For economies like Pakistan, funds repatriated by non-residents to family and friends back home, provide the most tangible link between migration and development. But after September 11attacks, it has become increasingly difficult for Pakistanis to get work visas which had resulted in negative growth of remittances.

Analysts believe that latest increase is due to strict regulation of foreign exchange market. Majority of the informal money transfer and forex firms have changed their business practice or disappeared.

Analysts point out that since remittances are unilateral transfers they do not create liabilities. And they usually come with advice—from migrants who have seen better—on how to best use them. Thus, remittances are not simply money, but value-added money.

NRPs sent $588.78 million in February 2009 compared to $641.32 of February 2010. The inflow of remittances in July-February, 2010 period from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,317.17 million, $1,173.37 million, $1,148.86 million, $826.93 million, $596.26 million and $171.41 million respectively as compared to $1,035.55 million, $1,156.51 million, $962.30 million, $783.39 million, $344.08 million and $150.05 million respectively in the July-February, 2008-09 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eight months of the current fiscal year amounted to $550.65 million as against $486.34 million in the same period last year. The monthly average remittances for the July-February 2010 period comes out to $723.36 million as compared to $614.83 million during the same period of last fiscal year, registering an increase of 17.65 percent.

During February 2010 remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $149.45 million, $136.88 million, $111.48 million, $89.21 million, $45.91 million and $13.48 million respectively as compared to $123.64 million, $166.62 million, $127.48 million, $93.09 million, $54.12 million and $18.31 million in February 2009. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during February 2010 amounted to $41.13 million compared with $58.04 million in the same month of last year.

The true size, including unrecorded formal and informal flows, is believed to be significantly larger. Remittances total at least three times official development assistance and are the largest source of external financing.

Federal Reseves comments that the US interest rates may remain low for “quite some time,” also hurt the dollar today.

Positive global economic data point to a continuing recovery, which is benefiting the euro and commodity-backed and emerging-market currencies, and persistent troubles in the U.S. labor market weigh on the dollar.

The lagging U.S. jobs report is “mostly perceived as a dollar issue and not as a broad risk event,” especially when Chinese data reported overnight points to a strong recovery there, Sebastien Galy, currency strategist at BNP Paribas in New York told Dow Jones.

Monday morning in New York, the euro was at $1.4525 from $1.4414 late Friday, according to EBS via CQG. The dollar was at Y92.47 from Y92.59, while the euro was at Y134.33 from Y133.48. The U.K. pound was at $1.6158 from $1.6034. The dollar was at CHF1.0163 from CHF1.0237.

The Indian rupee also rose to its highest level in more than 15 months against the U.S. dollar, benefiting from the greenback’s global weakness and hopes of capital inflows into the strongly growing Indian economy.

The dollar was at INR45.34 late Monday after falling to INR45.28, last seen on Sept. 22, 2008. It was down from INR45.76 Friday.

“The rupee has rallied quite a bit. Technically, there should be a correction, but it would only be mild,” said the foreign exchange trading head at a large private bank.

The local currency has risen more than 6% since October as a strengthening economy and relatively higher interest rates lure foreign investors back. Foreign funds bought more than $17 billion of local shares in 2009 after having sold more than $13 billion of shares the year before.

 A slew of initial share sales lined up mostly in February are likely to provide further strength to the local currency, the dealer added.

Compared to November’s gain in jobs (the first gain since the recession began), December’s loss has brought many questions about the U.S. recovery.

The NASDAQ index gained 0.53% today while S&P 500 dropped 0.11%, falling from a 15 month high.

The dollar index which gauges the U.S. currency against those of six major trading partners declined 0.5 percent to 77.509.

However, despite this bad news, investors seem to still be heading towards the U.S. economy for a few reasons.

U.S. Inventories rose 1.5% to $386.26 billion, the Commerce Department said Friday while a 0.3% decline was expected on Wall street, making it the largest since a 1.5% climb in October 2004.

The U.S. economy seems to be headed in the right direction, especially compared to European countries including the U.K. who are facing a large burden of debt at the moment amongst other problems. 

The loss of jobs in December, as troubling as it may seem is not as severe as many are making out to be. After all, 741,000 jobs were lost in January of 2009 just a year ago, when numbers like 600,000 and 700,000 jobs lost a month were common.

The fact that the U.S. has decreased unemployment down to 85,000 of the past year is a sign of long term improvement, not failure. 

 This is something investors realize. They realize that the job sector is lagging behind every other sector of the economy, and do not use it as a measure of the total economies worth. Rather they use times like these when the dollar is weak as a good buying opportunity.

On Tuesday, Fertilizer producer Moasic, a major potash company, said its fiscal second-quarter profit fell 89 percent. The company reported a net profit of $107.8 Million (24 cents per share) for the end of November 2009, compared to $959.8 Million ($2.15 per share) in November 2008. Mosaic blamed falling potash prices for their problems, and said that sales volumes were 40% less than they were the year before. 

The industries recent troubles have left some companies desperate. BHP Billiton just announced that it will go ahead with plans to develop what will be the world’s biggest mine of Potash. However, some companies fail to see the light in this possible Chinese contract. Instead, they see China’s low price offer as an insult and some even plan to just move on to other countries.

Negotiating from Vancouver based marketing consortium Canpotex, Canadian fertilizer giants Potash Corp. Agrium joined U.S. Mosaic to form the holdouts seeking a higher price. Mosaic CEO, Jim Prokopanko took things to a next level when he told the Chinese that that the fertilizer demand revival is expected and the company is very happy to find better paying customers if the Chinese buyers wont agree to their terms.

However, it may be Mosaic who could feel the repercussions of this, as it is simply the Chinese who could seek out different producers, such as companies in Russia who would have more amicable negotiations. 

Potash prices have fell from $1000 a ton in 2008 during global food shortages, a time when Potash traders were the darlings of the day. It was prices like those which attracted many companies to the industry. Companies like BHP, an Anglo-Australian company who entered the Potash market during its golden days. Times are more rough now and Potash companies must now look in the long run to what is in the best interest of their company, and the failing industry.

Industrial metals led the Index in 2009 with a gain of 82.42% as recorded by the S&P GSCI Industrial Metals Index. For the decade, the S&P GSCI posted a cumulative total return of 63.69% led by a 265.84% increase in the S&P GSCI Precious Metals Index.

“Coinciding with an approximate 1/4 devaluation of the U.S. Dollar since 1999, the S&P GSCI Precious Metals Index was the best performing sector within the S&P GSCI during the decade,” says Michael McGlone, Director of Commodity Indexing at Standard & Poor’s.

“The opportunity cost of holding non-income producing physical assets was certainly enhanced during the decade as the U.S. government benchmark 2-year note declined from a yield of 6.21% at the end of 1999 to 1.14% at the conclusion of 2009.”

The year 2009 was notable for the outperformance of commodity indices designed to alleviate the negative impact of rolling into contango. During the year, the S&P GSCI Enhanced Index increased 21.63% and the S&P GSCI 3-Month Forward Index increased 20.79%. Decade-to-date, these indices posted solid, pro-forma total returns of +272.50% and +287.36%, respectively

The S&P GSCI is the most closely followed benchmark for investment performance in the commodity markets. For more information on the S&P GSCI, please visit: www.spgsci.standardandpoors.com.

  S&P GSCI Analysis for December 31, 2009

                         Weight     Value       MTD      QTD      YTD
                          (%)    12/31/2009   Change   Change  Change
                          ---     ----------   ------   ------  ------
  S&P GSCI                           4534.17     0.86%    8.42%   13.48%
  S&P GSCI Energy
   Index                  70.19%     1016.21     0.71%    7.30%   11.22%
  S&P GSCI Petroleum
   Index                  65.16%     2183.65    -0.17%    8.77%   18.85%
  S&P GSCI Industrial
   Metals Index            8.22%     1706.93     7.35%   16.32%   82.42%
  S&P GSCI Precious
   Metals Index            3.10%     1424.01    -7.47%    7.64%   25.07%
  S&P GSCI Agriculture
   Index                  14.38%      615.52     0.29%   11.34%    3.81%
  S&P GSCI Livestock
   Index                   4.12%     2048.13    -0.05%    3.00%  -14.08%
  S&P GSCI Softs Index     4.93%       89.04     9.47%    7.04%   49.89%
  S&P GSCI Enhanced
   Index                              634.93    -0.08%    8.60%   21.63%
  S&P GSCI 3 Month
   Forward Index                      595.20     0.25%    9.41%   20.79%
  ----------------                    ------     ----     ----    -----

                          YTD      YTD    3-MO.    12-MO
                         High      Low    Change   Change    Decade
                         ----      ---    ------   ------    ------
  S&P GSCI              4679.49  3116.66    8.42%    13.48%    63.69%
  S&P GSCI Energy
   Index                1076.88   646.34    7.30%    11.22%    90.88%
  S&P GSCI Petroleum
   Index                2302.41  1291.03    8.77%    18.85%   184.77%
  S&P GSCI Industrial
   Metals Index         1712.57   853.25   16.32%    82.42%   173.28%
  S&P GSCI Precious
   Metals Index         1586.19  1040.96    7.64%    25.07%   265.84%
  S&P GSCI Agriculture
   Index                 663.49   509.40   11.34%     3.81%   -20.75%
  S&P GSCI Livestock
   Index                2467.74  1927.70    3.00%   -14.08%   -34.10%
  S&P GSCI Softs Index    89.64    55.85    7.04%    49.89%   -14.87%
  S&P GSCI Enhanced
   Index                 653.19   439.30    8.60%    21.63%   272.50%
  S&P GSCI 3 Month
   Forward Index         608.32   408.43    9.41%    20.79%   287.36%
  ----------------       ------   ------    ----     -----    ------

  Source: S&P Indices

However, this is more likely to make it difficult for the US Bureau of Land Management to speed up the permission of oil and gas projects on federal land. The staff in BLM shall need to acquire approvals from supervisors and make more visits to those places where the energy companies are ready to gain access.

The US domestic production from federal onshore oil and gas wells makes up 11% of US natural gas supplies and 5% of the country’s oil. The Obama administration is already in the midst of a fight with the oil and gas industry over proposals to raise billions of dollars. This is as additional taxes from energy companies.

Mr. Salazars action has attracted criticism from Government Accountability Office for violation of federal law; as well as litigation from certain environmental groups. It was planned that oil and gas drilling will be carried out by allowing federal land managers to ignore widespread environment reviews that are required.

The GAO mentioned that the 2005 law fails to state the conditions under which the exclusions can be granted. Many business groups are apprehensive that this action will discourage domestic energy development, in addition to new rules and regulations to the process of oil and gas drilling

The Industrial Energy Consumers of America, which is a lobbying group representing manufacturers has written a letter to Mr. Salazar. In this they stated the 2005 law about reducing the drilling permit backlogs and boosting natural gas production. “At a time when we should be working to enhance our energy supplies here at home, we believe it would be a mistake to pursue policies that would make it more expensive or difficult to access critical natural-gas resources, “the group said. Republican lawmakers have also insisted to Mr. Salazar not to give up the practice of granting categorical exclusions, as better guidance was needed y the BLM staff.

“We are concerned that the [U.S.] Department of the Interior is prepared to use a sledgehammer where a scalpel would suffice, “said Rep. Doc Hastings of Washington, in a letter to Salazar a few months back. According to some congressional democrats and environmental groups, the BLM has misused its authority in a number of cases and the rules have to be more stringent.

The Dow Jones Industrial Average fell 11.94 points, or 0.1%, to end at 10572.02. The blue-chip measure was led lower by a 3.1% decline in Alcoa, which is often sensitive to housing reports as a harbinger of demand for aluminum.

The Dow’s losses were tempered by a 4.9% surge in Kraft Foods after large shareholder and billionaire Warren Buffett moved to block Kraft from issuing shares to fund its offer for Cadbury.

The Standard & Poor’s 500-stock index rose 0.3%, led by a 1.7% gain in its financial sector.

Stocks had begun the year with a strong start, with the Dow rallying 155.91 points, or 1.5%, on Monday and the S&P 500 and Nasdaq producing comparable percentage gains. Investors are watching the market moves especially closely because January is generally seen as a harbinger of stocks’ performance for the rest of the year.

The Dow is up 61.48% from its 12-year close low of 6547.05 hit on March 9.

“We’re at a pretty important juncture in the market to see whether we’ll break out of a trading range,” said portfolio manager Uri Landesman, of ING Investment Management. “We’re at a point where you have to believe in a decent [U.S. economic] recovery to consider stocks cheap.”

The National Association of Realtors said its index of pending home sales plunged 16%, a much bigger decline than analysts expected.

Investors also paid attention to a series of sales reports from major auto makers Tuesday. The most upbeat was from Ford Motor, which rallied 6.6% after posting a 33% jump in December light-vehicle sales in the U.S.

Commodity prices rose modestly. Gold futures gained for a third straight day, up 40 cents to end at $1,118.10 an ounce in New York. Oil prices rose 26 cents to $81.77 per barrel.

The dollar rose 0.3% against the euro. Treasury prices rose.

The MOU was signed at a ceremony in Jaipur by C. Vinod Hayagriv, Chairman of the All India Gems & Jewellery Trade Federation and Mr. Eli Avidar, IDI Managing Director.

The MOU states that the two parties share the desire to promote positive relations between the Indian Gems & Jewellers Industry and the Israeli Diamond Industry, and to enhance areas of cooperation between them, as well as to intensify the dialogue concerning issues of mutual interest via collaboration between the parties.

The MOU calls for:
- An examination of joint interests to safeguard the industry;
- An ongoing exchange of information for the benefit of the members of both organizations;
- An annual meeting to examine and plan subjects on the agenda;
- A joint educational effort.

In addition, the parties will determine by mutual consent the level, agenda, time and place of consultations and other forms of cooperation. Moreover both parties will grant each other honorary membership in all functions and events taking place under the auspices of the two organizations.

The All India Gems & Jewellery Trade Federation is a national trade federation for the promotion and growth of trade in gems and jewellery across India. The Federation unites manufacturers, wholesalers, retailers and exporters all over India.

GJF Chairman C. Vinod Hayagriv said: “This marks a new, unexplored and exciting opportunity for Israel and India to seek each others strengths to widen their markets. The direct access will help businesses of both countries immensely as this partnership will help businesses of varying sizes to come together for a common purpose of commerce. Also envisaged is education and knowledge transfer between India and Israel”.

IDI Chairman Moti Ganz said: “This is an extremely important moment in the relations between the Israeli and Indian diamond and jewelry industries. We truly believe that we have a common interest and through partnership we will be able to benefit our members. The MOU is just the foundation for the joint projects yet to come.”

This is the second MOU that IDI has signed with India in the past four weeks. The first MOU was signed in November with the Gem and Jewellery Export Promotion Council of India (GJEPC).

The ISM’s manufacturing purchasing managers’ index rose to 55.9 last month, from 53.6 in November. December’s reading released today was above the 54.0

Alcoa and Boeing helped the Dow Jones Industrial Average gain 132 points, or 1.3%, to 10560, in early trading. Alcoa led the measure, up 3.7%.Boeing climbed 2.9%. One of the few components in the red, Home Depot eased 0.1%.

The tech-heavy Nasdaq Composite rose 1.4%. The Standard & Poor’s 500-share index climbed 1.2% as all of its components rose. The materials and energy sectors led the measure, boosted by rising commodities prices.

Reasserting a pattern that trailed off at year’s end, U.S. stocks climbed as the dollar fell. The U.S. Dollar Index, which represents the greenback against a basket of six other currencies, dropped 0.5%. The price of oil climbed above $81 per barrel and gold futures rose.

Hedge funds heavily involved in commodities and currencies that stepped back from trading in December have returned to the market.

The Dow’s climb was boosted Monday by data from the Institute for Supply Management showing a bigger-than-expected uptick in manufacturing activity during December, helped by improving production and ordering activity.

A report from the Commerce Department that U.S. construction spending fell more in November than economists had expected did little to check the market’s climb.

The gains also followed weekend remarks from Federal Reserve officials. Fed Chairman Ben Bernanke said in a speech Sunday that regulatory and supervisory policies, rather than monetary policy, were to blame for a rapid increase in U.S. house prices in the early parts of last decade and Fed Vice Chairman Donald Kohn said that tightening policy to head off perceived threats from asset price increases “could be expensive.”

However, Mr. Bernanke noted the Fed needs to “remain open” to employing higher interest rates to avert or pop future asset bubbles.

Investors will be watching the stock market’s movement this month closely, as January performance tends to be a bellwether for the year to come. January was a weak month for stocks in both 2008 and 2009, though last year’s rally from its March lows helped the Dow close up 19% for the year.

In the quarter ending December 31, the Central Bank of Pakistan reached milestone of increasing the external assets and decreasing the internal assets of banking system. In lending to the government of Pakistan, the Central Bank also complied with the process required under the Stand-by Agreement.

The government of Pakistan raised US$2 billion from the auction of Treasury Bills (T-Bills) in December and paid off the Central Bank’s loan.

It may be noted that instead of releasing the aid in January 2010, the IMF had send the fourth tranche of US$1.20 billion on December 28 and additional US$400 million were provided to cover the budget deficit.

The IMF aid helped the banking system to increase its foreign assets up to US$4 billion and the SBP has remained successful in achieving the prescribe targets.