2025-07-22 10:00
LONDON, July 22 (Reuters) - The pound steadied on Tuesday, consolidating after the previous day's rally, as investors took stock of data that showed UK government borrowing soared in June, a reminder of the fragility of Britain's public finances. Sterling , which rose 0.6% on Monday, its biggest one-day gain in a month, was last at $1.3493, showing little change on the day. It was also steady against the euro , which was at 86.7 pence. Sign up here. Britain borrowed more than expected in June as high inflation added to the government's debt costs, according to official data that is likely to add to speculation about the need for fresh tax increases later this year. Public sector net borrowing totalled 20.7 billion pounds ($27.9 billion) last month, the data showed. This compares with a forecast of 17.1 billion pounds for June from the Office for Budget Responsibility, the budget watchdog. "These overshot expectations yet again, a fact that should refocus minds on UK fiscal sustainability risks, especially after warnings by the ONS that the 20.7 billion pound figure recorded represents 'the second-highest June borrowing since monthly records began in 1993, after that of June 2020'," analysts at Monex said. "As we have noted previously, this is not a sterling positive dynamic, leaving risks to the pound tilted to the downside ahead of Thursday’s PMI release," they said. The borrowing figures added to a sense among investors that finance minister Rachel Reeves may have to raise taxes again later this year to remain on track to meet her targets for fixing the public finances. A separate report on Tuesday showed grocery inflation in Britain rose to 5.2% in the four weeks to July 13, up from 4.7% in last month's report and the highest since January last year, heaping more pressure on UK households. Market researcher Worldpanel by Numerator, which published the report, said just under two-thirds of households say they are "very concerned" about the cost of their groceries, and are switching to supermarket own-label products. The numbers align with data last week that showed nationwide consumer price inflation picked up more than expected in June, also hitting the fastest pace since January 2024. The Bank of England is expected to cut rates by a quarter point next week and at least one more time before the end of the year. https://www.reuters.com/world/uk/sterling-holds-gains-investors-mull-rise-borrowing-2025-07-22/
2025-07-22 09:18
BEIJING, July 22 (Reuters) - China has the conditions to keep the yuan stable, the country's foreign exchange regulator said on Tuesday, even as trade relations with Washington remain uncertain and deflationary pressures continue to weigh on the domestic economy. Li Bin, the deputy head of the State Administration of Foreign Exchange (SAFE), said that the yuan has been trading at reasonable and balanced levels so far this year and had the conditions to remain stable. Sign up here. "From a policy perspective, China has accumulated rich experiences in counter-cyclical adjustments in the foreign exchange market and has ample reserves of policy tools," Li said. He added that the regulator's ability to "prevent and resolve external shocks and risks" had been enhanced. "We have the confidence and ability to continue to maintain the stable operation of the foreign exchange market," he said. Overseas investors in general have increased their net holdings of onshore equities and bonds in the second quarter of this year, Li told a press conference in Beijing. He added that supply and demand in the foreign exchange market were basically stable. China's yuan has strengthened about 1.7% against the U.S. dollar so far this year. Chinese businesses and investors expect the yuan to remain steady in the near term, a rise in currency swaps and growing foreign exchange deposits suggest they are expecting the yuan to depreciate as U.S. trade tensions drag on. China reported slightly better-than-expected second-quarter gross domestic product (GDP) data last week, though analysts warn that weak demand at home and rising global trade risks will ramp up pressure on Beijing to roll out more stimulus. The 90-day tariff truce agreed by Washington and Beijing during trade talks in Switzerland is due to end on August 12. Official data on Tuesday showed that foreign investors sold China's onshore yuan bonds for the second consecutive month in June. https://www.reuters.com/sustainability/boards-policy-regulation/china-has-conditions-maintain-yuan-stability-fx-regulator-says-2025-07-22/
2025-07-22 08:49
Foreign appetite for Indian bonds expected to pick up More rate cuts expected as inflation slows, growth concerns rise Foreign investors net buy $1.5 billion in a month MUMBAI, July 22 (Reuters) - Foreign appetite for Indian government bonds is back, with inflows picking up steadily over the last month, as investors gauge fresh expectations of a rate cut by the Reserve Bank of India as early as August. The RBI cut rates by a larger-than-expected 50 basis points in June and changed the stance to "neutral", prompting investors to bet on a prolonged pause. Sign up here. But a sharp drop in June retail inflation has some investors reassessing the likelihood of another rate cut. The RBI could implement a modest 25 basis point cut in August if inflation remains subdued and growth concerns persist, said Singapore-based Manish Bhargava, CEO of Straits Investment Management, adding that bond yields are attractive at current levels. Over the last one month, foreign investors have net bought 129 billion rupees ($1.5 billion) of Indian bonds linked to global indexes after selling more than 330 billion rupees in the first two-and-a-half months of the financial year that started on April 1, clearing house data showed. Analysts said concerns on the growth front are also likely to prompt the central bank to lower rates further. With recent high-frequency data disappointing and indicating the possibility of a further slowdown in growth, "there is potential for more support from the RBI further down the line," said London-based Giulia Pellegrini, lead portfolio manager, emerging market debt at AllianzGI. India's overall economic fundamentals remain solid, keeping the country on investors' radar, she said. A wider gap between interest rates in India and the U.S. would add to the appeal of Indian debt, investors said. That's why a Federal Reserve rate cut could act as a positive catalyst for Indian bonds, as they have historically helped local currency debt markets, said Nigel Foo, Singapore-based head of Asian fixed income at First Sentier Investors. However, current Indian bond yields are lower than where they were in the past at similar policy rate levels, and so are relatively unattractive, he added. The 10-year U.S. yield was around 4.35%, with the Fed expected to cut rates by at least 50 bps in 2025. The Indian 10-year benchmark bond yield was at 6.30%. "India's local debt story remains very compelling on both FX and rates," said Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management in London, who expects bond yields to decline through this year and next, and finds the middle of the yield curve attractive. ($1 = 86.2470 Indian rupees) https://www.reuters.com/world/india/resurgence-india-rate-cut-wagers-revives-foreign-investor-interest-bonds-2025-07-22/
2025-07-22 08:34
UK borrowing in June 20.7 bln pounds Deficit pushed up by jump in inflation in April Finance minister Reeves struggling to hit fiscal targets Borrowing in April-June came to 57.8 billion pounds Year-to-date deficit back in line with official forecasts LONDON, July 22 (Reuters) - Britain borrowed more than expected in June as a jump in inflation pushed up the government's debt costs, adding to speculation about the need for new tax hikes by finance minister Rachel Reeves later this year. Public sector net borrowing totalled 20.7 billion pounds ($27.9 billion) last month, official data showed on Tuesday, above a median forecast of 16.5 billion pounds in a Reuters poll of economists, and the second highest amount for June on record. Sign up here. The borrowing was also bigger than expected by Britain's budget watchdog, which forecast June borrowing of 17.1 billion pounds when it published its outlook in March. Since then, a strong inflation reading in April had the effect of pushing up inflation-linked government bond payments. Tuesday's data from the Office for National Statistics showed the government's debt interest bill was 16.4 billion pounds in June, the third highest since records began in 1997. Having pushed up taxes by the most in decades last year, Reeves is expected to raise them again in a budget statement towards the end of 2025 in order to remain on track to meet her own targets for fixing the public finances. That job was made harder this month when the government dropped its plans to reduce the welfare bill in the face of stiff opposition within the ruling Labour Party. Slow economic growth is also adding to Reeves' problems. She has said she will balance day-to-day spending with tax revenues by the end of the decade. The latest ONS data showed the current budget was in deficit by 44.5 billion pounds in the first three months of the financial year that began in April - 5 billion pounds more than expected by the Office for Budget Responsibility watchdog. "There is no denying that fiscal developments have been very disappointing so far this financial year and Rachel Reeves will almost certainly be investigating potential revenue raising measures," said Philip Shaw, chief UK economist at Investec. Reeves will probably need to raise taxes by 20 billion pounds - about half the size of last year's package - with future increases in defence spending only likely to add to the bill further ahead, said Rob Wood, chief UK economist at Pantheon Macroeconomics. Darren Jones, a deputy to Reeves at the Treasury, said the government remained committed to its fiscal rules. Over the first three months of the fiscal year which began in April, Britain borrowed 57.8 billion pounds, 15% more than in the same period last year and the third-highest April-to-June deficit on record. The figure was back in line with the year-to-date forecast by the OBR, whose projections underpin the government's tax and spending plans, after two months of lower-than-expected borrowing by the government. The public finances have been aided by Reeves' increase in social security payments by employers. Compulsory social contributions - mostly National Insurance Contributions - jumped by 18% in the April-to-June period to 48 billion pounds. ($1 = 0.7425 pounds) https://www.reuters.com/world/uk/uk-borrows-more-inflation-adds-debt-bill-reeves-headache-2025-07-22/
2025-07-22 07:51
July 22 (Reuters) - A court in The Hague has lifted a seizure order on Russian energy giant Gazprom's (GAZP.MM) , opens new tab assets in the Netherlands, a ruling published on the court's website showed. The ruling last week shows that the assets in question were Gazprom's shares in gas producers Wintershall Noordzee and Gazprom International Projects B.V.. Sign up here. The seizure was introduced under two separate cases lodged by Ukrainian companies called Slavutich-Invest and Zhniva over losses related to Russia's actions in Ukraine. However, the Dutch court ruled that seizing Gazprom's assets may interfere with the principle of state immunity, which means Dutch courts cannot judge the actions of another state or state entity. Gazprom did not reply to a request for comment. https://www.reuters.com/business/energy/dutch-court-lifts-seizure-gazproms-local-assets-2025-07-22/
2025-07-22 07:51
UK reaches final investment decision Canadian pension fund La Caisse takes 20% stake UK to hold 44.9% in 38 billion pound project LONDON, July 22 (Reuters) - Britain gave the final go-ahead for the 38 billion pound ($51 billion) Sizewell C nuclear plant in eastern England on Tuesday after it secured investment from British and international investors including Canadian pension fund La Caisse. Under the deal, the British state will be the largest shareholder in the project with a 44.9% stake, La Caisse will hold 20%, UK energy firm Centrica 15% and London-based Amber Infrastructure will take an initial 7.6%, joining France's state-owned EDF which had already announced its 12.5% stake. Sign up here. The decision to go ahead with Sizewell C is another sign of a nuclear revival in Europe as several countries look to build new plants to replace ageing fleets, boost energy security and reach climate goals. The plant in Suffolk will be only the second new nuclear plant built in Britain in more than two decades. It is expected to create around 10,000 jobs during the peak of construction, and produce enough electricity to power around 6 million homes when built. EDF expects Sizewell C to be operational by around the mid to late 2030s. "Delivering next generation, publicly-owned clean power is vital to our energy security and growth," UK finance minister Rachel Reeves said in a statement. State loans are part of the financing mechanisms for most nuclear power plants in Europe, giving governments ownership stakes, while power price guarantees help companies to fund construction. The last nuclear power plant built in Britain, French state-owned EDF's Hinkley Point C, has been beset by delays and cost overruns, and is not due to start operating until about 2030. EDF had initially said it would be powering British homes in 2017. Sizewell C was first proposed in the early 2010s, when the plan was for it to be developed by EDF with China General Nuclear Power Group, but the UK government bought out the Chinese firm's stake in 2022 amid security concerns. The announcement of La Caisse as the second biggest shareholder comes as a surprise after months of speculation that Canadian investor Brookfield was in pole position to invest. The 38 billion pound total cost estimated by the government compared with initial estimates of a price tag of around 20 billion pounds. France's EDF has said it is investing around 1.1 billion pounds in Sizewell, while Centrica said in its statement it had committed to construction funding of 1.3 billion pounds. The government statement said Britain's National Wealth Fund would provide the majority of the debt finance for the project, alongside a debt guarantee from France’s export credit agency, Bpifrance Assurance Export. ($1 = 0.7424 pounds) https://www.reuters.com/business/energy/uk-approves-sizewell-c-nuclear-plant-after-la-caisse-investment-2025-07-22/
