2025-10-10 09:58
ECB simulates adverse and baseline scenarios Flight to safety would see 13 banks out of cash Baseline scenario shows modest impact FRANKFURT, Oct 10 (Reuters) - A digital euro could drain up to 700 billion euros ($810.88 billion) in deposits during a run on commercial banks, pushing around a dozen euro zone lenders into a liquidity squeeze, a European Central Bank simulation showed on Friday. The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, essentially an electronic wallet guaranteed by the ECB, would pose to the banking sector under different scenarios, including a hypothetical "flight to safety". Sign up here. The ECB has presented the digital currency as an alternative to U.S.-dominated means of payment, but bankers and some lawmakers fear it may empty banks' coffers. The ECB's study found that, were there to be an unprecedented run on commercial banks, depositors would withdraw 699 billion euros from euro zone banks to park them in digital euros if a limit on individual holdings was set at 3,000 euros each. This is equal to 8.2% of all retail sight deposits, although the impact would be greater for small market lenders and retail banks, the ECB said. Under this scenario, which the ECB described as highly unlikely, 13 of the 2,025 banks in the analysis would deplete their mandatory cash buffer, as measured by the Liquidity Coverage Ratio. These figures may be an overestimation as they don't consider the fact that some depositors have more than one bank account, the ECB said. Under the ECB's "business as usual scenario", in which depositors don't make full use of their digital euro allowance, just over 100 billion euros would flee banks' coffers, leaving the sector well within liquidity requirements, the study found. And even this outflow could be more than offset by an ongoing trend out of cash and into electronic means of payment, which should add to banks' deposits, the ECB added. The ECB also simulated individual holding limits of 500 euros, 1,000 euros and 2,000 euros, obtaining lower outflow estimates. "The analysis confirms that holding limits effectively restrict deposit outflows from the banking sector to levels that safeguard the stability of the financial system and support the correct formulation and implementation of monetary policy," the ECB said. It also found that a 3,000 euro holding limit would reduce banks' return on equity by an average 30 basis points, although the impact differs country by country. EU finance ministers agreed last month a roadmap for launching the digital euro but retained a say on its eventual introduction and on the holding limit. ($1 = 0.8633 euros) https://www.reuters.com/business/finance/digital-euro-could-drain-up-700-billion-euros-deposits-bank-run-ecb-says-2025-10-10/
2025-10-10 09:26
SINGAPORE, Oct 10 (Reuters) - Japan's ruling coalition broke up on Friday, with junior partner Komeito rebelling against the Liberal Democratic Party's new hardline leader Sanae Takaichi in a move that cast doubt over her premiership bid. Market reaction was mixed as traders attempted to make sense of what the split meant for the political landscape and economic outlook. Sign up here. The yen, which was trading near an eight-month low, strengthened as much as 0.5% to 152.38 per dollar after the fracture of the 26-year political partnership. It was last at 152.73. The yield on the two-year Japanese government bond (JGB), the tenor most sensitive to expectations for central bank rates, slid 2 basis points (bps) to 0.905%. The 30-year JGB yield jumped 5 bps to 3.225%. Here are some comments from market analysts: SHOKI OMORI, CHIEF DESK STRATEGIST, MIZUHO SECURITIES, TOKYO: "If Takaichi cannot become PM, and say a fiscal austerity-style, pro-BOJ tightening candidate emerges from another party, unwinding of the 'Takaichi trade' would probably kick in. That's not the main scenario as opposition parties are not unified in their views, but the market may start to price in the 'risk' of a reversal. This would push USD/JPY back down. That said, the yen is likely to remain a funding/carry currency, so I don’t think USD/JPY will go down below 140 in the near term just on this." BART WAKABAYASHI, BRANCH MANAGER, STATE STREET, TOKYO: "Based on what Takaichi-san has been saying through her campaign, the yen was sold pretty aggressively ... the market will have to react if there doesn't seem to be a consensus to approve her as prime minister, as opposed to the very definitive market reaction that occurred when she was confirmed." "This was some fuel to the fire, with expectations of a BOJ hike being kicked down the road a bit that added to the yen selling ... Takaichi-san isn't a supporter of hikes. Maybe there's some wiggle room there. The market largely expects the BOJ is doing nothing this month, I don't see that as a done deal." NAKA MATSUZAWA, CHIEF MACRO STRATEGIST, NOMURA SECURITIES, TOKYO: "The knee-jerk reaction is an unwinding of some of these Takaichi trades. There are basically two scenarios from here: The LDP retains a solo cabinet, or it can go for a coalition with the DPP. Part of the chatter about backdoor dealing was that Aso wanted to get rid of Komeito and bring in the DPP, because Aso is close with the DPP." "In either of those scenarios, the Takaichi trades will be back, and maybe stronger than ever, because the DPP also supports fiscal expansion. If, for example, Tamaki became finance minister, that could really shock the market." ALEX LOO, MACRO STRATEGIST, TD SECURITIES, SINGAPORE: "The absence of a big JPY reaction probably reflects investors’ view that Takaichi would still be able to push her reflationary policies through the Diet eventually with the help of smaller opposition parties such as DPP." "It’s still early days and Takaichi will engage with talks with Komeito again next week. We could see some concessions from both parties to reach an agreement given the LDP-Komeito long standing partnership." KAZUNORI TATEBE, CHIEF STRATEGIST AT DAIWA ASSET MANAGEMENT, TOKYO: "Japanese shares rose sharply after Takaichi’s win at the LDP election. The market priced in her policies into stocks, so if the market sees that she would struggle to carry out her plans, the shares will fall. But the decline is not significant, and they will probably fall around 1% to 2%. "There are investors who were not able to catch up with the latest rally, so there is a demand for buying when the market falls, supported by non-political cues such as corporate governance, inflation and AI growth." https://www.reuters.com/world/asia-pacific/market-analysts-reaction-japans-ruling-coalition-split-2025-10-10/
2025-10-10 07:56
ATHENS, Oct 10 (Reuters) - Greece is working hard to finalise a contract with U.S. oil major Chevron (CVX.N) , opens new tab and its Greek partner Helleniq Energy (HEPr.AT) , opens new tab for energy exploration offshore Greece by the end of the year, the country's energy minister said on Friday. Chevron and Greece's biggest oil refiner Helleniq submitted a joint bid in a Greek tender this year to look for gas in four deep-sea blocks off the Peloponnese peninsula and the island of Crete. Sign up here. "We are working intensively with the U.S. company and Helleniq Energy to meet the timetables and conclude the contract within 2025," Energy Minister Stavros Papastavrou told Greek television Action24. Greece, which produces very small volumes of oil and relies on hefty gas imports for power generation and domestic consumption, has been keen to explore for gas and bolster its role as a gas transit route as part of a European Union push to move away from Russian energy after Moscow invaded Ukraine. Once the contract with Chevron is finalised, it needs approval from a Greek court of auditors and the parliament before the company can start seismic research in 2026 and it has up to five years to locate potential recoverable deposits, Papastavrou said. Any eventual test drilling would not come before the 2030-2032 period, he added. https://www.reuters.com/business/energy/greece-seeks-finalise-chevron-gas-exploration-contract-this-year-says-minister-2025-10-10/
2025-10-10 07:54
NEW DELHI, Oct 10 (Reuters) - A trustee of Tata Group's charity arm has said its decision to vote him off the board of the $180-billion business empire it controls was "unprecedented" and signals a "different era", in the biggest boardroom rift to shake India Inc in years. The discontent at Tata Trusts, a year after the death of family patriarch Ratan Tata, has fuelled fears of a repeat of a bitter 2016 public spat between the charity and Tata Sons that also hit the reputation of India's most revered conglomerate. Sign up here. Tata Trusts has a stake of 66% stake in Tata Sons, which in turn, oversees 30 firms in areas ranging from consumer goods to airlines, including global names such as Jaguar Land Rover, Tata Consultancy Services (TCS.NS) , opens new tab and Tata Motors (TAMO.NS) , opens new tab. The disagreement in recent weeks concerns which trustees should sit on the board of Tata Sons, the general business direction taken by the group and how to manage the planned exit of minority shareholder Shapoorji Pallonji, Reuters has reported. The trustees voted not to reappoint Vice Chairman Vijay Singh to the board of Tata Sons in September, laying bare a tussle among senior members of the powerful charity arm, which is led by Ratan Tata's half-brother Noel Tata. "The idea of voting on any matter in Tata Trusts is unprecedented," Singh told the Indian Express newspaper in rare public comments from an insider at the firm that has always sought to stay out of the limelight. "Ratan Tata was very firm that there should always be consensus and unanimity on issues ... and perhaps we are now in a different era. Four trustees voted against Singh's continuance on the Tata Sons board for reasons that did not appear to have been spelt out, he added. Tata Trusts and Tata Sons, which have not commented on the matter, did not respond to emails from Reuters seeking comments on Friday. Singh did not respond to text messages. But two senior Indian ministers in a rare intervention this week urged Tata Trusts to resolve internal boardroom disputes. A source with direct knowledge of the issues at Tata Trusts said on Friday there are two factions at the charity arm which disagree on a host of issues, one led by its Chair Noel Tata and the other by a trustee, Mehli Mistry. The source spoke on condition of anonymity as the matter is private. How the indvidual factions line up on the issues at stake is not clear. Mehli Mistry is a cousin of the late Cyrus Mistry, a former Tata Sons chairman who died in 2022. Their family firm Shapoorji Pallonji holds a stake of 18% in Tata Sons. https://www.reuters.com/sustainability/society-equity/trustee-indias-tata-charity-arm-calls-internal-disagreements-unprecedented-2025-10-10/
2025-10-10 07:20
Spot gold breached $4,000 per ounce ceiling on Wednesday India dealers charge a premium of up to $15/oz this week Chinese markets open after October 1-8 Golden Week holiday Oct 10 (Reuters) - Physical gold demand in India held firm this week despite a record-breaking price rally, as jewellers and investors snapped up bullion ahead of key festivals later this month, while buying in China was subdued in post-holiday trade due to higher rates. In Hong Kong, residents rushed to sell everything from gold bars to rings to cash in on the record price rally. Sign up here. Spot gold prices rose above $4,000 per ounce for the first time on Wednesday, as broader geopolitical and economic uncertainty, and U.S. rate-cut expectations boosted bullion demand. Indians will celebrate Dhanteras and Diwali this month, festivals during which buying gold is considered auspicious and which are the busiest bullion-buying days in the country. Indian dealers were quoting a premium of up to $15 per ounce over official domestic prices, inclusive of 6% import and 3% sales levies, up from the last week's premium of $9. "Investment demand is really strong right now. Expecting prices to rise further, investors didn’t mind paying extra even over record high prices," said a Mumbai-based bullion dealer with a private bank. Domestic gold prices were trading around 121,000 rupees ($1,364.10) per 10 grams on Friday after hitting a record high of 123,677 rupees earlier in the week. Retail jewellery demand is still slow, but jewellers are hoping it picks up next week with Diwali around the corner, said a New Delhi-based dealer. Demand in top consumer China was lacklustre after a long holiday, with discounts of about $48-$60 an ounce being offered to lure buyers. "People are investing in gold bars and coins as safe havens but jewellery demand has been low. People are looking to buy, but they are waiting for prices to come down," said Peter Fung, head of dealing at Wing Fung Precious Metals. In Hong Kong, gold was sold anywhere between a discount of $0.5 to a premium of $1, while in Singapore , gold traded between a discount of $0.5 to a premium of $1.30. In Japan, bullion was sold at par to a premium of $1 per ounce over spot prices. ($1 = 88.7030 Indian rupees) https://www.reuters.com/world/china/asia-gold-festive-buying-props-up-demand-india-china-muted-post-holiday-trade-2025-10-10/
2025-10-10 07:13
MUMBAI, Oct 10 (Reuters) - The Indian rupee's fall to an all-time low has split analysts on what comes next for the South Asian currency. While some predict further weakness looming, strained by sluggish trade and portfolio flows, others reckon that the worst may be over as valuations turn supportive. The diverging views underscore the cross-currents affecting the Indian economy, which is pressured by punitive trade tariffs imposed by the U.S. and a lull in foreign inflows, while the domestic economy remains resilient. Sign up here. Goldman Sachs, in a note released late last month, said that much of the external headwinds was likely already reflected in the exchange rate. The rupee now looks undervalued both against the dollar and on a trade-weighted basis, the note added. The bank likened the rupee's recent decline to being caught in a "torrential monsoon", weighed down by the combination of U.S. tariffs and higher visa costs for India's tech sector. This has reflected in its underperformance; the Indian rupee is the weakest among emerging Asia currencies so far this year. BofA Global Research concurred, saying the rupee's valuation has turned appealing after recent losses. The bank forecast the rupee recovering to 86 per U.S. dollar by the end of 2025. MORE WEAKNESS TO COME However, analysts did not rule out the possibility of the rupee dropping further towards 90 in the light of the uncertainty around U.S. tariffs. Every single day or week that passes without a breakthrough in U.S.–India trade talks adds pressure, said HSBC's head of Asia FX research Joey Chew, adding that the rupee could recover ground towards 87 if the U.S. reduces tariffs on Indian goods. The rupee has fallen 3.7% against the dollar this year and was quoted at 88.78 on Friday, just shy of the lifetime low of 88.80 touched last week. MUFG said it expects the currency to stay on the defensive, forecasting a decline toward 89.75 "over time". It warned that sustained tariffs could trim up to 1% from India's gross domestic product, potentially keeping capital inflows subdued. https://www.reuters.com/world/india/undervalued-or-still-vulnerable-indian-rupees-path-splits-analysts-2025-10-10/
