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The widening chasm in interest rate policies around the world has caused turbulence in Asian currency markets. The yen plunged to its lowest level in 24 years against the dollar as hedge funds in Europe and the United States resumed betting that the Bank of Japan’s ultra-loose monetary policy would continue.
The Japanese currency fell to ¥144 against the dollar, its weakest level since August 1998. The sell-off began yesterday and continued today, leaving it down a fifth this year despite a change in tone of the Japanese government, which threatened to intervene. if the value of the currency fell further.
The storm had been seen coming in recent weeks as the deteriorating economic outlook for the U.S. economy prompted Federal Reserve officials to hint at multiple aggressive U.S. rate hikes in the coming months. It may even have been exacerbated by the Japanese government’s decision to lift Covid travel restrictions, fueling yen outflows from Japanese tourists visiting other countries.
The South Korean government also spoke tough today to stem a run on the country’s currency, which fell for a fifth consecutive session to its weakest level since the 2009 global financial crisis. The cause here was a combination of aggressive monetary tightening by the US Federal Reserve and bloated trade deficits in South Korea.
Interest rates will be in the news again tomorrow when the European Central Bank’s rate-setting board of governors meets to decide on the degree of monetary policy tightening for the euro zone. Its members are expected to rebound for a 0.75 percentage point rise this week, matching the largest increase in the central bank’s 24-year life.
Concerns arise. A vigorous rate hike by the ECB may not stem market tensions given the various economic factors affecting Europe, other than inflation, notes Tony Barber, editor of the FT European commentary.
Interest rates are also in the news in the UK with new Prime Minister Liz Truss set to face the Bank of England’s monetary policy committee, according to economics editor Chris Giles. of the FT.
A first indication of this came today when the BoE’s chief economist told a Treasury select committee that Truss’ plans for a freeze on energy bills for households and businesses were likely to force the central bank to raise interest rates despite the coming fall in the inflation rate. month.
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Need to know: the economy
Chinese exports significantly missed expectations in August as foreign demand flattened and the wave of Covid-19 lockdowns across the country disrupted domestic production and logistics. The numbers were doubly disappointing as trade had been one of the few bright spots in the world’s second-largest economy.
Latest for UK and Europe
Europe metal industry bosses have warned of an ‘existential threat’ to the future of the sector if the EU does not intervene with emergency measures. An aluminum smelter in Slovakia and a zinc plant in the Netherlands have already halted production indefinitely with the threat of further closures to follow, according to Eurometaux, the non-ferrous metals trade body.
Britain’s long-resilient housing market is showing signs of slowing as interest rates rise and inflation bites. house builder in london Berkeley Group said this week that it was taking a more cautious approach to buying land amid rising expectations of a housing downturn.
The largest home builder in the country Barratt Developments still expects house prices to rise, but more moderately, according to its annual results released today. FT columnist Helen Thomas is more pessimistic, warning that with the era of rock bottom interest rates and government support for buyers in the housing market, the situation is now fragile.
CaliforniaGovernor de Gavin Newsom has warned businesses and households to prepare for a second wave of power outages in two years amid the US state’s record heat wave. The California grid operator has placed the state on its highest alert level, prompting San Francisco-based Pacific Gas and Electric to warn about 525,000 customers to prepare for possible power outages.
Argentina wants to help ease global food and energy shortages by increasing oil and gas production and encouraging the country’s grain exports, Economy Minister Sergio Massa has told the FT’s Michael Stott. The comments, made on the first day of a visit to the United States, will be welcomed by the White House, which needs friendly nations that can ease food shortages created by Russia’s invasion of Ukraine. Argentina, despite all its economic and political problems, is a mine of natural resources.
Need to know: company
Spain’s largest oil company Repsol took an innovative path to help reduce carbon levels by selling a 25% stake in its exploration and production business to fund renewable energy investments. Repsol said the deal, which values its upstream business at around $19 billion, will “crystallize the value” of the division while freeing up capital for larger investments in greener forms of energy.
Revolution took cost-cutting to a new level by withdrawing job offers for graduates just days before successful candidates began working with the fintech company. Fintechs have had to make major cuts to counter the impact of the economic slowdown and rising interest rates, with investors now much less willing to fund profitless growth. At least Revolut received a work laptop before being told their offer had been revoked.
Retail business has named Hannah Gibson as chief executive as the pandemic-fueled online grocery boom wanes, an added challenge as she seeks to meet the company’s growth ambitions amid the crisis the cost of living where consumers are tightening their belts.
Elon Musk added World War III to its list of excuses for pulling out of its $44 billion Twitter takeover. The claim was made in texts between the billionaire entrepreneur and his bankers revealed during a court hearing.
The world of work
One of the bright spots in 2022 has been the labor market, which remains buoyant for job seekers. How long this will last is uncertain; however, there are good indications that business school graduates will be in demand for some time to come, according to the FT’s report on Masters in Management degree courses.
Getting the most out of hybrid workers, balancing time in the office with working from home, is the biggest management challenge right now, according to Stefan Stern, author of “How to Be a Better Leader” and visiting professor at the Bayes. Business School, City, University of London.
Covid cases and vaccinations
Total number of global cases: 599.5mn
Total doses administered: 12.6 billion
Get the latest global picture with our vaccine tracker
Some good news. . .
We live in remarkable times for medical breakthroughs, as the rapid development of Covid vaccines has proven, and this is true for endangered animal species as well as humans. Lucas, a prominent member of the African penguin colony at the San Diego Zoo, found new life with a pair of orthopedic boots to soothe a degenerative foot condition known as bumblefoot.