Financial Risk Manager: General, Money Market and Forex Updates

General, Money Market and Forex Updates - 25-01-2011
Wednesday, January 26, 2011

General Updates

Indonesian President Susilo Bambang Yudhoyono hoped to help secure lucrative investment deals worth $15 billion on a trip to India this week. “The investment value is $15 billion, which includes cooperation in infrastructure, manufacturing, natural resources and services.

Pakistan and Japan on Friday signed an agreement under which Japan would provide a soft loan of US $ 233 million for development projects in Pakistan. Under the arrangement, Japan will provide a soft loan of US $ 233 million of which $60 million and $173 million would be for budgetary support and the Khyber Pakhtunkhwa Rural Road Project respectively. This support is out of a total of $500 million pledged by Japan during the Pakistan Development Forum 2010.

The World Bank has approved a $250 million loan and a $35 million grant for Pakistan to help vulnerable communities in areas rocked by conflict. The loan announced Thursday aims to bolster Pakistan’s recovery efforts in the Khyber Pakhtunkhwa (KP) province and Federally Administered Tribal Areas (Fata).

Money Market Updates

Money market Interbank opened at 13.00/25 closed at 13.90 with a high of 13.90 and low of 13.00. Due to the liquidity crunch in the market the rate could not go down today due to which market had to stay near the upper limit of the discount rate although it did not touch the floor.

The State Bank of Pakistan (SBP) continued injecting liquidity into the money market that, analysts believe, is faced with liquidity crunch due to the rupee blockade as non-performing loans (NPL) mount and excessive government borrowing from the scheduled banks takes a toll. The state bank, in its fifth reverse repo open market operation of the month in the Government of Pakistan Market Treasury Bills and Pakistan Investment Bonds, injected some Rs 8.0 billion into the banking system on Saturday. The Saturday’s auction was preceded by four others conducted by the central bank on the 6th, 15th, 17th and 21st of this month to inject a sum of over Rs 92.35 billion into the inter-bank market in the short span of 16 days. One major reason of this injection in the market is the non performing loan increase in the credit market which has cause a big liquidity crunch.

Forex Updates

The monthly average of remittances for the July-December 2010 period comes out to $881.90 million as compared to $755.04 million during the same corresponding period of the last fiscal year, registering an increase of 16.80 percent.

The country’s trade deficit went up by over 18 per cent in the first half (July-December) of current fiscal year 2010-11 against the corresponding period of the last year, as it was recorded at $ 8.150 billion against $ 6.895 billion in the same period of 2009-10.

posted @ 1:13 PM,

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