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ECONOMY
14 NOVEMBER 8, 2008 TEHRAN TIMES INTERNATIONAL DAILY
$3b transited
through Iran, Morroco keen to China considers support
for foreign-bank units
Salafchegan in
boost economic relations
SHANGHAI (The Wall Street Journal) — China’s central bank is con-
sidering a facility to funnel cash to the local operations of foreign
6 months banks needing day-to-day financing in yuan money markets, ac-
cording to people familiar with the situation.
Tehran Times Economic Desk meeting in Rabat on Thursday. Equity in the foreign banks’ locally incorporated entities might be eligi-
TEHRAN — Salafchegan Special They also studied ways to en- ble collateral, along with bonds, loans and foreign currency, according to
Economic Zone Managing Direc- hance and facilitate bilateral rela- people familiar with the plan.
tor Ebadollah Kamkar said on Fri- tions, IRNA reported. Separately, China’s sovereign-wealth fund signed a deal to pump 19
day that over $2.99 billion worth of Maazouz praised Iran’s progress billion dollars into Agricultural Bank of China, part of a restructuring proc-
goods have been transited through in various fields and said Morocco is ess that is expected to transform the bank into a stockholding company
in the first half of the current Iranian willing to use Iran’s experience in in- by the end of the year. The bank is following the same path as China’s
calendar year (began March 20). dustry, energy, and car making. other three large state-controlled banks, which are now some of the
IRNA quoted Kamkar as saying Pointing to Iran’s potentials in en- world’s best-capitalized financial institutions.
that more than 39,577 thousand tons ergy, dam making, road construction, China so far has limited its response to the global financial crisis by
of goods have been exported, import- petrochemicals, and pharmaceuti- aiding its domestic economy and calling for coordination in the global
Tehran Times Economic Desk cals, Nahavandian said developing velop the existing capacities through response. On Thursday, a senior Chinese official played down specula-
ed, and transited in the special eco-
TEHRAN — Iran Chamber of Com- relation with Islamic countries is top bilateral cooperation and urged the tion over whether China will offer funds to help address the crisis at next
nomic zone and nearly 554 million
merce, Industries, and Mines (IC- on Iran’s foreign policy agenda. use of the regional situation to boost week’s economic summit in Washington. Vice minister of foreign affairs
dollars of customs has been paid.
CIM) Chairman Mohammad Naha- “It is among our country’s princi- up economic relations. He Yafei said Beijing’s focus at the meeting, which is scheduled for Nov.
He added that the figure has a
vandian and Moroccan Minister of ples to improve relations with Islam- International changes as well as 15., will be on lobbying for the interests of developing countries.
360 percent increase compared to
Foreign Trade Abdellatif Maazouz ic states,” he said, highlighting the global financial and economic crisis The People’s Bank of China last week requested information from foreign-
the figure of the same period of the
called for the expansion of Iran- importance of African states. necessitate such cooperation, he owned banks about their financial condition in preparation for the launch of
last Iranian year.
Morocco economic relations in a He also expressed hope to de- concluded. a lending mechanism, known as a Term Auction Facility, for those that need
There are totally 117 production,
industrial, and economic units in the cash on a temporary basis, two people familiar with the situation said.
Salafchegan zone, Kamkar said.
Salafchegan of Qom, 155 km
Russia may push Iran-Armenia rail link In China, about 25 foreign banks, including Citigroup Inc. and HSBC
Holdings PLC, operate through holding companies that are standalone
entities, largely walled off from their global operations by restrictions on
southwest Tehran, is aimed to be Construction of a rail link to Iran is likely to be ments are currently underway. One would start from
home to one of the most advanced how capital can move across China’s borders.
pushed forward with Russian backing. Eraskh on the line to Ararat, one from the current ter-
complexes in rail industry in the The structure is partly meant to protect China’s ability to influence the value
At a meeting in Sochi in September, Russian Presi- minus at Vardenis and the other from Gagarin, to the
Middle East, Kamkar was quoted as of its currency and to reduce its exposure to global financial risks, but puts the
dent Dmitry Medvedev discussed the project with his northeast of Yerevan.
saying by the Mehr News agency entities under the regulatory authority of the Chinese government. It also leaves
Armenian counterpart Serch Sarkissjan as part of a co- The link would require around 80 km of new con-
on December 5, 2006. some of the world’s biggest financial institutions highly dependent on China’s
operation agreement between the two countries. struction in northwestern Iran, running from the Arme-
Iran’s first GTL (gas-to-liquid) unit money markets to fund the growth of their operations in the country.
The Russian Rialways (RZD) subsidiary South Cau- nian border on the Aras River to Marand on Tabriz-Djolfa
became operational in Salafchegan Officials at the central bank and other agencies declined to comment
casus Railway took over the operation of the Armenian line.
Special Economic Zone in Qom about the proposed lending facility. Executives at several banks that
rail network on June 1 under a 25-year concession, According to Armenian Minister of Transport and
Province on 2005. might be eligible for the funds also declined to comment.
but Armenia’s only active international rail link runs via Communications Gurgen Sargsyan, the line is expected
The plan appears modeled on a Term Auction Facility introduced in
Georgia, as the lines to Turkey and Azerbaijan are out to cost around 2 billion U.S. dollars.
Malaysian team of use. Iran and Armenia have agreed to set up a working group,
December 2007 by the U.S. Federal Reserve to advance funds to Ameri-
can banks. Similar mechanisms were offered by central banks in other
Initial proposals for a line into Iran were first floated in which the Russians may be invited to participate.
of investors in 2006, and feasibility studies for three possible align- (Source: railwaygazette.com)
countries as well, all of them meant to keep financial institutions solvent,
as bankers grew reluctant to extend credit to each other.
head for Iran IMF sees U.S. economy contracting 0.7% in ’09 In the first six months of this year, net borrowing by foreign banks in
China’s money markets totaled 344.6 billion yuan (49.23 billion dollars),
“Markets have entered a vicious compared with 144.6 billion yuan a year earlier, according to central-
A group of Malaysian investors
cycle of asset deleveraging, price bank figures. More recent numbers aren’t available.
have left for Tehran to assess
declines, and investor redemptions,” Since the September collapse of Lehman Brothers Holdings Inc. -- which
business and investment oppor-
the IMF said. has tied up assets claimed by financial institutions everywhere -- deposit-rich
tunities in Iran’s tourism sector.
Asian countries: The IMF slashed Chinese banks have been skittish about extending money to foreign-owned
The tour coordinator in Kuala
its 2009 economic growth forecast for banks in China, as well as to trade with them in local currency markets and
Lumpur told IRNA that the group will
developing countries in Asia by 0.6 to undertake other types of financial-market transactions.
attend the Second International Con-
percentage points to 7.1 percent. Bankers say Chinese banks have shown no reluctance to lend to each
ference on Investment Opportunities in
“Countries in East Asia, including other, so the pinch on foreign banks has had limited impact on the broader
Iran Tourism Industry (November 8-9)
China, generally have suffered smaller yuan money markets in China. Foreign institutions controlled only about
and inspect Iranian tourist resorts.
markdowns,” it said, while advanced 2.4 percent of total banking assets in China at the end of 2007.
The group of 10 Malaysian in-
economies are expected to contract 0.3 China’s regulators have reassured their own lenders that the foreign-
vestors has been chosen to attend
percent on a full-year basis in 2009. owned banks are creditworthy. In late September, authorities issued a
the tourism conference in Iran as
European growth statement saying such institutions have “healthy fundamentals.”
the first such exhibition was found
Growth in the eurozone is fore- Yet money-market dealers say China’s biggest state-owned lenders appear
to be a success.
WASHINGTON (AFP) — The IMF on now been cut heavily in the face of cast to shrink drastically by half a to be the most reluctant to deal with foreign banks, raising doubt among bankers
President Mahmoud Ahmadine-
Thursday sharply cut its outlook for financial market turmoil and other point in 2009, the IMF said, in a new that Beijing has done all it can to alleviate the market tightness. The shortfalls
jad is to open the meeting here to-
the U.S. economy, predicting a con- woes. indicator of the harsh impact of a have left treasurers scrambling to adjust their Chinese balance sheets.
day at the International Seminars
traction of 0.7 percent in 2009 amid a Just a month ago, the IMF had called world economic crisis. Funds do remain available to foreign banks, though these days they
Hall of Tehran Milad Tower.
brutal slowdown in global activity. for the U.S. to show growth of 0.1 per- “Growth in the euro area will be are disproportionately coming from smaller Chinese banks, which have
(Source: mathaba.net)
The new forecast from the Inter- cent in 2009, but now sees far more dif- hard hit by tightening financial con- suddenly replaced the country’s largest banks as trading counterparties
Iceland forecasts national Monetary Fund comes less
than a month after its semiannual
ficult conditions worldwide including the
first contraction in advanced economies
ditions and falling confidence,” the
IMF said in an update of its October
to the foreign institutions, bankers say.
Banks tapping China’s Term Auction Facility would be permitted to
high inflation World Economic Outlook, which has since World War II. World Economic Outlook report. take short-term loans from the central bank of durations ranging from
14 to 30 days, according to two people familiar with the plan. “The TAF
in beginning of Latvia’s economy contracts in 3rd quarter program will surely help us soothe the liquidity pressure,” said a money-
market trader in Shanghai for a European-based bank.
In October, Premier Wen Jiabao and China’s cabinet, the State Coun-
next year RIGA, Latvia (AP) — Latvia’s economy crashed in the
third quarter, the national statistics office said on Friday,
this week it agreed to close two small ministries — on inte-
gration and EU funds — as one cost-cutting measure. cil, approved a comprehensive plan to make Agricultural Bank, which is
STOCKHOLM (Xinhua) — Iceland’s with output shrinking 4.2 percent year-on-year as the glo- Latvia’s central bank chief, Ilmars Rimsevics, has now weighed down by bad loans, a commercial enterprise with a focus
central bank Sedlabanki said on bal financial crisis accelerated the Baltic nation’s woes. slammed the government for putting together a deficit on the countryside, owned by stockholders instead of just the state. The
Thursday it forecasted annual in- The contraction comes after three years of stellar budget for 2009. The planned deficit of 1.85 percent of bank is the country’s largest rural lender by assets.
flation, which stood at 15.9 percent economic performance, when Latvia topped the Euro- gross domestic product is not realistic and will actually bal- In return for its cash, Central Huijin Investment Ltd., a unit of sover-
in October, would rise up to nearly pean Union in annual GDP growth, and could compli- loon to 4 percent of GDP, Rimsevics was quoted as saying eign-wealth fund China Investment Corp., will take a 50 percent stake in
22.7 percent in the first quarter of cate its wish to adopt the euro. by the Diena daily in an interview published on Friday. the bank. China’s Ministry of Finance will hold the rest of shares.
2009, according to reports reach- The result contrasts with the same quarter in 2007, The European Commission forecast a deficit of 5 per-
ing here from Reykjavik. when the Baltic state’s GDP soared 10.9 percent from the cent.
The economy is expected to fall
8.3 percent next year. In 2010, gross
year earlier. First quarter growth this year was 3.3 percent,
while in the second quarter it slowed to 0.1 percent.
A deficit of more than 3 percent of GDP will further
harm Latvia’s wish to adopt the euro at the earlier pos-
ECB rate cut “not sufficient”
domestic product is foreseen to fall
1.7 percent versus an initial estimate
Though many Western economies are also threat-
ened with shrinking economies after this fall’s financial
sible date, possibly in 2012.
Latvia, which joined the EU in 2004, is also saddled to boost economy
of 1.9 percent decline, said the Sedla- meltdown, Latvia’s case is exacerbated by three years with rampant inflation. In September consumer prices PARIS (Reuters) — The European chet has not ruled out further eas-
banki in a statement posted online. of double-digit growth fuelled by rampant consumption. climbed nearly 15 percent year-on-year. Central Bank’s 50-basis-point ing at the bank’s next meeting in
In the current year, the economy On Monday the European Commission released a Propelled by easy credit and a consumption binge, Latvia’s rate cut on Thursday will not December and financial markets
is expected to rise only 1.8 percent. It forecast that Latvia’s economy would contract 0.8 per- economy peaked in 2006 with GDP growth of 12.2 percent. be enough to boost the econo- are pricing in a rate cut of 50 basis
was better than the earlier estimate of cent this year and another 2.7 percent in 2009. Economists, however, warned that the economy was my and a similar cut will prob- points, which would take benchmark
1.1 percent, the Sedlabanki said. Faced with plummeting revenues, Latvia’s center-right overheating, and they now agree that Latvia’s govern- ably come before year-end, said rates down to 2.75 percent.
The Sedlabanki pointed out that government is scrambling to slash expenditures. Earlier ment was too slow to heed the advice. French Economy Minister Chris- Earlier in the day, France slashed
economic recovery was expected to tine Lagarde. its forecasts for economic growth
begin in 2011.
Earlier Thursday, the Board of South Korean central bank cuts key rate Asked on French television if she
thought Thursday’s move would be
and inflation next year and conced-
ed it would overshoot the European
Governors of the Sedlabanki de- SEOUL (Xinhua) — South Korea’s central bank on pected to slow sharply as the pace of export growth is sufficient to revive the economy, La- Union’s deficit limit, bringing its eco-
cided to hold the policy interest rate Friday decided to cut its key interest rate from 4.25 markedly falling and domestic demand remains slug- garde said, “Clearly not.” nomic outlook closer to with market
unchanged at 18 percent, which percent to 4 percent. gish,” BOK Gov. Lee Seong-tae told local media, say- The 50 basis point cut was the expectations.
was hiked by 6 percentage points It was the third time that the Bank of Korea (BOK) ing the growth of inflation is likely to slow to the 3 per- second such lowering of rates by In a widely anticipated move, La-
on Oct. 28. lowers the benchmark seven-day repo rate in a month. cent range by the middle or second half of next year. the ECB in less than a month. The garde said the eurozone’s second-
Last month, Iceland secured a The current key rate of 4 percent is the lowest level The South Korean economy rose by 5 percent in Bank of England cut its rates by 150 biggest economy would grow by be-
2.1 billion US dollar loan from the since February 2006. 2007. basis points on Thursday. tween 0.2 percent and 0.5 percent
International Monetary Fund (IMF) The BOK also reduced the interest on its low-rate The BOK plans to manage its monetary policy by “It’s not sufficient,” Lagarde told in 2009, against the previous 1 per-
after the krona collapsed follow- loans to commercial lenders by 0.25 percentage point preventing financial market jitters from severely con- France 3 television. “We will prob- cent forecast.
ing the government takeover of the to 2.25 percent. tracting the economy while keeping a close watch on ably have a similar move before the Lagarde also lowered the 2010
three biggest banks, which were un- “The growth of the South Korean economy is ex- inflation, Lee said. end of the year,” she added. forecast, saying it would hit 2 percent
able to secure short-term funding. ECB President Jean-Claude Tri- and not the 2.5 percent seen earlier.
