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PKR gains 1.37 rupees per USD in early trade

PKR gains 1.37 rupees per USD in early trade

June 30, 2022 (MLN): Riding on the upward trail, the Pakistani rupee (PKR) has further gained 1.37 rupees against the greenback in the interbank market during early trade compared to the previous close of PKR 205.12 per USD. 

The local unit is being traded at PKR204.25/204.75 [10:00 PST] with the trades being reported at PKR 203.75 per USD. 

This appreciation is attributable to the government’s unpopular decisions to comply with the IMF tranche.

The government is on its toes to unlock the IMF deal as soon as possible to bring the economic stability back. As a result, the National Assembly on Wednesday passed the Finance Bill-2022 after clause-by-clause consideration and adopting certain amendments in it.

During the debate on the Finance Bill, Minister of State for Finance and Revenue Aisha Ghaus Pasha said that there had been no pressure from the fund to integrate amendments in the federal budget 2022-23 saying that the changes had been made in the larger interest of the country.

However, experts are of the view that this appreciation in PKR is short-lived due to a prolonged bullish rally of oil prices in the international market.

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Saudi Arabia may raise Aug crude prices to Asia to near record levels

Saudi Arabia may raise Aug crude prices to Asia...

June 30, 2022: Top oil exporter Saudi Arabia may raise prices of light crude grades to Asia for the second straight month in August on the back of record distillate margins and strong spot premiums for Middle Eastern oil this month.

The official selling price (OSP) for Saudi's flagship Arab Light crude could rise by about $2.4 a barrel from the previous month, according to nine refining sources surveyed by Reuters on June 28-29.

The price hike would drive the August OSP close to record levels, set when May Arab Light crude reached $9.35 a barrel.

"Refining margins are very solid and we expect demand to stay robust in the near term," said one of the respondents.

Margins for gasoline, diesel, and jet fuel in Asia leaped to records in June alongside a revival of travel demand amid the easing of COVID-19 restrictions.

Spot premiums of medium-sour Oman and Dubai crude have climbed to their highest since mid-March, while light sour Murban soared to a record last week.

The monthly change in first- and third-month price spread for Middle East benchmark Dubai typically guides how much Saudi might raise or cut Arab Light's OSP.

This month, the spread widened by an average of $2.47 a barrel in backwardation - a market phase when prompt prices are higher than those in future months, indicating tight supply.

Major producers Saudi Arabia and the United Arab Emirates have flagged limited spare capacity to further boost production, while political unrest in Libya and Ecuador could further tighten oil supply.

Meanwhile, China issued 52.7 million tonnes of fresh crude oil import quotas to its independent refiners, up 49% from the same allotment last year. That will allow Chinese buyers to take more crude cargoes from the already tight global market, further driving up prices.

For other grades, respondents to Reuters' survey expect OSP for Arab Medium to raise $0.50 to $3.00 a barrel, and Arab Heavy to increase $0.50 to $2.90 a barrel.

OSP for Arab Extra Light, which typically follows Murban prices, is seen being raised as much as $5.35 a barrel. Average spot premiums of IFAD Murban against Dubai quotes increased $4.38 a barrel in June from the previous month.

Saudi crude OSPs set the trend for Iranian, Kuwaiti, and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.

Saudi Aramco is likely to release monthly prices after a meeting between the Organization of the Petroleum Exporting Countries and producer allies on Thursday.

Saudi Aramco officials as a matter of policy do not comment on the kingdom's monthly OSPs.

Reuters

Gold set for worst quarter in five as dollar dominates

Gold set for worst quarter in five as dollar...

June 30, 2022: Gold was mostly quiet on Thursday, but faced its worst quarter since early 2021, as a remarkable showing from the dollar kept investors away, with bullion's outlook clouded by top central banks adopting aggressive tactics against stubborn inflation.

Spot gold was flat at $1,817.07 per ounce by 0339 GMT. U.S. gold futures edged up 0.1% to $1,819.70.

Gold prices, set to drop for a third straight month, have fallen about 6.2% this quarter.

A combination of rising yields and the U.S. dollar have played their part in gold underperformance, City Index senior market analyst Matt Simpson said but noted that gold priced in other currencies hadn't performed too badly.

The U.S. dollar hovered near recent two-decade peaks and could record its best quarter in over five years, making gold more expensive for buyers holding other currencies. 

Bringing down high inflation around the world will be painful and could even crash growth, but must be done quickly to prevent rapid price growth from becoming entrenched, the world's top central bank chiefs said on Wednesday.

Higher bond yields and interest rate hikes by central banks to fight inflation raises the opportunity cost of holding bullion, which yields no interest. 

Bullion's performance in the second quarter erases gains made earlier in the year as a spiraling Ukraine-Russia conflict lifted demand for the safe haven, with prices back around levels they started 2022 at - just above $1,800.

Looking forward, the bias will become increasingly bearish as rate hikes continue to come through and bring down inflation expectations, Ilya Spivak, a currency strategist at DailyFX said, adding that $1,780-$1,790 is a critical support level.

Spot silver was up 0.1% at $20.72 per ounce, platinum was flat at $916.66, and palladium gained 1.2% to $1,986.21. However, they were all still headed for monthly and quarterly losses.

Reuters 

Buckle Up: How investors can deal with crypto turbulence

Buckle Up: How investors can deal with crypto turbulence

June 30, 2022: When Doug Milnes started buying cryptocurrencies in January of this year, he felt like it could become an entirely new asset class for investors.

Right now what it is making him feel is extremely unsettled.

The marketing executive from Summit, New Jersey, says his holdings, including a number of different cryptocurrencies like Ethereum, are down around 60% from where he bought. What was 2% of his portfolio is now around 0.8% – making him wring his hands about whether to hold on, head for the exits, or buy the dip.

“Crypto has gone through a number of booms and busts over time, and it’s hard to know if this time is different,” Milnes says. “I don’t know if my feelings are clouding my judgment. It’s hard to feel confident about what to do next.”

It has certainly been a harrowing year for crypto, and Milnes is not alone in trying to make sense of the plummeting charts. The total market capitalization of crypto assets has gone from almost $3 trillion in November 2021 to roughly $900 billion as of June 29, according to the tracker CoinMarketCap.

Meanwhile, bitcoin - the dominant cryptocurrency - fell from a high of more than $67,000 to its current level of just below $20,000.

“Some people set up their portfolios in the euphoria of the last few years, without much thought about a bigger plan,” said Christine Benz, director of personal finance for investment research firm Morningstar. Recent losses, she adds, are a good impetus to ask yourself some questions, including how much risk can you take and what kind of losses can you withstand?

"If you didn’t go through that process on the front end, it’s worth thinking through now,” Benz said.

Of course, crypto is hardly alone in flying through heavy 2022 turbulence. The stock markets officially dipped into bear territory earlier in June – the S&P 500 is down more than 19% year-to-date as of Wednesday, and the Nasdaq is down more than 28% over that time frame.

The unique nature of crypto has skeptics likening any moves now to “closing the barn door after the horse has bolted,” said Peter Palion, president of Master Plan Advisory in East Norwich, New York. “Except on further thought, a horse is a real thing with a real value, and crypto - as John Paulson famously said - is a limited supply of nothing.”

No matter what your personal stance on crypto, the key to handling extreme market moves is having a plan in place, so you do not act out of pure panic. A few tips from the experts:

REEVALUATE YOUR RISK TOLERANCE

If this year’s crypto swoon has made you realize you are not equipped to handle such swings, then do not assume even more risk.

After all, just because there have been heavy losses, that does not rule out more losses to come. “If you find yourself unduly rattled, maybe you’re not a good candidate for holding that asset class,” said Benz. “There’s no shame in that.”

WRITE OFF LOSSES

It may seem like cold comfort, but if you have lost value in crypto transactions, you can write off a certain amount come April 15.

“For clients who have a large position in crypto we recommend using this time to tax loss harvest,” said Kevin Lum, founder and CEO of Foundry Financial in Los Angeles.

Losses function the same as they would for equities, Lum said. If your losses exceed your total capital gains for the year, you can deduct up to $3,000 against your ordinary income. "Losses beyond $3,000 can be carried forward until death to offset future gains."

LIMIT PORTFOLIO ALLOCATION

As with any more speculative investment, it is wise to keep it to a certain percentage of your holdings – a particular “bucket” that will not swamp the rest of your portfolio.

“A good framework is to set an upper threshold,” said Benz. “Think of all your speculative assets in totality, and give them a 5% or 10% position in your portfolio – whether crypto, or precious metals, or microcap companies, or anything else.”

For example, even though Doug Milnes' crypto portfolio has been savaged, it is not like he bet his entire future on it.

“There is a lot of uncertainty about what to do next, but at least I’m not worried about my retirement,” he said. “My advice to other crypto investors would be, don’t put all your eggs in one basket.”

Reuters

Palm oil set for steepest monthly decline since 2008 financial crisis

Palm oil set for steepest monthly decline since 2008...

June 30, 2022: Malaysian palm oil futures firmed on Thursday ahead of June export data, but worries over declining shipments and rising production set the contract for its biggest monthly slump since the 2008 financial crisis.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange gained 12 ringgit, or 0.24%, to 4,915 ringgit ($1,116.54) a tonne during early trade.

For the month, the contract plunged 22%, its sharpest drop since October 2008.

FUNDAMENTALS

Cargo surveyors are expected to release estimates for June exports later in the day. Traders are expecting shipments to remain weak amid top producer Indonesia's push to boost exports.

Industry groups have so far pegged a double-digit growth in production this month, although temporary mill closures in some parts of Malaysia due to declining palm prices may hurt output. 

Dalian's most-active soyoil contract DBYcv1 fell 0.2%, while its palm oil contract DCPcv1 eased 0.02%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.2%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may test a support at 4,742 ringgit per tonne, as it could have completed a bounce from the recent low of 4,493 ringgit, Reuters technical analyst Wang Tao said. TECH/C

MARKET NEWS

Asian shares were ending a rough quarter in a somber mood on Thursday amid fears central banks' cure for inflation will end up sickening the global economy, though it is proving to be a fillip for the safe-haven dollar and government bonds. 

Reuters

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