Business

Dollar on pace for biggest weekly rise since February

Published

1 year ago

May 13, 2023

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The U.S. dollar rose against the euro and sterling on Friday, and was on track for its biggest weekly gain since February, as investors shifted to safe havens after consumer sentiment data fueled concern about the U.S. debt ceiling and monetary policy.

A University of Michigan survey on Friday showed May U.S. consumer sentiment slumped to a six-month low on worries that political dispute over raising the federal government’s borrowing cap could trigger a recession.

Consumers’ long-term inflation expectations jumped to their highest since 2011. That could influence the Federal Reserve which signaled last week that it could pause its interest-rate hikes.

“Rate differentials are continuing to tilt in the dollar’s favor,” said Karl Schamotta, chief market strategist of Corpay in Toronto.

“The surprises in the University of Michigan consumer sentiment survey are painting sort of a stagflationary picture for the U.S. economy and one that could justify another rate hike at the June Fed meeting, but certainly will diminish odds of rate cuts in the latter half of the year.”

Recent data showing a slowing economy has boosted the case that the Fed will pause hiking rates at its June meeting. Data also showed U.S. consumer price index inflation cooling to 4.9% year-on-year in April. Moreover, weekly jobless claims rose more than expected.

But the labor market remains tight, with 1.6 job openings for every unemployed person in March, well above the 1.0-1.2 range consistent with a market not generating too much inflation.

Fed Governor Michelle Bowman said the central bank will probably need to raise rates further if inflation stays high.

The pound fell 0.5% to $1.2448, while the euro weakened 0.6% to $1.0851, a day after falling to a one-month low.

That left the dollar index up 0.6% at 102.69, notching a weekly gain of 1.4% – its biggest weekly rise since February.

Joe Manimbo, senior market analyst at Convera, noted that elevated U.S. inflation spurred some skepticism about the Fed’s year-end rate cuts, and that the view that other central banks may be closer to pausing rate hikes as well has weighed on European currencies.

“Dollar gains this week have been multidimensional. The buck has served as a safe harbor from worries about a weak Chinese economy and volatility on Wall Street,” Manimbo wrote.

“While stronger, it’s too soon to tell whether the dollar’s run of weakness has turned the corner. Markets would need to take rate cuts off the table to lend meaningful upside traction to the greenback.”

Futures traders see a pause in June, and the fed funds falling later in the year. The Fed’s target range stands at 5% to 5.25%, having risen rapidly from 0% since March 2022.

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

2 days ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

2 days ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

2 days ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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