bond auctions.
The extra yield on 30-year bonds over five-year notes narrowed to as low as 1.54 percentage points on Oct. 8, the least since July. A yield curve is a chart that plots the yields of bonds of the same quality, but different maturities. It steepens when yields on shorter-maturity notes fall, those on longer-dated bonds rise, or both happen simultaneously.
Japan’s debt burden will probably rise to 197 percent of gross domestic product next year, according to the Organization for Economic Cooperation and Development. The Finance Ministry in April said it will boost bond issuance by 15 percent to 130.2 trillion yen this fiscal year.
Bond losses were limited on speculation the yen’s recent gains will hurt exporters’ profits.
“No exporter can survive at the current exchange rate,” said Kazuto Uchida, chief economist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan’s biggest banking group. “The appreciation of the yen will thus strengthen downside risks for Japan, thereby supporting bonds.”
Japanese companies forecast the currency will average 94.50 in the year to March 2010, according to the Bank of Japan’s Tankan survey released Oct. 1. The yen reached 88.01 per dollar on Oct. 7, the strongest level since January.
Benchmark yields increased from near an eight-month low after Alcoa Inc. started the earnings season with an unexpected profit and U.S. jobless claims dropped. Japan’s machinery orders, an indicator of capital spending in the next three to six months, rose 0.5 percent in August, rebounding from a 9.3 percent decline in July, the Cabinet Office said yesterday in Tokyo.
“Good earnings and economic data enhance risk sentiment,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., part of Japan’s fourth-largest banking group. “Ample liquidity from active stimulus and monetary easing will continue to shift to riskier assets from safe-haven assets.”
The yield on 10-year bonds rose three basis points this week to 1.280 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker.
Ten-year bond futures for December delivery dropped 0.48 this week to 139.13 yen, while the Nikkei 225 Stock Average advanced 2.9 percent.
Japan’s 10-year yields had a correlation of 0.7 with the Nikkei 225 in the past three weeks, according to Bloomberg data. A value of 1 means the two moved in lockstep.
Ten-year yields reached 1.24 percent on Oct. 6, the lowest since Jan. 27. A basis point is 0.01 percentage point.
No ‘Double-Dip’ Recession
“Bond yields, which are already at unsustainable levels, will rise,” said Taro Saito, senior economist in Tokyo at NLI Research Institute Ltd., a unit of Japan’s biggest life insurer. “The Japanese economy won’t slip into a double-dip recession, even though the recovery path is slow.”
The MSCI World Index of stocks gained more than 4 percent this week after the U.S. government said first-time jobless claims slid to 521,000 last week, the lowest since January. Economists in a Bloomberg News survey estimated 540,000 claims.
Global shares also advanced after Alcoa, the first company in the Dow Jones Industrial Average to report earnings, said profit excluding certain items was 4 cents a share, beating the average analyst estimate for a 9-cent loss.
Japan’s Ministry of Finance will sell 2.3 trillion yen ($25.9 billion) in five-year notes on Oct. 15. Primary dealers, which are required to bid at government debt sales, often reduce holdings of bonds in case prices decline before they can pass on the new securities to investors.
Debt Supply
“Given the fact that supply and demand conditions for short- and mid-term notes are gradually deteriorating, the yield curve may flatten,” said Kazuhiko Sano, chief strategist in Tokyo at Citigroup Global Markets Japan Inc., one of the 23 primary dealers that are required to bid at bond auctions.
The extra yield on 30-year bonds over five-year notes narrowed to as low as 1.54 percentage points on Oct. 8, the least since July. A yield curve is a chart that plots the yields of bonds of the same quality, but different maturities. It steepens when yields on shorter-maturity notes fall, those on longer-dated bonds rise, or both happen simultaneously.
Japan’s debt burden will probably rise to 197 percent of gross domestic product next year, according to the Organization for Economic Cooperation and Development. The Finance Ministry in April said it will boost bond issuance by 15 percent to 130.2 trillion yen this fiscal year.
Bond losses were limited on speculation the yen’s recent gains will hurt exporters’ profits.
“No exporter can survive at the current exchange rate,” said Kazuto Uchida, chief economist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan’s biggest banking group. “The appreciation of the yen will thus strengthen downside risks for Japan, thereby supporting bonds.”
Japanese companies forecast the currency will average 94.50 in the year to March 2010, according to the Bank of Japan’s Tankan survey released Oct. 1. The yen reached 88.01 per dollar on Oct. 7, the strongest level since January.
Asian Currencies Advance as Inflows Overwhelm Intervention
Oct. 10 (Bloomberg) -- India’s rupee led weekly gains in Asian currencies as signs the region is recovering from a global recession attracted investment, overwhelming attempts by central banks to stem appreciation.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies excluding the yen, rose 0.5 percent in the last five days, a sixth straight weekly gain, as Asian stocks rallied. Philippine central bank Deputy Governor Diwa Guinigundo signaled policy makers favored “more moderate” appreciation in the peso, and the Central Bank of the Republic of China (Taiwan) yesterday flagged the merits of capital controls after the island’s dollar reached a one-year high.
“We’re seeing real money flows, institutional investors globally making a large allocation into emerging markets, the strongest since early 2007,” said Steven Chang, senior managing director of foreign-exchange trading at State Street Bank & Trust Co. in Hong Kong. “Central banks in the region are smoothing the market appreciation.”
The rupee jumped 2.7 percent this week to 46.475, according to data compiled by Bloomberg. Malaysia’s ringgit rose 2.4 percent to 3.3981, Indonesia’s rupiah climbed 2 percent to 9,455 and South Korea’s won rose 0.9 percent to 1,164.38.
The Hong Kong Monetary Authority intervened three times during the week, injecting a total HK$16.3 billion ($2.1 billion) in the financial system to defend the currency’s fixed trading range of HK$7.75 to HK$7.85 per dollar, according to data compiled by Bloomberg. Central banks intervene by arranging purchases or sales of currencies to influence exchange rates.
‘Supporting the Dollar’
South Korea’s central bank yesterday kept its benchmark interest rate unchanged at a record-low 2 percent. Governor Lee Seong Tae said it was “undesirable” for the won to move in one direction.
The Bank of Korea’s decision came as other central banks begin to indicate a willingness to raise rates. Australia unexpectedly raised its benchmark on Oct. 6 from a 49-year low, becoming the first Group of 20 nation to act since the start of the global financial crisis more than a year ago.
“The only reason the won hasn’t strengthened a lot more is because the central bank is supporting the dollar,” State Street’s Chang said.
Foreign investors have bought $19.4 billion more Korean stocks than they sold this year, while net purchases in India and Taiwan each total more than $12 billion, exchange data show.
‘Positive Outlook’
Malaysia’s ringgit completed its biggest weekly gain this year after Bank Negara Malaysia said the economy contracted at a slower pace in the third quarter and will likely return to growth in the final three months of this year. Exports fell 19.8 percent in August from a year earlier, the least since March, the trade ministry said Oct. 8.
“The central bank is positive on the outlook and we should see better data supporting the ringgit,” said Azmi Shukri Rahman, a currency trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “The weak dollar sentiment will continue for a while and we may see more foreign funds in stocks here.”
Indonesia’s rupiah rose a fifth week, the longest winning streak since April, after policy makers kept borrowing costs unchanged to stimulate economic growth. Bank Indonesia Deputy Governor Budi Mulya said on Oct. 5 the rupiah may strengthen further this year.
Intervention
The central bank on Oct. 5 held its reference rate at 6.5 percent, the highest benchmark among Asia’s 10 biggest economies. It also raised the 2009 growth forecast to 4.3 percent, from 4 percent, and said gross domestic product will accelerate 5.5 percent in 2010. Bank Indonesia does not want the rupiah to strengthen too rapidly, Deputy Governor Hartadi Sarwono said yesterday.
The central bank intervened the previous day because the rise in the rupiah “has been too fast,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania in Jakarta.
Bank Indonesia bought about $50 million of the U.S. currency on Oct. 8, Susanto said, adding that the central bank will continue to step into the market next week if the rupiah remains volatile.
Elsewhere, the Philippine peso climbed 1.4 percent this week to 46.46. Thailand’s baht gained 0.6 percent to 33.32 and the Singapore dollar climbed 1.7 percent to close at a 14-month high of S$1.3928.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies excluding the yen, rose 0.5 percent in the last five days, a sixth straight weekly gain, as Asian stocks rallied. Philippine central bank Deputy Governor Diwa Guinigundo signaled policy makers favored “more moderate” appreciation in the peso, and the Central Bank of the Republic of China (Taiwan) yesterday flagged the merits of capital controls after the island’s dollar reached a one-year high.
“We’re seeing real money flows, institutional investors globally making a large allocation into emerging markets, the strongest since early 2007,” said Steven Chang, senior managing director of foreign-exchange trading at State Street Bank & Trust Co. in Hong Kong. “Central banks in the region are smoothing the market appreciation.”
The rupee jumped 2.7 percent this week to 46.475, according to data compiled by Bloomberg. Malaysia’s ringgit rose 2.4 percent to 3.3981, Indonesia’s rupiah climbed 2 percent to 9,455 and South Korea’s won rose 0.9 percent to 1,164.38.
The Hong Kong Monetary Authority intervened three times during the week, injecting a total HK$16.3 billion ($2.1 billion) in the financial system to defend the currency’s fixed trading range of HK$7.75 to HK$7.85 per dollar, according to data compiled by Bloomberg. Central banks intervene by arranging purchases or sales of currencies to influence exchange rates.
‘Supporting the Dollar’
South Korea’s central bank yesterday kept its benchmark interest rate unchanged at a record-low 2 percent. Governor Lee Seong Tae said it was “undesirable” for the won to move in one direction.
The Bank of Korea’s decision came as other central banks begin to indicate a willingness to raise rates. Australia unexpectedly raised its benchmark on Oct. 6 from a 49-year low, becoming the first Group of 20 nation to act since the start of the global financial crisis more than a year ago.
“The only reason the won hasn’t strengthened a lot more is because the central bank is supporting the dollar,” State Street’s Chang said.
Foreign investors have bought $19.4 billion more Korean stocks than they sold this year, while net purchases in India and Taiwan each total more than $12 billion, exchange data show.
‘Positive Outlook’
Malaysia’s ringgit completed its biggest weekly gain this year after Bank Negara Malaysia said the economy contracted at a slower pace in the third quarter and will likely return to growth in the final three months of this year. Exports fell 19.8 percent in August from a year earlier, the least since March, the trade ministry said Oct. 8.
“The central bank is positive on the outlook and we should see better data supporting the ringgit,” said Azmi Shukri Rahman, a currency trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “The weak dollar sentiment will continue for a while and we may see more foreign funds in stocks here.”
Indonesia’s rupiah rose a fifth week, the longest winning streak since April, after policy makers kept borrowing costs unchanged to stimulate economic growth. Bank Indonesia Deputy Governor Budi Mulya said on Oct. 5 the rupiah may strengthen further this year.
Intervention
The central bank on Oct. 5 held its reference rate at 6.5 percent, the highest benchmark among Asia’s 10 biggest economies. It also raised the 2009 growth forecast to 4.3 percent, from 4 percent, and said gross domestic product will accelerate 5.5 percent in 2010. Bank Indonesia does not want the rupiah to strengthen too rapidly, Deputy Governor Hartadi Sarwono said yesterday.
The central bank intervened the previous day because the rise in the rupiah “has been too fast,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania in Jakarta.
Bank Indonesia bought about $50 million of the U.S. currency on Oct. 8, Susanto said, adding that the central bank will continue to step into the market next week if the rupiah remains volatile.
Elsewhere, the Philippine peso climbed 1.4 percent this week to 46.46. Thailand’s baht gained 0.6 percent to 33.32 and the Singapore dollar climbed 1.7 percent to close at a 14-month high of S$1.3928.
US trade tensions intensify with China
By Sarah O'Connor in Washington, Alan Beattie in London,and Justine Lau in Hong Kong
Published: October 9 2009 03:00 | Last updated: October 9 2009 03:00
Global trade tensions intensified yesterday as the US opened an investigation into Chinese steel imports and clashed with the European Union over chickens.
The US steel pipe investigation is likely to irritate Beijing, which last month accused its biggest trading partner of "rampant protectionism" after Barack Obama, the US president, imposed a heavy duty on imported Chinese tyres.
That decision rattled many economists, who feared that Mr Obama would backtrack on his free trade promises in an attempt to pacify the politically important US unions. Resentment towards China has been growing in the US as the recession pummels manufacturers.
The latest investigation into seamless steel pipes is one of a string that has been opened this year. A petition, filed by several steel companies and the United Steelworkers union, said unfairly low Chinese prices spurred a 218 per cent surge in imports last year to $328m (€222m, £206m). The petition asks for a 98.37 per cent anti-dumping duty as well as countervailing duties aimed at offsetting what it said were Chinese government subsidies. Beijing, which was on National Day holiday yesterday, has not reacted to the announcement. Such investigations are common and do not necessarily turn into tariffs but the move is likely to exacerbate China's fears that US companies have been encouraged by the tyres case to ask for more protection.
Yu Li of Winston & Strawn, a law firm, said: "The trade law has been around for some time and I think more US companies would make use of it as they look for someone to blame for falling profitability."
China has become a clear target amid the global downturn, and not just for US companies. Across the world, industry demands for new import restrictions on China rose 23 per cent in 2008 and are expected to increase again in 2009.
Another potential flashpoint between the US and China looms next week as the US Treasury prepares to declare whether or not Beijing is manipulating its currency. The US also escalated a dispute with Brussels over restrictions on imports of US poultry, asking the World Trade Organisation to open a dispute settlement panel.
The office of the US Trade Representative said: "The US poultry subject to the EU ban is safe. We regret that formal WTO consultations and significant US engagement over many years have not resulted in the lifting of the EU's ban."
The US has complained the EU has blocked chicken meat washed with chlorine and other chemicals even though US and European scientific agencies have concluded such treatments were safe for consumers.
Published: October 9 2009 03:00 | Last updated: October 9 2009 03:00
Global trade tensions intensified yesterday as the US opened an investigation into Chinese steel imports and clashed with the European Union over chickens.
The US steel pipe investigation is likely to irritate Beijing, which last month accused its biggest trading partner of "rampant protectionism" after Barack Obama, the US president, imposed a heavy duty on imported Chinese tyres.
That decision rattled many economists, who feared that Mr Obama would backtrack on his free trade promises in an attempt to pacify the politically important US unions. Resentment towards China has been growing in the US as the recession pummels manufacturers.
The latest investigation into seamless steel pipes is one of a string that has been opened this year. A petition, filed by several steel companies and the United Steelworkers union, said unfairly low Chinese prices spurred a 218 per cent surge in imports last year to $328m (€222m, £206m). The petition asks for a 98.37 per cent anti-dumping duty as well as countervailing duties aimed at offsetting what it said were Chinese government subsidies. Beijing, which was on National Day holiday yesterday, has not reacted to the announcement. Such investigations are common and do not necessarily turn into tariffs but the move is likely to exacerbate China's fears that US companies have been encouraged by the tyres case to ask for more protection.
Yu Li of Winston & Strawn, a law firm, said: "The trade law has been around for some time and I think more US companies would make use of it as they look for someone to blame for falling profitability."
China has become a clear target amid the global downturn, and not just for US companies. Across the world, industry demands for new import restrictions on China rose 23 per cent in 2008 and are expected to increase again in 2009.
Another potential flashpoint between the US and China looms next week as the US Treasury prepares to declare whether or not Beijing is manipulating its currency. The US also escalated a dispute with Brussels over restrictions on imports of US poultry, asking the World Trade Organisation to open a dispute settlement panel.
The office of the US Trade Representative said: "The US poultry subject to the EU ban is safe. We regret that formal WTO consultations and significant US engagement over many years have not resulted in the lifting of the EU's ban."
The US has complained the EU has blocked chicken meat washed with chlorine and other chemicals even though US and European scientific agencies have concluded such treatments were safe for consumers.
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