Pak backtracks on MFN; says status not granted to India

“The Cabinet has only given its in-principle approval to move forward on the issue (of MFN)... “We will give it the go-ahead if the situation is quite favourable and in the national interest. Otherwise, proceedings on it would be withheld,” Pakistan prime minister Yousuf Raza Gilani informed the media

Islamabad: Backtracking on granting the Most Favoured Nation (MFN) status to India, Pakistan prime minister Yousuf Raza Gilani has said the commerce ministry has only been tasked by the Cabinet to move forward on the issue in bilateral trade negotiations, reports PTI.

His statement came three days after Pakistan information minister Firdous Awan announced following a Cabinet meeting that it has been decided ‘unanimously’ to grant MFN status to India. Pakistan had been dilly-dallying on the issue since 1996 when India granted it the MFN status.

Since the Wednesday announcement of Ms Awan, right-wing extremists in Pakistan and business lobbies in the country’s crucial Punjab province have been vehemently opposing the decision. The business lobbies dealing with engineering and pharmaceutical products are of the view that granting of MFN status to India would be detrimental to their business interests.

“The Cabinet has only given its in-principle approval to move forward on the issue (of MFN) and permitted the ministry of commerce, which is actively engaged in trade talks with New Delhi, to negotiate with it trade-related issues,” Mr Gilani told reporters at his residence in Lahore.

“We will give it the go-ahead if the situation is quite favourable and in the national interest. Otherwise, proceedings on it would be withheld,” the premier was quoted as saying by the media.

Mr Gilani’s remarks came even as his Indian counterpart Manmohan Singh welcomed Pakistan’s decision to grant MFN status to India but said it should have been done long ago.

With contradictory statements coming from Pakistan, its high commissioner to New Delhi Shahid Malik Friday denied that Islamabad had taken a U-turn on granting the MFN status to India. “Let me correct you, there is no question of U-turn about it.”

After the information minister’s announcement on Wednesday, the Pakistan Foreign Office clarified that the Cabinet had only taken an in-principle decision on the issue and both countries would have to work towards the goal in further engagements.

The issue of normalising trade ties also figured in foreign minister Hina Rabbani Khar’s consultations Friday with top military officials, including ISI chief Lt Gen Ahmed Shuja Pasha.

Mr Gilani said the commerce ministry would have to make important decisions independently in bargaining with India over trade policy and hence it had sought the Cabinet’s go-ahead.

He contended the Cabinet did not have to refer decisions made on the MFN issue to Parliament.

“We can brief Parliament over the Cabinet’s decision of going ahead with MFN, but according to my point of view it is not necessary. Only Cabinet approval is necessary to negotiate with other countries,” he said.

Parliament would be briefed at an ‘appropriate time’, he added.

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C Rangarajan favours decontrol of diesel prices

“Diesel is like any other commodity and (oil marketing) companies should be allowed to fix prices. The most appropriate time for doing it will be when inflation starts declining,” Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan told reporters

Chennai: Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan today pitched for freeing diesel prices but suggested that it should be done when inflation starts declining, reports PTI.

“Diesel is like any other commodity and (oil marketing) companies should be allowed to fix prices. The most appropriate time for doing it will be when inflation starts declining,” Mr Rangarajan told reporters on the sidelines of the three-day conference ‘Bancon 2011’, organised by Indian Banks’ Association and Indian Overseas Bank here.

Petrol rates are market-linked but the prices of LPG, kerosene and diesel are subsidised and hence government- administered.

Oil marketing firms raised petrol prices by Rs1.80 per litre on Thursday, a move which has come in for an all round attack with even UPA key allies, TMC and DMK opposing it.

Mr Rangarajan’s comments come a day after prime minister Manmohan Singh virtually justified the hike in petrol prices, saying there should be further movement towards deregulation of fuel prices and market should be allowed to find its level.

On inflation, that has been a constant cause of concern for the government and the Reserve Bank of India (RBI) for over 18 months, Mr Rangarajan said it should stabilise at 7% by March 2012.

Food inflation soared to 12.27% for the week ended 22nd October, while the overall inflation in September stood at 9.27%.

“Though inflation rates were mainly influenced by foodgrain and vegetable prices, it has now become generalised and spread even to manufacturing sector which has recorded at 7.4%,” Mr Rangarajan said.

He also said that RBI’s raising its policy rate would help rein in inflation.

“I hope that by December-January, inflation would break and around that time perhaps a reversal policy is possible which would keep deficit near budget levels,” he said.

Mr Rangarajan, a former RBI governor, also cautioned that public sector banks need to watch out for liquidity risk in real estate, infrastructure, power and aviation sectors.

Asked whether corporate entities should be allowed to foray into the banking space, he said “it is debatable. But, if proper applicants fit in from the non-corporate business segment, they should be considered.”

He stressed upon the need for cautious infusion of capital into state owned banks as the government may need to step-in for supplementary demands for grants between Rs4,000 and Rs10,000 crore to meet the capital requirements (of banks) as against the Rs6,000 crore budgeted for this year.

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COMMENTS

JM Manilal

5 years ago


Kind Attn Mr. Supreme Court Judges, Govt. of India, Mr. Ranga Rajan

CC: All Readers and Public

Please hear that this my letter linked with my commend to Court on 16th Sep 2011


In which atmosphere Govt give freedom to increase the Petrol rate by Petroleum companies?
A deep and confidential private investigation required in this subject and also required a special investigation against Mr. Ranga Rajan.
Strongly believe, these all people are moving by the influence of Petroleum agencies?

There is no any justification to increase the Petrol / Diesel prize of common vehicle such as taxis, two wheelers and public buses.

Please hear that, this is not my point.
My point is that Court doesn’t have the eye to look these matters. But they are very crazy about and support the planning of steal the Lord Sri Padmanabha’s properties.

Advices and suggestions welcome.

Regards,
Manilal

CME increases margin call; markets will be under pressure

US options & futures holders will be forced to deposit billions in additional capital to the CME to avoid margin calls. This may pressure all asset classes on Monday

There is a liquidity crunch in the options & futures markets for commodities worldwide. CME, the exchange for such transactions in the US, had made the initial margin and maintenance margin equal for every commodity with options and futures. This implies that options and futures holders will be forced to deposit addition capital to the CME in the form of maintenance margin, simply to hold their positions. This will put markets under pressure on Monday. The lack of liquidity and additional margin requirement comes in the aftermath of the bankruptcy of MF Global.

The London Metal Exchange has suspended MF Global from trading with immediate effect, following a similar move by the CME Group, which operates the Chicago Mercantile Exchange, Chicago Board of Trade and New York Mercantile Exchange. MF Global had filed for bankruptcy protection following bad bets on euro-zone debt. The brokerage’s meltdown in less than a week made it the biggest US casualty of Europe's debt crisis, and the seventh-largest bankruptcy by assets in US history.

One of the biggest market concerns now is systemic liquidity, which is virtually non-existent. Interbank liquidity in Europe is at an all-time low, and possibly for the US banks. But this is just as true at the commodity exchange level, where it appears the aftermath of the MF Global collapse is just now being felt. CME's margin hike will force market players to cough up billions of dollars in a single day. Since this cannot be easily procured in one business day, we may see margin calls and forced liquidations of margin accounts across America and the world.

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COMMENTS

David

5 years ago

It is not a liquidity crunch. there is plenty of liquidity - it is created - springs forth from the act of margin borrowing!!! it is a commodity supply crunch - physical demand - the fear that comex will have to deliver what it cannot possibly possess nor make a contract to get.

Oli

5 years ago

It was a false alarm: the CME is actually reducing Initial Margin to do with the transfer of MF accounts...
http://www.cmegroup.com/tools-informatio...

Citizenindia

5 years ago

Finally the system itself is forcing corrective action. It may lead to significant falls in prices next week but atleast prices will come closer to demand supply driven levels. Thats what genuine markets are all about. Futures market was meant for better price discovery but had become a speculative tool. On a micro level it may work, but when thats happenin in trillions, one spark and the system may be driven to disaster. For countries like india, it could be great as the biggest problem for india is crude and if that comes to more saner levels, india can be the world's dream investment destination.

Citizenindia

5 years ago

Finally the system itself is forcing corrective action. It may lead to significant falls in prices next week but atleast prices will come closer to demand supply driven levels. Thats what genuine markets are all about. Futures market was meant for better price discovery but had become a speculative tool. On a micro level it may work, but when thats happenin in trillions, one spark and the system may be driven to disaster. For countries like india, it could be great as the biggest problem for india is crude and if that comes to more saner levels, india can be the world's dream investment destination.

Oli

5 years ago

My understanding is that this hike requirement only applies to 'Performance Bonds", and not for "every commodity with futures & options".
Maybe someone can explain the likely impact of this as i'm not sure how big a % of the overall CME "Performance Bonds" are.
Thanks in advance

REPLY

C

In Reply to Oli 5 years ago

Oli - I believe the performance bond is the collateral put up to meet the margin requirement... performance bonds are not a traded commodity.

Oli

In Reply to C 5 years ago

In that case it does apply to all instruments traded on the CME....
Unless people/firms (loads & loads of them) can come up with the increased margin then their positions will be liquidated by the close of business on Monday.
This woud be messy to put it mildly.
I'm surprised of 2 things:
1) that the CME will be allowed to do that considering the dire consequences that will follow (possibly another 'black monday').
2) how little interest has been generated by this story so far.
C, what are your views on this move and likely outcome for next week.
Cheers

Moneylife Team

In Reply to Oli 5 years ago

CME has eliminated the distinction between initial and maintenance margin. That is quite rare.

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