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Tuesday, December 25, 2012
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Business digest

 

Egypt central bank governor resigns

 

CAIRO: The governor of Egypt’s Central Bank, Faruq El-Okda, has resigned, state television reported, after days of speculation that he would step down for health reasons.

 

State television reported that Okda, the bank’s head since 2003, might be replaced by his deputy, Hisham Ramez. It did not say why he had stood down.

 

Okda’s resignation comes amid economic turmoil in the country, which has seen its foreign reserves dwindle and foreign investment shrink two years after an uprising overthrew president Hosni Mubarak.

 

An IMF loan expected to boost the economy has also been delayed as Mubarak’s successor Mohamed Morsi battles a renascent opposition movement that has resorted to mass rallies to put pressure on the Islamist leader.

 

GCC ministers discuss economy ahead of summit

 

MANAMA: Foreign ministers of the six Gulf Cooperation Council states met in Bahrain’s capital on Sunday to discuss economic integration on the eve of the annual GCC summit, a diplomatic source said.

 

The meeting was held behind closed doors and focused on “the complementary nature of the six members,” whose overall GDP in 2011 amounted to 1.371 trillion dollars, the source said.

 

The GCC states — Bahrain, Kuwait, Oman, Qatar, UAE and Saudi Arabia — have a joint population of around 46 million, the majority of whom are foreigners.

 

In 2003, they launched a symbolic customs union which has been beset with problems, failing to meet its target date of 2005, with the transition period systematically extended.

 

And a monetary union announced in 2009 with the aim of creating a common currency has also failed to materialise, with just four nations (Bahrain, Kuwait, Qatar and Saudi Arabia) signing up to it.

 

The two-day Manama summit, set to begin on Monday afternoon, will also discuss other regional issues including the more than 21-month conflict in Syria, relations with Shiite Iran and the situation in Yemen, sources said. However, four of the six heads of state will not attend the annual gathering.

 

Japan’s China envoy urges stronger economic ties

 

TOKYO: Japan’s new envoy to China urged stronger economic ties with Beijing in an interview broadcast Monday, after the incoming premier pledged to mend bilateral ties strained by a bitter territorial row.

 

Ties between Asia’s two biggest economies have become increasingly strained over a disputed island chain — the Tokyo-controlled Senkakus, which Beijing calls the Diaoyus — with neither side willing to budge after months of wrangling.

 

“My mission number one is to improve the Japan-China relationship,” Masato Kitera, a career diplomat who will succeed Uichiro Niwa as Japan’s ambassador to China, told public broadcaster NHK.

 

“I will explain to China’s senior officials we need to make economic ties warmer if our political relationship is cooling, as Japanese corporate activities in China are contributing to the Chinese economy,” he said.

 

The dispute flared badly in September after Tokyo nationalised the islands, triggering protests across China that led to boycotts or attacks on Japanese businesses, with Japan’s exports to China tumbling 14.5 percent on-year.

 

Beijing has also boycotted various events held in the both countries, including its decision not to send its finance minister and central bank chief to Tokyo for IMF and World Bank meetings held in October.

 

Beijing sent government boats into the archipelago’s territorial waters almost every day, and upped the ante earlier this month with a flypast, in what Japan said was the first Chinese breach of its airspace since at least 1958.

 

“It is important to boost exchanges in various fields so as to ease bitter public sentiment against each other,” Kitera said.

 

New Japan govt hints at joining Pacific trade pact

 

TOKYO: Japan’s new government led by incoming prime minister Shinzo Abe has suggested it may join a US-backed Pacific-wide free trade deal, a report said on Monday.

 

Tokyo has previously shown interest in joining the Trans-Pacific Partnership (TPP) but remained non-committal in the face of fierce opposition from its cosseted farming industry.

 

Participation by the world’s third largest economy would give a shot in the arm to a pact seen as a key plank of US President Barack Obama’s pivot to Asia, and a counterbalance to China’s rising regional clout.

 

Referring to the possibility of joining the TPP, Abe’s Liberal Democratic Party (LDP) and its junior coalition partner New Komeito “will pursue the best path that would serve Japan’s national interest”, they said in their final coalition agreement, the Asahi Shimbun daily reported.

 

The coalition, that is due to take office officially on Wednesday, also agreed on promoting other free trade frameworks, it said.

 

The comment contains a more positive note on participation in the TPP compared with the LDP and New Komeito’s election pledges before the December 16 poll that brought Abe a landslide parliamentary victory.

 

Vietnam seeks economic boost with fresh rate cuts

 

HANOI: Vietnam on Monday cut its key interest rates for the sixth time in 2012 in an attempt to boost an economy growing at the weakest pace in more than a decade.

 

The move comes as the communist-run economy struggles in the face of domestic banking sector turmoil, falling foreign direct investment and deepening financial troubles among state-owned companies.

 

The State Bank of Vietnam cut the refinancing rate — charged on loans to commercial banks — to nine percent from 10 percent. The decision, announced over the weekend, took effect on Monday.

 

The discount rate was lowered to seven percent from eight percent. “Business and production activities are encountering difficulties due to markets’ weak purchasing power and large stockpiles,” the bank said in a statement.

 

Yen slips against dollar

 

SINGAPORE: The yen dipped against the dollar and euro in Asian trade Monday as incoming Japanese premier Shinzo Abe stepped up pressure on the Bank of Japan to set a two percent inflation target.

 

The euro bought 111.23 yen in afternoon Christmas Eve trade from 110.05 yen in New York late Friday, after Abe on Sunday threatened to revise a law guaranteeing the BoJ’s independence if it did not back his proposed inflation goal.

 

The dollar fetched 84.38 yen from 84.25 yen, while the single currency bought $1.3183 from $1.3181.

 

“The yen is finding sellers, even in thin holiday trade,” said Jason Hughes, head of premium client management for IG Markets Singapore.

 

“The changes in political circles in Japan mean we will see a more aggressive stance in weakening” the yen, he told AFP.

 

Abe is expected to take office on Wednesday, following a landslide victory for his Liberal Democratic Party in national elections last week.

 

The hawkish leader has called for a two percent target in a bid to drag Japan out of years of deflation.