World Bank chief backs BRICS bank idea

("More behind-the-scenes developments in preparations for the new financial system coming online in the weeks ahead.")

http://www.thenews.com.pk/Todays-News-3-101054-World-Bank-chief-backs-BRICS-bank-idea

BOAO, China: Outgoing World Bank president Robert Zoellick on Tuesday gave his backing to a new development bank proposed by the leaders of the BRICS emerging countries.
Zoellick said the World Bank would be prepared to work with the new financial institution, which was discussed by the leaders of Brazil, Russia, India, China and South Africa when they met in New Delhi last week.

While the plans are still in their preliminary stages, such a bank is seen as a potential counterweight to other multilateral lenders such as the World Bank and the Asian Development Bank.

“As a general principle if the BRICS countries want to develop it we would work with it,” Zoellick told the Boao Forum in southern China, according to a transcript posted on the meeting’s website.

“We work with the regional development banks, and I have created a series of partnerships with these banks that are likely to be similar to the BRICS bank in that it will probably be more of a financing vehicle than a knowledge and experience vehicle.”

Last week’s BRICS summit was the fourth since the bloc was formed in 2009.

South Africa joined in 2010 and the five members now account for roughly 18 percent of the world’s GDP, 40 percent of its population, 15 percent of global trade and hold 40 percent of global currency reserves.

Dollar, euro slip as Eurozone worries rekindled

TOKYO: The dollar eased in Asian trade on Tuesday while the euro was under pressure against the yen as weak Eurozone manufacturing data raised concerns about the state of the bloc’s economy.

The greenback slipped to 81.95 yen in Asian trade, compared with 82.28 yen in New York Monday.

The European single currency held steady against the dollar at $1.3342, it slipped to 109.36 yen after changing hands near the 111.00 yen level on Monday.

Traders sought the safety of the Japanese currency after weak Eurozone manufacturing and unemployment figures underscoring the debt-riddled region’s economic troubles, analysts said.

Manufacturing activity dropped to a three-month low in March, with the malaise spreading to top economies Germany and France, according to a closely watched purchasing managers index (PMI) released Monday.

Adding to the grim picture were figures showing Eurozone unemployment at a 15-year high of 10.8 percent in February.

The news tempered sentiment, which had been given a lift at the weekend by news of an agreement to boost the Eurozone’s debt firewall.

The dollar was tamped down by lower Treasury yields, making the US unit relatively less attractive, analysts said, despite better-than-expected US manufacturing data.

In the near term, the dollar may test 80.00 yen and was tipped to drop further, said Kengo Suzuki, currency strategist at Mizuho Securities.

Spanish unemployment hits record high

MADRID: The number of registered job seekers in Spain hit a new record high in March, government figures showed on Tuesday, as the country slides back towards recession.

The number of job seekers rose 0.82 percent from the previous month to 4.75 million people, its eighth monthly increase, according to a labour ministry report which is based on the official unemployment register.

The Spanish economy, the Eurozone’s fourth largest, is still reeling from the collapse of a labour-intensive property bubble in 2008 which destroyed millions of jobs.

Figures released in January by the National Statistics Institute, which uses a different calculation method, showed a jobless queue of 5.27 million and an unemployment rate of 22.85 percent at the end of 2011.

The government expects the unemployment rate — already the highest in the industrialised world — to surge to 24.3 percent this year.

Spain is expected to contract 1.7 percent this year, after posting a modest expansion of 0.7 percent in 2011, according to the government’s estimates.

South Korea shipyard to set up joint venture

SEOUL: Hyundai Heavy Industries, the world’s largest shipbuilder, said on Tuesday it would set up a joint venture with a Canadian firm to develop battery technology for electric and hybrid vehicles.

A deal was signed Monday in Seoul between Hyundai Heavy and Magna E-Cara, a supplier of components and systems for hybrid and electric vehicles, to develop lithium-ion battery technologies, the shipyard said in a statement.

South Korea is trying to nurture rechargeable batteries as new growth engines for its economy.

The joint venture will be owned 60 percent by Magna E-Car and 40 percent by Hyundai Heavy.

“We are pleased to move forward together as partners with (Hyundai Heavy) to advance next-generation cell and battery pack technology to support the growth of the electric and hybrid electric vehicle markets,” Magna E-Car chairman Frank Stronach said in the statement.

The shipyard said the joint venture reflects its determination to become “a leading eco-friendly integrated energy company”.

IMF gives Sri Lanka $427 million loan

WASHINGTON: The International Monetary Fund (IMF) approved a $427 million loan for Sri Lanka, hoping to shore up government coffers that have been ravaged by a massive trade deficit.

The Washington-based lender said that Sri Lanka’s economic recovery continued in 2011, but easy access to credit and a rigid exchange rate had helped extend long-running trade imbalances.

Last year’s trade deficit hit nearly $10 billion, or a fifth of the country’s GDP, imposing a massive strain on the country’s dwindling foreign reserves and leaving the island exposed to external shocks.

Since 2009 the IMF has lent Sri Lanka $2.13 billion in an effort to reform the country’s economy and improve the government’s budget in the wake of a four decades-long ethic war.

The country’s foreign currency reserves have been decimated, leaving little cash on hand for a government that is also running a high budget deficit.

“The authorities have recently introduced a broad package of measures,” noted the IMF’s Min Zhu.

The government has allowed the rupee to depreciate and slapped credit ceilings on commercial banks to discourage loans that could fuel further imports.

The country needs to borrow heavily to finance the trade deficit and repay debt which could push the country into a vicious debt cycle, experts warn. The government has insisted, however, that it does not risk a sovereign default.