Category: 3. Business

LAHORE:

Financial globalisation has liberalised the financial/capital account of countries. This liberalisation has provided opportunities to financial/money manager capitalists to look for arbitrage across the world.

They borrow in a country where policy rate is low and invest in a country where policy rate is high provided the exchange rate remains stable. In the jargon, this is known as positive carry trade for the money manager capitalist.

Carry trade is a characteristic feature of financial globalisation where differentials in policy rates provide profitable opportunities to investors/money managers. For instance, policy rates in the US, Australia and Europe are 5.5%, 3.9% and 2.25% respectively while policy rate is at 11% in Pakistan.

The exchange rate has been stabilised so foreign money managers invested in Market Treasury Bills (MTBs) and equities in the last 18 months, showing a net positive capital inflow, as reported by the Special Convertible Rupee Account (SCRA). However, there is a net outflow of around $40 million in July 2025 as policy rate differentials have been curtailed.

Foreign money managers pour capital into a country where there is an interest rate differential along with stable exchange rate. The rupee-dollar parity has been hovering around 285 since January 2024, which has given confidence to these investors to park their capital in MTBs and equities.

The business press will appreciate this development and favour net capital inflows. A general view is that these inflows will bring valuable dollars to the country, which will bolster foreign exchange reserves. The reserves held by the State Bank of Pakistan (SBP) have been around $14.4 billion in July 2025. These reserves have been boosted through intervention of the SBP in the inter-bank market.

If the SBP buys dollars from the inter-bank market, it will increase rupee circulation in the banking system. Then it has to perform domestic sterilisation operation, where it will sell government securities to mop up excess liquidity in the banking system. This sterilisation will incur cost and reduce profitability of the SBP.

The costs associated with capital inflows are hardly discussed. These flows are temporary to the extent that certain institutional investors/money managers complete a transaction within a month. They invest and withdraw their funds as soon as possible to realise profits.

Such inflows are costly for developing countries and Pakistan is not an exception in this regard. The SBP will incur a loss as it will use the domestic policy rate to buy dollars while foreign institutional investors/money manager will gain by borrowing at a low policy rate and invest at a high policy rate in Pakistan.

The gain of foreign institutional investors will equalise the loss for the SBP. This loss will further reduce the SBP’s profit, which is booked as non-tax revenue in the fiscal account. In the jargon, this will be called negative carry trade, which will reduce the profitability of the central bank.

Fiscal austerity, tight monetary policy, privatisation and liberalisation of the capital account fall under the aegis of macroeconomic stabilisation policies. These stabilisation policies generate interest rate differentials to attract short-term capital inflows. These capital inflows enhance domestic credit liquidity where the SBP has to perform sterilisation which will, in turn, increase fiscal deficit of the government.

In a nutshell, carry trade is a distinct feature of financial globalisation. The macroeconomic stabilisation policies create differentials in policy rates which, in turn, promote carry trade. Considering the costs associated with this carry trade, there is a need to learn from the earlier experience.

The accumulation of foreign exchange reserves either through the SBP’s inter-bank intervention or capital inflows requires sterilisation, which will increase fiscal deficit in the coming years. Hence, macroeconomic stabilisation polices could be destabilising for the economy in the medium term.

The writer is an independent economist

Iron ore edged up after a three-day drop on speculation that steel demand in China may rebound seasonally, aiding demand and prices.

Futures of the steel-making staple hit a high of $103 a ton in early trading, after slumping more than 2% in the final three sessions of last week. That losing run came as Beijing reported steel output fell below 80 million tons to post its weakest performance for the month of July since 2017.

Triple-negative breast cancer (TNBC) is an aggressive subtype lacking targeted therapies, making immunotherapy a promising yet unpredictable option. Current biomarkers, such as PD-L1 expression or tumor mutational burden, often fail to reliably predict treatment success due to the complexity of immune responses. Moreover, invasive tumor biopsies are impractical for frequent monitoring. Plasma proteomics, which analyzes blood-based proteins, offers a non-invasive alternative but remains underexplored in TNBC. Previous studies have linked certain plasma proteins to immune activity, but none have systematically mapped their dynamics during immunotherapy or tied them to clinical outcomes. Based on these challenges, there is a pressing need to identify reliable, non-invasive biomarkers to optimize immunotherapy for TNBC patients.

Published (DOI: 10.20892/j.issn.2095-3941.2025.0038)on July 4, 2025, in Cancer Biology & Medicine, researchers from Fudan University Shanghai Cancer Center and Shanghai Institute for Biomedical and Pharmaceutical Technologies unveiled a plasma proteomics study of 195 TNBC patients. Using high-sensitivity assays, the team tracked 92 immune-related proteins before, during, and after immunotherapy. They identified ARG1, NOS3 and CD28 as key predictors of response and developed the PIPscore, a model with 85.8% accuracy. The study integrates single-cell RNA sequencing to correlate blood-based findings with tumor microenvironment changes, offering a holistic view of immunotherapy dynamics.

The study revealed dramatic shifts in plasma protein levels post-immunotherapy, with immune-activating proteins like CXCL9 and IFN-γ rising in responders. Notably, patients achieving pathologic complete response(pCR) had higher ARG1 and CD28 but lower NOS3 levels, suggesting these proteins regulate immune activation and tumor suppression. The PIPscore, combining six proteins (e.g., ARG1, NOS3, IL-18), stratified patients into high- and low-response groups with striking precision (AUC 0.858). High PIPscores correlated with better outcomes, while low scores indicated resistance.Single-cell RNA sequencing further linked plasma proteins to tumor microenvironment changes. For example, elevated NOS3 levels associated with fewer CD8+ T cells in tumors, hinting at immunosuppressive effects. Conversely, ARG1‘s role in arginine metabolism may enhance T-cell function. The team validated findings via ELISA, confirming the reliability of their proteomic platform.A standout highlight was the PIPscore’s prognostic power: it predicted 12-month progression-free survival with 96% accuracy. This tool could streamline clinical decision-making, identifying ideal candidates for immunotherapy upfront.

This study transforms how we approach TNBC immunotherapy. By translating complex plasma proteomics into a practical score, we’ve bridged the gap between research and clinical utility. The PIPscore not only predicts response but also opens doors to targeting metabolic pathways like arginine deprivation to overcome resistance. These findings underscore that systemic immunity, not just the tumor microenvironment, dictates treatment success.”

Dr. Yizhou Jiang, co-corresponding author

The PIPscore could soon guide oncologists in selecting TNBC patients for immunotherapy, reducing unnecessary side effects and costs. Its non-invasive nature allows repeated monitoring, enabling real-time adjustments to treatment plans. Beyond TNBC, this approach might apply to other cancers where immunotherapy efficacy varies widely.

Oil steadied as traders turned their attention to Donald Trump’s meeting with Volodymyr Zelenskiy on Monday, with the Ukrainian leader facing US pressure to reach a peace deal with Russia that involves ceding territory.

Brent was below $66 a barrel after closing 1.5% lower in the previous session, while West Texas Intermediate was near $63. In a show of support, European leaders including European Commission President Ursula von der Leyen, French President Emmanuel Macron, and NATO Secretary-General Mark Rutte, will join the high-stakes meeting in Washington with Trump and Zelenskiy.