2025-11-03 16:21

BRASILIA, Nov 3 (Reuters) - Brazil has established new rules raising the minimum capital required for financial institutions to operate in the country to 9.1 billion reais ($1.68 billion) from 5.2 billion reais, the Central Bank of Brazil said on Monday. Around 500 firms could be affected, with the changes potentially triggering market exits, mergers or corporate restructuring, the bank said in a statement. Sign up here. The new framework will base minimum capital and net worth requirements on the activities performed by institutions, rather than their classification. Institutions that use the term "bank" or similar expressions in their name will be subject to an additional capital buffer, it added. The rules take effect immediately, with a phased implementation through January 2028. Accounts opened by financial technology firms at traditional banks but with limited traceability of the actual fund holder must be closed if used for unauthorized financial services or to conceal third-party obligations, according to the regulation. The move aims to close loopholes that obscure final beneficiaries following police investigations under Operation Hidden Carbon, which found fintechs were used for criminal activity. It also addresses cybersecurity risks linked to technology service providers. ($1 = 5.4039 reais) https://www.reuters.com/world/americas/brazil-tightens-minimum-capital-requirement-rules-could-impact-500-firms-2025-11-03/

2025-11-03 15:51

HARARE, Nov 3 (Reuters) - Zimbabwe's annual inflation rate could halve from current levels by the end of 2025, driven by a stable local currency supported by high gold prices, according to a report by the Confederation of Zimbabwe Industries released on Monday. Annual inflation in Zimbabwe measured in the Zimbabwe Gold (ZiG) currency fell sharply to 32.7% in October from 82.7% in September, the CZI said. The organization expects inflation to decline further, potentially reaching between 15% and 20% by December 2025. Sign up here. This projection is attributed to negative month-on-month inflation in recent months and a stable ZiG currency, bolstered by surging gold prices. "The policy target is for an annual ZiG inflation of about 30%. The negative month-on-month inflation for the past two months has helped increase chances of this happening," the CZI said in its October 2025 Inflation and Currency Developments Update. The CZI, Zimbabwe's main business lobby representing manufacturing and industrial firms, publishes independent macroeconomic data that investors use as an early indicator of domestic price and currency trends. The ZiG currency, partly backed by gold, has maintained stability in official markets, with a parallel market premium of approximately 20%, analysts at Oxford Economics said. Gold production in Zimbabwe is forecast to surpass the record 38.4 tonnes achieved in 2024, driven by high bullion prices, according to the same analysts. Zimbabwe has grappled with persistent inflation and currency instability for over two decades, with frequent dollarization episodes undermining confidence in local money. A sustained reduction in inflation would be a critical step toward restoring policy credibility and facilitating economic recovery in the Southern African nation. https://www.reuters.com/world/africa/zimbabwes-inflation-set-drop-amid-stable-currency-gold-boom-2025-11-03/

2025-11-03 15:18

EBA flags 'meaningful currency mismatch' in banks' balance sheets Warning comes as banks asked to stress test dollar resilience EBA study shows EU banks subsidiaries increase dollar dependence MILAN/LONDON, Nov 3 (Reuters) - European banks increased their reliance on U.S. dollars last year, Europe's banking regulator said on Monday, amid growing concerns about the region's vulnerability should dollar financing dry up. Banks globally have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. Sign up here. Dollar funding fears have grown since U.S. President Trump announced a wave of trade tariffs and began putting pressure on the Federal Reserve earlier this year. That has led some European central banking and supervisory officials to question whether they can still rely on the Fed to provide dollar funding in times of market stress. The European Central Bank's Chief Economist Philip Lane said last month that euro zone banks may come under pressure if dollar funding were to dry up. The European Banking Authority said in a new report that European banks' funding in dollars including deposits represented 13.1% of their total funding in December 2024, up from 12.4% a year earlier. Banks' total exposure to assets denominated in dollars also rose to 23% from 19.3%, the EBA said. Reuters reported earlier this year that European and UK regulators have asked banks to monitor and stress test their resilience to dollar shocks. The EBA - which has a mandate to protect and support the EU financial system - also said that data indicated banks' subsidiaries are increasing their reliance on U.S. dollar funding at a faster pace than their parent entities. The share of dollar funding increased the most during 2024 for securities financing transactions and unsecured wholesale funding, the EBA study shows. BANKS FACING A 'MEANINGFUL CURRENCY MISMATCH' The banking authority also warned about "a rather meaningful currency mismatch" in European banks' balance sheets, something regulators in Europe have asked lenders to monitor, Reuters has reported. The EBA added that, as of December 2024, one third of EU banks' assets were denominated in foreign currencies, compared with just one fifth of their liabilities. Earlier in October, the International Monetary Fund said supervisors and banks should effectively monitor and manage liquidity risks in significant currencies. "At the individual institution level, attention needs to be paid to any significant currency gaps in the stable funding requirements unless these are adequately hedged," the regulator added. Some EU banks have a net stable funding ratio (NSFR) - a measure of stable funding to cover a lender's long-term assets - below the 100% minimum in some foreign currencies including the dollar, the EBA said. https://www.reuters.com/sustainability/boards-policy-regulation/european-banks-increase-reliance-us-dollar-funding-eu-regulator-finds-2025-11-03/

2025-11-03 14:44

Treasury to keep auction sizes for notes, bonds steady QT end to reduce Treasury's financing needs Economists note strong tariff receipts Focus on T-bills with Fed as ready buyer JP Morgan sees lower deficit for 2026 NEW YORK, Nov 3 (Reuters) - The U.S. Treasury is widely expected this week to announce its intention to keep note and bond auction sizes unchanged over the next 12 months, at least, as it likely continues to issue more bills and shorter-term debt to manage a sizable fiscal deficit. The Treasury will release its quarterly borrowing estimates on Monday at 3:00 p.m. ET (2000 GMT), followed by the quarterly refunding on Wednesday at 8:30 a.m. ET (1330 GMT). The refunding outlines details of the Treasury's financing plans for the upcoming quarter, including auction sizes for three-year and 10-year notes and 30-year bonds. Sign up here. The government's top fiscal authority has held bond and note auction sizes steady since February 2024 - a stance unlikely to change until late next year or early 2027, analysts said. "The (yield) curve has not steepened enough to the point that the Treasury will respond aggressively with their issuance patterns," said Brendan Murphy, head of fixed income, North America at Insight Investment. "There certainly has been more focus and pressure on the long end. The Treasury will likely adapt to that by issuing more bills and less coupons." The share of Treasury bills in the overall debt mix is expected to climb further from its current 21%, analysts said, as the government leans more heavily on short-term borrowing. Net bill issuance for 2026, excluding Federal Reserve purchases, is expected to rise to $555 billion from $344 billion this year, while net issuance of coupons - Treasury notes and bonds that pay interest - is seen falling to $1.5 trillion from $1.9 trillion this year, J.P. Morgan estimates showed. Analysts said the end of the Fed's balance sheet reduction program, also known as quantitative tightening (QT), will help keep debt issuance steady as it reduces the Treasury's financing needs. Under QT, the Fed allows bond holdings to mature without reinvestment, effectively increasing Treasury's borrowing requirements. To redeem maturing debt held by the Fed, the Treasury draws from its cash balance at the central bank, which it must then replenish by issuing new securities. The end of QT reverses that process. The Fed also announced last week it will start reinvesting all proceeds from maturing mortgage-backed securities into T-bills starting December 1, a move likely to encourage more bill issuance. "You probably need to increase bill supply by about $600 billion if the Fed is reinvesting mortgages into bills," said Joseph Abate, head of rates strategy at SMBC Nikko Securities. "It may seem like a lot, but if the Fed is there buying, $600 billion hopefully is not going to be hard to digest." LOWER BORROWING ESTIMATES Economists overall foresee lower borrowing estimates for the fourth quarter. In the last July announcement, the Treasury said it expected to borrow $590 billion in the last three months of 2025, with a projected cash balance of $850 billion by end-December. Jefferies Chief U.S. Economist Tom Simons said, in a research note, that he expects a moderate downward revision in net borrowings in the fourth quarter to $525 billion due in part to stronger-than forecast tariff revenue. J.P. Morgan also expects slightly lower-than-expected borrowings in the fourth quarter of $564 billion and $639 billion in the first three months of next year. The Treasury said in July that it expected to borrow $1.007 trillion in the third quarter partly to replenish its cash balance that dwindled during the latest debt ceiling episode. It is set to reveal the actual borrowing total later on Monday. In the meantime, strong demand for T-bills has allowed the Treasury to delay increases in longer-dated debt auctions, a strategy that has raised concerns about the potential risk of relying too much on short-term funding. Analysts warned that over-reliance on short-term borrowing could increase volatility in financing the deficit and heighten rollover risks if market conditions shift. That said, the fiscal picture seems to have evolved, analysts said. J.P. Morgan has revised lower its 2026 U.S. deficit forecast to $2.035 trillion from $2.125 trillion, citing a $350 billion boost in tariffs. Other financial institutions such as SMBC Nikko Securities also slightly lowered their deficit estimates for next year. One potential complication, however, is a looming U.S. Supreme Court ruling that could determine whether President Donald Trump's authority under the International Emergency Economic Powers Act extends to imposing tariffs without congressional approval. If the ruling goes against Trump, the U.S. government would have to return hundreds of billions of dollars in tariffs. The Supreme Court is set to hear oral arguments on November 5, with a decision likely before year-end. "Uncertainty around the future of tariff collections is hugely important for the overall deficit and issuance needs by the Treasury," said Zachary Griffiths, head of investment grade and macro strategy at CreditSights. https://www.reuters.com/business/no-surprises-seen-us-debt-issuance-t-bills-up-bonds-steady-2025-11-03/

2025-11-03 12:18

LONDON, Nov 3 (Reuters) - British transport minister Heidi Alexander said there were no injuries reported after a train bound for London from Glasgow derailed in northern England on Monday. North West Ambulance Service later said on Monday morning that it had stood down from "major incident status" and was withdrawing resources it had dispatched to the scene. Sign up here. Avanti West Coast, which operates long-distance services between London and Scotland, has advised passengers not to travel north from the city of Preston. The train operator said it expected disruptions to last a number of days. https://www.reuters.com/world/uk/no-injuries-reported-after-uk-train-derails-minister-says-2025-11-03/

2025-11-03 12:07

SHANGHAI, Nov 3 (Reuters) - A Chinese state bank closed retail gold accounts to new investors on Monday, two days after Beijing tweaked a long-standing tax exemption for the metal that is likely to hit retail demand in the world's biggest consumer market. State-owned China Construction Bank said on Monday it would no longer accept applications for one of its gold purchasing accounts without giving a reason. Fellow major ICBC also restricted new applicants but reversed the move hours later. Sign up here. The decisions follow Beijing’s announcement , opens new tab two days earlier that it would cut the full 13% value-added tax exemption to 6% for certain gold purchases through the Shanghai Gold Exchange and the Shanghai Futures Exchange from November 1. The change will affect industrial and jewellery users because gold purchased for investment, for example gold bars or ingots, is exempt, as are paper trades on the exchange. The new regime applies to non-members of the SGE regardless of the gold's ultimate use. "We expect the net effect is higher costs on gold consumption in jewellery and industrial uses," UBS analyst Joni Teves said in a note on Monday, adding it could spur more companies to join the exchanges, improving liquidity and transparency. The new tax regime comes amid a worldwide rush to buy gold, especially in China where consumers have lined up to purchase jewellery from retailers. The buying helped drive gold's rally to a record $4,381 an ounce on October 20. Spot gold prices on Monday briefly slipped below $4,000 an ounce and were last trading near that level and have dropped about 9% since hitting the record. Shares of gold jewellery retailers Laopu Gold (6181.HK) , opens new tab and Chow Tai Fook (1929.HK) , opens new tab dropped as much as 9% and 12%, respectively, on Monday, while gold miners Zijin Mining (601899.SS) , opens new tab and Zhongjin Gold (600489.SS) , opens new tab each fell around 1.5%. Last month, the value-added tax exemption for platinum was also removed for China Platinum Company, also beginning on November 1. https://www.reuters.com/world/asia-pacific/china-cuts-gold-tax-exemption-some-retailers-which-may-curb-buying-2025-11-03/