2024-11-12 04:34

SHANGHAI, Nov 18 (Reuters) - Global investment banks are rushing to trim their forecasts for the Chinese yuan amid the looming threat of rising trade tensions following Donald Trump's win in the U.S. presidential election. As part of his pitch to boost American manufacturing during the election campaign, Trump said he will impose tariffs of 60% or more on goods from China. Trump's proposed tariff and tax policies are seen as inflationary and therefore likely to keep U.S. interest rates high and buoy the dollar, undermining currencies of trading partners. An average of nine investment banks' forecast projects the yuan weakening about 1.8% to 7.37 per dollar through the end of 2025. In comparison, the yuan depreciated by 5% in the initial round of U.S. tariffs on Chinese goods in 2018 and another 1.5% a year later when trade tensions escalated during Trump's first presidency. Here is a summary of some forecasts for the Chinese currency: Major investment houses had forecast the yuan to trade at around 7.1 per dollar at the end of this year, according to Reuters' calculation based on forecasts from 12 financial institutions in late 2023. KEY QUOTES: ** MORGAN STANLEY "The supply chain rewiring over the past seven years has reduced China's direct trade exposure to the US; and the weaker starting points of China's economic fundamentals, China-U.S. interest rate differentials, and USDCNY than in early 2018 mean that a sharp USDCNY depreciation would run the risk of triggering self-fulfilling capital outflows." ** BARCLAYS "It is worth stressing that risks for the dollar remain skewed towards the upside, notwithstanding the uncertainties relating to the extent of U.S. tariff policy and potential offsetting stimulus from China. Initial signs from Trump's choices for his trade and economic advisors and an underwhelming first round of Chinese stimulus are testament to that judgment." ** GOLDMAN SACHS "A 20% increase in the effective tariff rate on Chinese imports could shave 0.7pp off China's GDP. In this scenario, we expect USD/CNY to rise towards 7.40-7.50. Our event studies show that the sharpest move in USD/CNY usually comes just after a tariff announcement." "Whilst an over-shoot of 7.50 is possible, we note that a large currency depreciation could fuel further currency depreciation expectations promoting potential financial market instability. Therefore, we think policymakers will not let the RMB depreciate too much, but rather shift towards more monetary/fiscal policy easing to offset the growth shock." ** ING "Overall, we expect the onshore yuan (CNY) outlook to be a little weaker with a Trump win in the books, and risks to our forecasts are now tilted toward a weaker CNY. "We may consider extending the upper bound of our 2025 fluctuation band a little higher if we get signals of stronger action against China, though we expect the People's Bank of China (PBOC) will once again ramp up intervention to prevent excessive depreciation; odds of a move past the 2023 highs of 7.34 are still relatively small unless policymakers abandon the currency stability objective." ** UBS "In the new baseline, we assume that the new Trump administration will impose additional tariffs on most imports from China in a staged manner starting in H2 2025, though uncertainties remain high on the scale and timing of tariffs and other US policies." ** BNP PARIBAS "Trump's potential tariff policy is what the market is focusing on the most right now. If the 60% tariff were delivered, then we expect the upside risk for USD/RMB could go to 7.5–7.7. The biggest downside uncertainty revolving around Trump's presidency is whether there would be a new Plaza Accord. This concern arises as he said he prefers a weaker dollar, which is highly unachievable with his current policy proposals, in our view." ** SOCIETE GENERALE "The CNY will hurt from Trump 2.0. Faster than previous Trump 1.0 but smaller than that in Trump 1.0. "China's more holistic economic support measures will also mitigate tariff impact to some extent too." ** CITI "Higher likelihood of tariff imposition means that emerging market (EM) Asia FX could weaken versus the USD. Imposition of a 10-15% tariff would result in 1.5-2.0% offshore yuan (CNH) weakness from current levels of 7.15-7.20, we estimate." Sign up here. https://www.reuters.com/markets/currencies/global-investment-banks-rush-trim-yuan-forecasts-under-looming-trump-tariff-2024-11-12/

2024-11-12 02:57

MUMBAI, Nov 12 (Reuters) - The Indian rupee is likely to open at a lifetime low on Tuesday, weighed by the rally in the dollar index and the slump in the Chinese yuan in the wake of Donald Trump's victory in the U.S. Presidential election. The 1-month non-deliverable forward indicated that the rupee will open at 84.40-84.42 to the U.S. dollar, inching past the all-time low of 84.3925 hit on Monday. The rupee has been making all-time lows after Trump's U.S. election victory. The rupee would likely have fallen much more, probably near the 85-level, if it were not for the Reserve Bank of India's regular intervention, per several traders. The RBI "has been aggressive on the offer (on dollar/rupee)" and that "in a way is keeping things peaceful", a trader at a bank said. The sense right now is that the RBI wants the rupee to weaken due to what is happening to the dollar overall, but at a pace that does not "cause alarm", he said. DOLLAR CLIMBS The expectations that Trump will implement economic and trade policies that will boost the U.S. economy have sent the dollar and U.S. Treasury yields higher. The dollar index is hovering at the highest in over 4 months. The offshore yuan, likely to be most impacted by Trump's trade policies, slipped past 7.24 to the dollar and is now down nearly 2% since Trump's win. The rupee is down just 0.35% during that period. FED RATE CUTS ODDS SLIP The odds that the Federal Reserve will deliver a rate cut at next month's meeting have slipped on prospects that Trump's policies are likely to muddle the inflation outlook. The probability of a rate cut in December is down to 2-in-3 from nearly 80%. KEY INDICATORS: ** One-month non-deliverable rupee forward at 84.50; onshore one-month forward premium at 8.5 paise ** Dollar index up at 105.62 ** Brent crude futures down 0.3% at $71.6 per barrel ** Ten-year U.S. note yield at 4.32% ** As per NSDL data, foreign investors sold a net $421.1 mln worth of Indian shares on Nov. 8 ** NSDL data shows foreign investors sold a net $21.1 mln worth of Indian bonds on Nov. 8 Sign up here. https://www.reuters.com/markets/currencies/all-time-low-beckons-rupee-slide-yuan-rally-dollar-index-2024-11-12/

2024-11-12 02:27

Bitcoin up dramatically since Trump victory Congress, regulators seen as crypto friendly Miners fly on speculation U.S. will buy crypto stockpile SINGAPORE/LONDON, Nov 12 (Reuters) - Bitcoin rallied to the verge of $90,000 on Tuesday, riding a wave of euphoria since the election of Donald Trump as U.S. president on expectations his administration will be crypto friendly. The world's biggest cryptocurrency has become one of the most eye-catching movers in the week since the election and touched $89,982 - a gain of around 30% since Nov. 5. It was last down 1.4% at $86,730. Bitcoin is surging along with Elon Musk's automaker Tesla (TSLA.O) , opens new tab, which is up nearly 40% since voting results rolled in, as investors figure Trump's friends and interests will do well while he is in office. "The crypto enthusiasts think they have a like-minded incoming president," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets. "The thing about bitcoin at the end of the day is that there is no valuation anchor to it, it's hard to get a grip on fair value. So when sentiment is very positive, it does get carried away a lot more than other asset classes." Trump embraced digital assets during his campaign, promising to make the United States the "crypto capital of the planet" and to accumulate a national stockpile of bitcoin. It is not clear how or when that could happen but the possibility drove a speculative surge in crypto mining and trading stocks. "I think it increases the chances that other nation states buy bitcoin in a bid to front run the U.S.," said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital. "Additionally I think it would be a crazy catalyst for the U.S. listed bitcoin miners ... given possibilities of such entities getting nationalised." Crypto miner Riot Platforms jumped nearly 17% on Wall Street on Monday. Fellow miners MARA Holdings (MARA.O) , opens new tab and CleanSpark (CLSK.O) , opens new tab leapt nearly 30%. Software company and investor in bitcoin MicroStrategy (MSTR.O) , opens new tab announced it had spent about $2 billion buying bitcoin between Oct. 31 and Nov. 10. Shares rose 26% on Monday. "Obviously (it's) a clear Trump trade as he is so supportive of the industry, and this can only mean more demand both for crypto stocks as well as the currencies themselves," Nick Twidale, chief market analyst at ATFX Global in Sydney, said of the bitcoin rally. "The fact that bitcoin was trading near all-time highs when the election result came through meant that it had clean sky above." The euphoria extended across the crypto landscape with smaller tokens such as ether and dogecoin surging, although they dipped on Tuesday morning in Europe. Crypto investors see an end to increased scrutiny under U.S. Securities and Exchange Commission Chair Gary Gensler whom Trump has said he will replace. Trump also unveiled a new crypto business, World Liberty Financial, in September. "What we're seeing isn't just a price milestone; it's a signal that the market is warming to the idea of bitcoin as a more stable, even politically favoured, asset," said Justin D'Anethan, head of Asia-Pacific business development at digital assets market maker Keyrock. Sign up here. https://www.reuters.com/technology/record-breaking-bitcoin-rally-nears-90000-trump-boost-2024-11-12/

2024-11-11 23:47

TOKYO, Nov 12 (Reuters) - The Japanese government is planning to continue gasoline subsidies next year with phased in reductions, the Nikkei newspaper said on Tuesday. In a draft economic stimulus plan, the subsidies will continue in 2025, but upper price limits for consumers will be raised from about 175 yen ($1.14) per litre to 185 yen, Nikkei said. The government decided in June to extend gasoline subsidies until the end of the year and to temporarily reintroduce relief on utility bills over the summer. The gasoline subsidies have been available to fuel wholesalers since January 2022 to lower retail prices. The programme has been extended seven times despite criticism of its impact on public finances. ($1 = 153.6000 yen) Sign up here. https://www.reuters.com/world/japan/japan-continue-gasoline-subsidies-reduced-levels-nikkei-says-2024-11-11/

2024-11-11 23:28

BRASILIA, Nov 11 (Reuters) - Brazil's finance minister said on Monday that remaining stumbling blocks to a fiscal package aimed at curbing mandatory expenses had been resolved, but added that President Luiz Inacio Lula da Silva wants to extend the cuts to one more ministry. The Brazilian real currency has weakened to multi-year lows against the U.S. dollar in recent weeks amid government hesitation to announce a fiscal package to stem a rapid rise in mandatory spending. Speaking to journalists in Brasilia, Finance Minister Fernando Haddad gave no time frame for when the package might be publicly announced. He added that outstanding issues that had held up discussions last week were resolved. Still, he said Lula has now asked to include a new ministry in the spending-cut package, adding that the talks with the unnamed ministry might be concluded by Wednesday. Lula and his chief of staff held meetings in the last few days with leaders of more than 10 ministries, including those from Health, Education and Pension, according to the government. The government has said it would present the fiscal package after municipal elections held in late October, but has offered no concrete timeline for the announcement since then. Asked if the package has stalled during the recent talks, Haddad said no, but that the government made adjustments to make the measures "more understandable and palatable." Haddad said he would speak with Lula on Tuesday about presenting the package to the Lower House and Senate chiefs, adding he believed the measures could be approved by Congress this year. Sign up here. https://www.reuters.com/world/americas/brazils-finance-minister-says-outstanding-issues-fiscal-package-resolved-2024-11-11/

2024-11-11 22:37

FRANKFURT, Nov 11 (Reuters) - Siemens Gamesa, the wind division of Siemens Energy (ENR1n.DE) , opens new tab, has won a turbine order worth more than 1 billion pounds ($1.3 billion) to supply the East Anglia TWO offshore wind farm of Iberdrola's (IBE.MC) , opens new tab ScottishPower, the companies said. Siemens Gamesa will supply 64 of its flagship SG 14-236 DD offshore wind turbines to the project located 33 km off the Suffolk coast in the southern North Sea, they. The turbine's blades will be made at Siemens Gamesa's factory in Hull. Once completed, East Anglia TWO, which is worth a total 4 billion pounds, will have capacity of 960 megawatts (MW), enough to power nearly one million homes. ($1 = 0.7772 pounds) Sign up here. https://www.reuters.com/business/energy/siemens-energy-wins-13-bln-scottishpower-wind-turbine-order-2024-11-11/