Fed to raise rates

WASHINGTON (Reuter): The Federal Reserve announced yesterday it wants to boost short-term interest rates slightly by tightening its grip on the availability of credit in the banking system.

The U.S. central bank said the move would result in a "small increase" in short-term interest rates.

"Chairman Alan Greenspan announced today that the Federal Reserve will increase slightly the degree of pressure on reserve positions," the announcement said. "This action is expected to be associated with a small increase in short-term money interest rates."

Wall Street sources said the Fed was raising the federal funds rate, the rate banks charge each other for overnight loans, one- quarter point to 3.75 percent.

It was the third time since February that the central bank has moved to boost short-term interest rates to head off inflationary pressures in the economy. Government reports show price pressures in check but Greenspan and other Fed officials have voiced concerns that the economy is growing too quickly.

Malaysia to buy RI planes

JAKARTA (JP): Malaysia has given said they would buy six new CN-235 airplanes from PT Industri Pesawat Terbang Nusantara (IPTN) of Indonesia after the RI decided to allow Malaysia's MD-3 planes and Proton Saga cars onto its market.

IPTN's vice president, Hari Laksono, said here Saturday that the sale plan, which is still being negotiated between the two parties, is scheduled to be signed here at the end of May.

"Malaysia has, thus far, decided to buy three CN-235 airplanes with an option of buying three more," Hari said as quoted by the Bisnis Indonesia daily.

"If Malaysia wants to buy more airplanes, IPTN is ready to provide up to 16 CN-235 aircraft in the near future," he said.

Hari declined to give details on the government's deregulation of Malaysian MD-3 planes and Proton Saga cars, or the sales agreement for the six CN-235 planes.

However, the daily estimated that the purchase of the six airplanes would cost around US$79 million if IPTN sets their prices at the previous sale price of $13 million each. (fhp)

RI riots boost rubber prices

SINGAPORE (AFP): Singapore rubber futures prices closed steadier yesterday on short covering by traders worried that worker riots in Medan, Indonesia would affect supply, dealers said.

"It was a quiet day except for some short-covering of nearby RSS 1 and 3 by European traders because of news of the Indonesian riots," a dealer said, adding local traders were also covering their positions.

Dealers said there were concerns Indonesian producers would invoke force majeure and cancel contracts.

At around 0930 GMT, Basis June RSS 1 was quoted at 147.50 Singapore cents, RSS 3 at 93 US cents and TSR 20 at 161 Singapore cents.

IATA reports "shock" losses

GENEVA (AFP): Main world airlines lost US$4.1 billion on international routes in 1993 and lost $15.6 billion in the four years to 1993, the International Air Transport Association (IATA) reported yesterday.

An IATA statement said that the losses by its member airlines, calculated after interest charges, were nearly a record, and described them as "shock figures".

It quoted IATA director general Pierre J. Jeanniot as telling the annual New York Airfinance Conference that the main reason was that "the anticipated unit cost reduction was not achieved".

Airlines had aimed for an improvement of nine percent and had achieved six percent.

Calling for signs of "sanity" from the industry, he said: "The sad thing about our industry is that it is still supply driven...it was caught with far too much capacity at the start of the recession."

But he noted that there was room for optimism because many airlines were undergoing deep restructuring or privatization and that "even many of those airlines which were regarded as an extension of their national governments no longer seem immune to this process".

Gas exploration planned

KUALA LUMPUR (AFP): The US-based petroleum firm Triton said yesterday it would launch gas exploration along overlapping Malaysia-Thailand boundaries by June after the signing of landmark bilateral oil production- sharing-contracts (PSC) this week.

"Exploration is expected to begin late in the second quarter of this year with seismic activity, followed by drilling early in 1995," said a statement from Triton Energy Corporation issued in Kuala Lumpur.

Officials said that on Thursday PSCs would be signed among the Malaysia-Thailand Joint Authority (MTJA), Dallas-based Triton, the exploration arm of Malaysian state-owned oil firm Petronas Carigali and Petroleum Authority of Thailand's affiliate, PTT Exploration and Production.

The agreements were for exploiting petroleum resources in the 7,250-square- kilometer (4,500 square mile) stretch of overlapping boundaries in the South China Sea.

China to raise car imports

BEIJING (AFP): China is expected to step up imports of cars and mini-vans to meet growing domestic demand for medium- and high-quality vehicles, in an apparent loosening of restrictions imposed last year, a report said.

A China Imported Automobile Trade Center official said purchasing groups would be sent overseas once a final decision is made within a couple of months on increasing imports, the China Daily Business Weekly said.

The announcement followed the virtual ban last July on car imports by official agencies -- which account for most automobile purchases in China -- as part of an austerity program aimed at cooling the overheated economy.

The official did not say which countries would be targeted but emphasized the popularity of US-made cars in China and noted that a senior employees at the center would travel with a business delegation to the United States in May.

Germany told to cut rate

WASHINGTON (AFP): Germany's Bundesbank should further cut interest rates to revive its sluggish economy and those of neighboring countries, a senior International Monetary Fund official said.

"I welcome the decision of the Bundesbank" to reduce interest rates, the official said, speaking on condition of anonymity. "Particularly if it announces in a not-too-distant future a further reduction."

The official's remarks came several days ahead of the IMF's annual spring meeting here and a financial ministers meeting of the seven most industrialized nations.

The Bundesbank last Thursday lowered the discount rate to 5.5 percent and the Lombard rate to 6.5 percent. In early 1993, the rates were eight percent and nine percent respectively.

Germany has been criticized for not moving quickly enough to lower rates to stimulate its economy.

The IMF official noted that the German economy was "still at a very low level of activity" and inflation pressures remained "well-contained," conditions that leave room for further interest rate reductions.