Bangladesh readymade garment units reopen after disaster

Readymade garment manufacturing units in Bangladesh reopened on May 2, 2013, after the Savar building collapse.“Yes, the garment factories have reopened today,” Mr. Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told fibre2fashion on phone.Production at apparel making units was suspended fearing massive labour unrest in the aftermath of the collapse of Rana Plaza, which housed five separate garment units.The building collapse on Wednesday, April 24, resulted in death of over 400 people.Meanwhile, the BGMEA has urged the Government to take adequate security measures so that no untoward incident takes place.Earlier this week, representatives of more than 40 buyers, including H&M, JC Penney, Gap Inc, Inditex, Levi’s, Marks & Spencer, Teseco, Target, Nike Inc, Primark and New Look held a meeting with BGMEA leaders.At the meeting, it was decided that a committee, including representatives from buyers, would be formed to determine the terms of references regarding assessment of all safety-related issues of apparel units, including their building structure.Accordingly, buyers would be submitting a list of the names of their representatives this week to the BGMEA for formation of the committee, and to decide the future course of action.At the meeting, BGMEA leaders urged the buyers’ representatives to talk to their respective top managements to extend shipment time of products and not to impose any penalty on them considering the overall situation.Meanwhile, BGMEA has issued a circular to all its members, advising them to get their garment factory buildings examined by recognized structural designer/design firm, and send a copy of their recommendation to BGMEA before May 31, 2013, for safe operation of the garments activities in the building (s).Last week, at an Emergency General Meeting (EGM) of BGMEA, members agreed to shift their generators to ground floor if they are upstairs within 30 days time.
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Long Lines as Banks Reopen in Cyprus After Freeze

“We were in the Stone Age, and now we’re entering the 19th century,” he said in this village near the capital, Nicosia, after visiting his branch of the Bank of Cyprus, which opened Thursday for the first time since March 15. He cursed the strict new controls that for at least the next week will give him access to only a tiny portion of his money and stop him from cashing checks freely or using his bank to pay suppliers who use different ones.

Across Cyprus, fears that the reopening could lead to a bank run gave way Thursday to conflicting emotions: relief that bank doors were at least open again, but anger over the new rules, which allow deposits but tightly ration withdrawals.

The restrictions are meant to keep customers from draining their accounts in the wake of the bailout deal announced Monday morning in Brussels. European leaders hailed the deal as saving Cyprus’s teetering banks — and the country as a whole — from collapse.

But the prevailing view in Cyprus is that those leaders have mainly sought to halt a potential financial contagion from spreading by allowing it to devastate Cyprus and its bank depositors.

For Mr. Sofroniou, the bailout terms show that the European Union is driven by the same merciless forces now playing out in the long concrete-and-aluminum sheds of his family farm. “The weakest pigs in the pen don’t eat,” he said. “The strong ones eat everything. This is the law of nature.”

In a daily struggle for meager rations, he said, “The weak ones will be eaten.”

Mr. Sofroniou has a sheaf of checks from customers who have bought pigs from him over the past two weeks. But they were nearly all drawn on accounts at cooperative banks and are not yet honored by the Bank of Cyprus.

Not since the introduction of the euro in January 1999 has a European country blocked bank depositors from having full access to their own cash. Under European Union treaties, such restrictions are normally forbidden. But the European Commission, the union’s administrative arm, issued a statement Thursday morning that the Cyprus controls were legal — though urging that they be rescinded as soon as possible. Originally, the controls were to be in place for one week. But on Thursday, the Cypriot foreign minister, Ioannis Kasoulides, said that restrictions on financial transactions would not be lifted for a month.

Earlier, as banks were preparing to open at noon, local radio stations and Twitter messages pleaded for patience, urging people to show patriotic discipline and not to stampede cashier windows. To make sure that there was enough cash on hand, the European Central Bank flew in a container on Wednesday with about 1.5 billion euros, or $1.9 billion, to the Larnaca airport near Nicosia. The container was then taken under police escort to the Cypriot central bank.

Bank employees started preparing early. Many were given three pages of allowed transactions to which to refer when customers demanded their money. Bags of coins were piled high on a desk at Laiki Bank in central Nicosia, while a manager in a dark business suit stood at the front door waving away a retiree who was trying to enter early.

Some of those in bank lines on Thursday conceded understanding for the rigid restrictions, imposed by Cypriot officials in consultation with the European Central Bank, the European Commission and the International Monetary Fund — the so-called troika of lenders that now largely dictates the fate of Cyprus. The lenders promised the country 10 billion euros, or $12.8 billion, as long as it shrinks a banking sector bloated by money from wealthy Russians and other foreigners seeking to avoid taxes back home.

“They need to control the money,” said Dimitris Dimitriou, the owner of an optical business. He stood in line for 45 minutes in Nicosia to enter a branch of Laiki Bank, which is set to be dismantled as part of the bailout. “Financially it’s been a disaster, for me and for the entire population.”

As security guards let a slow trickle of customers through a revolving door, a small crowd pressed Mr. Dimitriou toward the bank’s entrance, a scene probably repeated in hundreds of spots across the country. But with the police on high alert and extra private security guards called in to prevent disorder, no outbreaks of violence were reported.

Few thought that the banks’ reopening was a return to normality — or even a dependable sign that a bank run was out of the question once the currency controls lift. “People here have not recovered from the shock that has happened to us,” Mr. Dimitriou said. When they do, he said, “a lot more people will want to get their money out of the banks.”

The controls effectively create two classes of the same money, analysts said: the constrained euros in Cyprus, and the fully fungible ones elsewhere.

In Akaki, the village president, Giannakis Chatziyannis, said he feared that “this is just the start of our troubles.” The economic crisis, he said, will get far worse as jobs evaporate — including those at a local Laiki branch set to be shut down. He was supposed to pay his own employees at the end of March but told them they would have to wait.

“Everyone knows that the next 10 years are going to be very bleak,” he said. “We are in a downward spiral.”

Anger at the European Union and its most powerful member, Germany, has reached a boiling point in Cyprus. Even in Akaki, which seems distant from the political passions of the capital, Chancellor Angela Merkel of Germany has become a hated figure. Writing by the roadside entrance to the village referred to her with a vulgarism and said, “Cyprus above all.”

“We are what you call collateral damage,” said Chrysanthos Chrysanthou, a goat and chicken farmer. He blamed the German-led push to reshape Cyprus’s banking industry for leaving his animals on “starvation rations.”

He, too, went to the bank on Thursday and withdrew the limit of 300 euros, far less than he needed to keep his animals fed.

Germany and other lenders “say they want to penalize bankers but are just hurting everyone,” he said. “We are not all bankers. A lot of people here do real work.”

When a supplier of animal feed called to demand cash, he said he could pay only by check. The supplier, who uses a different bank, said no. Throwing down the phone in fury, Mr. Chrysanthou said he had returned to Cyprus in 1994 after years in South Africa but was now thinking of leaving. “I left South Africa after I was robbed by thieves,” he said. “Now I’m being robbed again here.”

Andrew Higgins reported from Akaki, and Liz Alderman from Nicosia, Cyprus. Dimitrias Bounias contributed reporting from Akaki, and Andreas Ris from Nicosia.

This article has been revised to reflect the following correction:

Correction: March 28, 2013

An earlier version of this article referred incorrectly to capital controls in Europe. They have not been applied since the introduction of the euro; it is not the case that they have never been applied.

This article has been revised to reflect the following correction:

Correction: March 28, 2013

An earlier version of this article misstated the surname of the president of the village of Akaki. He is Giannakis Chatziyannis, not Chatzyiannis.

View the original article here

Long Lines as Banks Reopen in Cyprus After Freeze

“We were in the Stone Age, and now we’re entering the 19th century,” he said in this village near the capital, Nicosia, after visiting his branch of the Bank of Cyprus, which opened Thursday for the first time since March 15. He cursed the strict new controls that for at least the next week will give him access to only a tiny portion of his money and stop him from cashing checks freely or using his bank to pay suppliers who use different ones.

Across Cyprus, fears that the reopening could lead to a bank run gave way Thursday to conflicting emotions: relief that bank doors were at least open again, but anger over the new rules, which allow deposits but tightly ration withdrawals.

The restrictions are meant to keep customers from draining their accounts in the wake of the bailout deal announced Monday morning in Brussels. European leaders hailed the deal as saving Cyprus’s teetering banks — and the country as a whole — from collapse.

But the prevailing view in Cyprus is that those leaders have mainly sought to halt a potential financial contagion from spreading by allowing it to devastate Cyprus and its bank depositors.

For Mr. Sofroniou, the bailout terms show that the European Union is driven by the same merciless forces now playing out in the long concrete-and-aluminum sheds of his family farm. “The weakest pigs in the pen don’t eat,” he said. “The strong ones eat everything. This is the law of nature.”

In a daily struggle for meager rations, he said, “The weak ones will be eaten.”

Mr. Sofroniou has a sheaf of checks from customers who have bought pigs from him over the past two weeks. But they were nearly all drawn on accounts at cooperative banks and are not yet honored by the Bank of Cyprus.

Not since the introduction of the euro in January 1999 has a European country blocked bank depositors from having full access to their own cash. Under European Union treaties, such restrictions are normally forbidden. But the European Commission, the union’s administrative arm, issued a statement Thursday morning that the Cyprus controls were legal — though urging that they be rescinded as soon as possible. Originally, the controls were to be in place for one week. But on Thursday, the Cypriot foreign minister, Ioannis Kasoulides, said that restrictions on financial transactions would not be lifted for a month.

Earlier, as banks were preparing to open at noon, local radio stations and Twitter messages pleaded for patience, urging people to show patriotic discipline and not to stampede cashier windows. To make sure that there was enough cash on hand, the European Central Bank flew in a container on Wednesday with about 1.5 billion euros, or $1.9 billion, to the Larnaca airport near Nicosia. The container was then taken under police escort to the Cypriot central bank.

Bank employees started preparing early. Many were given three pages of allowed transactions to which to refer when customers demanded their money. Bags of coins were piled high on a desk at Laiki Bank in central Nicosia, while a manager in a dark business suit stood at the front door waving away a retiree who was trying to enter early.

Some of those in bank lines on Thursday conceded understanding for the rigid restrictions, imposed by Cypriot officials in consultation with the European Central Bank, the European Commission and the International Monetary Fund — the so-called troika of lenders that now largely dictates the fate of Cyprus. The lenders promised the country 10 billion euros, or $12.8 billion, as long as it shrinks a banking sector bloated by money from wealthy Russians and other foreigners seeking to avoid taxes back home.

“They need to control the money,” said Dimitris Dimitriou, the owner of an optical business. He stood in line for 45 minutes in Nicosia to enter a branch of Laiki Bank, which is set to be dismantled as part of the bailout. “Financially it’s been a disaster, for me and for the entire population.”

As security guards let a slow trickle of customers through a revolving door, a small crowd pressed Mr. Dimitriou toward the bank’s entrance, a scene probably repeated in hundreds of spots across the country. But with the police on high alert and extra private security guards called in to prevent disorder, no outbreaks of violence were reported.

Few thought that the banks’ reopening was a return to normality — or even a dependable sign that a bank run was out of the question once the currency controls lift. “People here have not recovered from the shock that has happened to us,” Mr. Dimitriou said. When they do, he said, “a lot more people will want to get their money out of the banks.”

The controls effectively create two classes of the same money, analysts said: the constrained euros in Cyprus, and the fully fungible ones elsewhere.

In Akaki, the village president, Giannakis Chatziyannis, said he feared that “this is just the start of our troubles.” The economic crisis, he said, will get far worse as jobs evaporate — including those at a local Laiki branch set to be shut down. He was supposed to pay his own employees at the end of March but told them they would have to wait.

“Everyone knows that the next 10 years are going to be very bleak,” he said. “We are in a downward spiral.”

Anger at the European Union and its most powerful member, Germany, has reached a boiling point in Cyprus. Even in Akaki, which seems distant from the political passions of the capital, Chancellor Angela Merkel of Germany has become a hated figure. Writing by the roadside entrance to the village referred to her with a vulgarism and said, “Cyprus above all.”

“We are what you call collateral damage,” said Chrysanthos Chrysanthou, a goat and chicken farmer. He blamed the German-led push to reshape Cyprus’s banking industry for leaving his animals on “starvation rations.”

He, too, went to the bank on Thursday and withdrew the limit of 300 euros, far less than he needed to keep his animals fed.

Germany and other lenders “say they want to penalize bankers but are just hurting everyone,” he said. “We are not all bankers. A lot of people here do real work.”

When a supplier of animal feed called to demand cash, he said he could pay only by check. The supplier, who uses a different bank, said no. Throwing down the phone in fury, Mr. Chrysanthou said he had returned to Cyprus in 1994 after years in South Africa but was now thinking of leaving. “I left South Africa after I was robbed by thieves,” he said. “Now I’m being robbed again here.”

Andrew Higgins reported from Akaki, and Liz Alderman from Nicosia, Cyprus. Dimitrias Bounias contributed reporting from Akaki, and Andreas Ris from Nicosia.

This article has been revised to reflect the following correction:

Correction: March 28, 2013

An earlier version of this article referred incorrectly to capital controls in Europe. They have not been applied since the introduction of the euro; it is not the case that they have never been applied.

This article has been revised to reflect the following correction:

Correction: March 28, 2013

An earlier version of this article misstated the surname of the president of the village of Akaki. He is Giannakis Chatziyannis, not Chatzyiannis.

View the original article here

Cypriot Banks Reopen, Euro Rallies; USD Steadies Ahead of GDP

ASIA/EUROPE FOREX NEWS WRAP

High beta currencies and risk-correlated assets are mixed in the pre-North American trading hours, as investors around the globe anxiously await news out of Cyprus, now that banks are reopening there for the first time since March 16. There has been much ado about the potential for a bank runs in Cyprus, but thus far, predictions have fallen short of reality. Even though it is a counterfactual argument (and thus can’t be either proved or disproved), I suggest that the capital controls in place – limiting Cypriots to withdrawals of €300/day – are the reason why we’ve seen a lack of panic; accordingly, without them, Cypriot banks would be seeing massive outflows.

Regardless, with Cypriot banks reopening today at 06:00 EST/10:00 GMT, the Euro has found some firmer footing, and has retaken $1.2800 against the US Dollar amid the lack of the bank run. Italian and Spanish yields continue to edge higher, however, as the political situation in Italy appears to be nearing the apex of its crescendo, with it increasingly clear that Pier Luigi Bersani of the centre-left party won’t be able to garner enough support to form a government. However, with Italian President Giorgio Napolitano in the last six months of his presidency (ending in May), new elections cannot be called. We are thus stuck in limbo, and it is looking like another caretaker government, albeit with limited scope for implementing any substantive new reforms, will take charge in the interim.

Looking ahead to the North American trading session, there are several key data releases at 08:30 EST/12:30 GMT that could stoke additional volatility on Thursday. I’ve discussed the implications for both of these releases in greater detail in the Top 5 Key Events column this week.

Taking a look at European credit, upward pressure on peripheral bond yields has held the Euro back on Thursday, despite constructive price action in the single currency. The Italian 2-year note yield has increased to 1.949% (+0.6-bps) while the Spanish 2-year note yield has increased to 2.437% (+1.8-bps). Similarly, the Italian 10-year note yield is unchanged at 4.766% while the Spanish 10-year note yield has increased to 5.089 % (+3.4-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 10:50 GMT

JPY: +0.28%

NZD: +0.16%

EUR: +0.15%

CHF:+0.10%

CAD:-0.03%

GBP:-0.07%

AUD:-0.19%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.05% (+0.05% past 5-days)

ECONOMIC CALENDAR

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

EURUSD: No change: “The headlines of Cyprus’ bailout pushed the EURUSD through the descending TL off of the February 1 and March 15 highs, at 1.2990/300, to its 21-EMA at 1.3042, before failure ensued on Monday. As I do not find the bailout terms favorable to long-lasting Euro strength, the “top” after the bailout could now be in place. Fresh yearly lows were set below 1.2800 at the time of writing [on Wednesday], with a clear test of 1.2660/80 (61.8% Fibonacci retracement on July 2012 to February 2013 rally, mid-November swing lows) in focus. A bearish bias holds so long as 1.3085 holds this week.”

USDJPY: No change: “The USDJPY continues to consolidate near the lower rail of its ascending channel dating back to January, with the first test of 93.50 well-supported. Accordingly, with risk aversion afoot, the drive in the pair is likely lower given the compressing 2s10s Treasury spread. Nevertheless, BoJ policymakers are set to meet next week, in what should be the beginning of new, expansive monetary measures under the watchful eyes of Haruhiko Kuroda. A break below 93.50 could lead to a hasty sell-off towards 90.00/50.”

GBPUSD: No change: “The failed run up to the 1.5285/375 region suggests that the rally in the GBPUSD seen the past few weeks may be nothing more than short covering and asset reallocation, rather than traders taking up new positions amid an improved interest rate outlook for the UK. Price has fallen back below the 8- and 21-EMAs after a rejection at a critical RSI level of 55. A move below 1.5000 this week would necessarily bring into view the lows near 1.4800/30 going into April.” A potential Bearish Rising Wedge has developed (clearer on the 4H timeframe, which would suggest a retest of the lows near 1.4830. The pattern is valid so long as 1.5260/65 holds to the upside.

AUDUSD:No change: “The AUDUSD uptrend remains, but after rejection in the critical 1.0475/535 region, the uptrend is being tested at 1.0435. A daily close below 1.0435 brings into focus the Symmetrical Triangle breakout zone of 1.0370/95, also where the 21-EMA and 200-DMA sit. It is of note that daily RSI failed to move through 67 – a level that has capped the daily RSI on previous run ups towards 1.0600 in mid-December and mid-January.” Now that price has closed below 1.0435, a further pullback to 1.0370/95 is in scope before buying interest returns.

S&P 500: No change: “The near-term set back at 1530 took place for less than two weeks, but the break higher hasn’t been marked by high volume; no, it has been a volumeless rally, with the breakout occurring on volumes around 80% of the daily average in 2013. This is not a ‘technically strong move.’ The float higher could continue, towards the all-time high at 1576.1, but might be cut short in the 1565/70 zone, where two key Fibonacci extensions lay. I’m very skeptical up here – markets seem to be ignoring Italy and the derisive politics in the United States at the moment (this also happened in 2011 and 2012 at the beginning of those years).”

GOLD: No change: “Gold broke below trendline support off of the January 2011 and May 2012 lows at 1650 last week, prompting a sharp sell-off into 1600, where price broke out in mid-August before a rally into the post-QE3 high at 1785/1805. However, with oversold conditions persisting on the 4H and daily timeframes, a rebound should not be ruled out; each of the past two daily RSI oversold readings has produced a rally in short order. Resistance is 1625 and 1645/50. Support is 1585 and 1555/60. It should be noted that Gold has entered a major support zone from the past 18-months from 1520 to 1575.”

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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Crude Oil to Rise as Gold Falls on Orderly Cyprus Banks Reopen

Crude oil is likely to rise amid a recovery in risk appetite while gold prices fall if Cyprus manages an orderly reopening of the troubled nation’s banks.

Talking Points

Crude Oil, Copper Look to Reopening of Cyprus Banks to Guide Risk Trends Gold Prices to Decline as Silver Moves Higher on Recovery in Risk Sentiment Commodity prices are treading water in late Asian trade as markets continue to cast a worried eye toward the Eurozone. Needless to say, lingering uncertainty in Cyprus and political instability in Italy remain in focus. Greek newspaper Kathimerini reported that Cypriot banks will finally reopen today and traders will be closely watching to gauge the effectiveness of capital controls installed to prevent a mass exodus of capital.

A relatively orderly reopening may boost risk appetite, sending cycle-sensitive crude oil and copper prices higher. The XAU/XAG ratio is showing an increasingly significant inverse correlation with our in-house risk appetite gauge, hinting such an outcome stands to weigh on gold while boosting silver. Signs of social unrest or reports of banks flouting the new rules stand to yield the opposite results.

Meanwhile in Italy, Democratic Party Leader Pier Luigi Bersani is expected to report that he was not able to forge a coalition today, clearing the way for President Napolitano to tap a neutral politician to attempt to form a government that brings together the various Italian political factions. Investors will be keen to learn who this may be and gauge whether he/she has the wherewithal to succeed in producing a pro-reform administration.

S&P 500 index futures are pointing lower, warning that the path of least resistance for risk appetite favors the downside. On the economic data front, the spotlight is on the final revision of fourth-quarter US GDP figures. Weekly Jobless Claims data as well as the Chicago PMI and Kansas City Fed Manufacturing Activity leading indicators are likewise on tap.

WTI Crude Oil (NY Close): $96.58 // +0.24 // +0.25%

Prices broke resistance at 96.41, the 50% Fibonacci expansion, a barrier reinforced by a falling trend line set from late January. Buyers now target the 61.8% Fib at 98.09. The 96.41 level has been recast as near-term support, with a turn back beneath that exposing the 38.2% Fib at 94.74.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1605.25 // +5.21 // +0.33%

Prices are testing support at 1597.77, the 14.6% Fibonacci expansion, a barrier reinforced by a rising trend line set from late February (1596.09). A break below that exposes the 23.6% level at 1586.27. Near-term resistance is at 1616.98, the March 21 high, with a reversal above that aiming for a longer-term falling trend line at 1638.85.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.69 // -0.08 // -0.27%

Prices continue to consolidate above support at 28.46, the 23.6% Fibonacci expansion. A break below that exposes the 38.2% level at 27.86.Near-term resistance is in the 29.42-92 area, with a break higher targeting a falling trend line now at 30.06.

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.444 // +0.002 // +0.06%

Prices are testing below support at 3.447, the 14.6% Fibonacci retracement. A break downward targets the March 19 swing low at 3.388. Near-term resistance is at 3.483, the 23.6% level, with a reversal above that aiming for 38.2% Fib at 3.542.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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