-Oct 01, 2000
High forward rates hit importers
The State Bank on Thursday made another intervention
in the inter-bank foreign exchange market to contain the surge of the
Bankers said the State Bank sold $5-$10 million on
ready counters that pushed the dollar down to Rs 57.70 after enjoying an
intra-day high of Rs 58.40. But after normal trading hours the dollar
shot up again to Rs 57.90 as some banks started buying to square their
The SBP had intervened in the market also on
Wednesday. It had sold $15-$20 million in three month forward to contain
the rise of the dollar.
Bankers said whereas the Wednesday intervention had
stabilized both ready and forward rates this was not the case on
Thursday. They said forward premiums in the inter-bank market shot up to
such high levels as 225 paisa over spot price for six months; 115 paisa
for three months and 40 paisa for one month. On Wednesday the premiums
had fallen to 175 paisa for six months; 80 paisa for three months and 25
paisa for one month.
In practical terms high forward premiums in
inter-bank market means expensive forward buying for the importers. For
example if the inter-bank premium on six month is 225 paisa per dollar
the banks would quote six month forward price to the importers at 250
paisa or so. In simpler words an importer will book a dollar for
delivery after six month at 60.50-if the premium is 250 paisa.
Importers need to make forward buyings of the dollar
to hedge their positions against rupee depreciation in future. That is
why forward premiums go up when there is panic in the market and they
come down when sentiments cool off. An unusual rise of the dollar this
week has turned importers panicky — thanks to some foreign banks in
particular and others in general that are out to make money by keeping
the importers in queue.
LC limit for raw sugar import fixed
Letter of Credit (LC) opening limit for import of
5,00,000 tons sugar has been fixed for importers to resolve the problem
of sugar shortage in the country.
According to official sources, government has already
instructed CBR as well as the State Bank accordingly to ensure strict
compliance of these instructions.
The importers of sugar have been allowed import of
only above 600 category raw sugar in bulk form at zero duty.
Economic Coordination Committee (ECC) had approved
category above 600 ICUMSA of raw sugar in bulk form for import at zero
duty and rest of the categories of raw sugar will be charged according
to normal tariff.
The decision to import raw sugar, sources said, will
save foreign exchange spending by $ 50 to 60 per ton due to price
difference between raw and refined sugar.
Raw cotton export
Raw cotton export from new crop is gradually gaining
momentum and out of 100,000 bales contracted for export around 18,090
bales have been physically shipped, official sources disclosed on
Under the new cotton policy, the government has
allowed export of raw cotton from the start of cotton season i.e. Sept
1. Similarly, duty-free imports have been permitted by the government to
maintain a balance between the stakeholders of the cotton economy.
According to official figures, so far, TCP has
exported around 16,930 bales out of new crop, while private exporters
made physical shipment of around 1,160 bales.
Though the size of the crop at this early stage could
not be ascertained, however under new policy, the government in order to
provide protection has asked the TCP to work out a stabilizing force and
make sure that phutti prices do not fall below Rs725 per 40kg.
PSO awards tender
Pakistan State Oil has awarded the tender to four
international suppliers for supply of furnace oil to be delivered during
October to December 2000.
Petronas of Malaysia, Vetol of Switzerland, Fal Oil
of Sharjah and Bakari of Saudi Arabia got the contracts to supply fuel
oil after emerging as lowest bidders, a PSO official told on Monday.
PSO had invited bids for supply 1.035 million metric
tons of high sulphur fuel oil (HSFO) and 150,000 tons of light sulphur
fuel oil (LSFO) on August 20 for fuel oil to be delivered during
October, November and December for 25 cargoes.
Pakistan has been under the onslaught of increased
dumping of tyres and tubes from East Asian countries, including China
ever since the government replaced the Import Trade Price (ITP) with the
World Trade Organization's evaluation system last January, according to
a reliable source.
This is one of the factors which have posed a serious
challenge to the survival of the tyre-and-tube industry in Pakistan.
The Trading Corporation of Pakistan has floated an
international tender for the export of 17,791 bales of various varieties
of raw cotton.
A TCP official said on Thursday that tender includes
the export of 10,000 bales of Afzal 1-1/32" from the new crop and
6,000 bales of Afzal from previous crop.
Other varieties included 1,100 bales of 1414
1-1/16", 300 bales of 1467-type and 295 bales of 1503-type and 96
bales of 1505-type, he added. He said the closing date of the tender is
Sept 28 and the bidding will be held on Sept 29, at TCP head office.
Kuwait, a big market
Kuwaiti Ambassador, Mohammed Ahmad Al-Mijrin Al-Roomi,
has called upon the Pakistani exporters to fully avail the opportunities
existing in Kuwait as there exist rich potential for Pakistani goods.
Speaking at the Faisalabad chamber of commerce and
industry, he said the imported goods in Kuwait was subjected to only 4
per cent customs duty and that's why it was cheap to shop there.
Ambassador Ahmad said there was also a
"Free-trade Zone" in Kuwait with excellent banking facilities
which could greatly facilitate both importers and exporters.