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July 02 - 08, 2001

SBP buys $2 billion from kerb in 2000-01

The State Bank has so far purchased about $2 billion from open currency market during this fiscal year and the amount may rise further if SBP buying continues till the year-end, sources close to SBP said.

In the last fiscal year, the central bank had bought $1.6 billion from kerb. Latest official figures are not available but SBP had admitted in its third quarterly report that it had purchased $1.56 billion between July 2000-March 2001 from the open market to meet balance of payment requirements. The sources close to SBP said the State Bank has bought over $400 million more from the open market so far during this quarter that lifted its total purchase to a little less than $2 billion.

SBP had to buy some $400 million during this quarter from kerb despite major foreign exchange inflows including that of $350 million World Bank structural adjustment credit to meet a yawning gap in the balance of payment. The balance of payment gaps become wider normally at the end of every quarter and more prominently at the end of the last quarter due to huge official and private debt payments. Throughout this fiscal year there had been another factor responsible for widening the balance of payment gap i.e. higher than normal oil import bills due to increased prices of POL products in international markets.

What else compelled SBP to keep buying dollars from kerb was the fact that it was building foreign exchange reserves to meet an IMF target. Under the $596 million IMF standby credit SBP is to have $1.6 billion liquid reserves at the end of June to meet the target of its net foreign assets.

As on June 16 the State Bank had liquid forex reserves worth $1.7 billion but the amount also included about $350 million of banks placed with SBP as cash reserves on their foreign currency deposits. In other words SBP had net forex reserves of $1.35 billion on June 16. The sources say increasing this amount to $1.6 billion by end-June would have been difficult had SBP not been buying dollars from kerb. But it is not the kerb purchases alone that the State Bank is relying on to keep the reserves at the desired level.

SBP borrows $105m from banks thru swap

The State Bank had to borrow more than $100 million from some local and foreign banks during this month to meet an IMF target.

Senior bankers said, SBP borrowed about $105 million from banks under dollar-rupee swap arrangement for one year adding that the banks got one-year T-bills against this amount instead of cash in rupees. They said the central bank issued the bills at 12.93 per cent to the banks.

This brings the total swap, the central bank has contracted in this fiscal year to $316 million.

Slight upward change in POL prices seen

Refinery operators and oil marketing companies (OMCs) forecast a slight upward price adjustment in petroleum products from July 1 in view of rising trend in global oil prices and weakening of the rupee against the dollar.

Several senior officials in refineries and OMCs, hinted at "a slight increase" in petroleum prices from July 1 but they did not reveal the exact percentage.

Some executives were of the view that the price hike in petroleum products will remain below five per cent.

Officials in the OMCs as well as refinery operators will meet at the office of Oil Companies Advisory Committee (OCAC) to announce the new prices of petroleum products effective from July 1-15.

MCB declares 7.5pc dividend

Muslim Commercial Bank (MCB) on Thursday announced a cash dividend of 7.5 per cent and 20 per cent bonus shares to the bank shareholders for the year 2000.

The decision was taken at the 53rd Annual General Meeting of the Muslim Commercial Bank Ltd. Meeting that in view of Operating Profit of Rs. 2.48 billion for the year 2000, which was 58 per cent higher than Operating Profit of the year 1999, 10 per cent Interim Bonus, 10 per cent Final Bonus and 7.5 per cent Cash Dividend be paid out to the shareholders.

Rupee falls

The rupee on Thursday shed five paisa more against the US dollar in inter-bank market to close at 63.90/ 63.95 for ready buying and selling. Senior bankers said the rupee fell, mainly due to oil import bill payment by a foreign bank that increased the demand for dollars. They said some deals were struck at Rs 64.00/64.05 per dollar in value.

Gold touches all time high

Gold prices touched all time high at Rs5,898 per 10 grams on Wednesday, breaking its previous record of Rs 5,847 per 10 grams on June 9.

Bullion dealers said that the price of ten tola bar (600 grams) also shot up to Rs68,700 from Rs67,400.

Wapda to float bonds

Wapda will issue Rs6 billion bonds to complete 1450 MW Ghazi Barotha Hydro Power Project (GBHP), which is already 18 months behind schedule.

Domestic debt increased

The government accumulated both domestic and foreign currency debt at a much faster pace than projected in fiscal year 2000-01. According to the budget documents for fiscal 2001-02 domestic permanent debt rose by Rs31 billion in 2000-01 against original estimate of Rs12 billion.

Maple Leaf merger

The Maple Leaf Electric Company will soon be merged with Kohinoor Textiles and Maple Leaf Cement Factory under the scheme of arrangement approved by the Lahore Higher Court, recently.

Under the approved Swap ratio, 100 shares of Maple Leaf Electric, are equal to 49.7 shares of Maple Leaf Cement and 50.3 shares of Kohinoor Textiles Mills. Book closure for the exchange of shares will commence from June 29.