2024-04-17 20:22

WASHINGTON, April 17 (Reuters) - Japan and the United States agreed to closely communicate on currency markets, Japanese Finance Minister Shunichi Suzuki said on Wednesday after a meeting with U.S. Treasury Secretary Janet Yellen. "I explained Japan's view, which is that it's desirable for exchange rates to move stably, reflecting fundamentals, and that Japan will respond to excessive currency moves," Suzuki told reporters on what was discussed during the bilateral talks. "I think our view was well understood," said Suzuki, who is visiting Washington to attend this week's International Monetary Fund (IMF) and G20 finance leaders' gatherings. He declined to comment, when asked whether Japan could intervene in the currency market to prop up the yen. Vice Finance Minister for International Affairs Masato Kanda, who oversees Japan's currency policy, also told reporters that authorities would not rule out any options in dealing with excessive yen moves. "We are always exchanging views with other countries very frequently, so I think Japan's stance (on currency policy) is well understood" by its counterparts, Kanda said. Kanda declined to comment, when asked about the possibility of joint intervention to slow the yen's declines. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/japan-us-finance-chiefs-agree-closely-communicate-fx-2024-04-17/

2024-04-17 20:05

BUENOS AIRES, April 17 (Reuters) - Argentina's corn harvest, already cut sharply due to a stunt disease spread by leafhopper insects, is "likely" to be slashed significantly further, a Rosario grains exchange analyst said on Wednesday, a potential knock to global supplies. Argentina, the world's No. 3 corn exporter, once expected a record haul of corn, but since March the crop has been hit by an unprecedented outbreak of the bugs, which led the exchange to slash its forecast by 6.5 million tons to 50.5 million tons last week. Leafhoppers are insects that carry the harmful spiroplasma disease and whose population tends to spread in hot and dry conditions. They have badly dented 2023/24 corn, which started its harvest a few weeks ago and is now 15.3% complete. "Corn is very affected and this is something we fear and that worries us," Cristian Russo, head of agricultural estimates at the Rosario Stock Exchange, told Reuters. "It is likely that this will be a factor in further losses, which will not be minor losses." Russo said that in the worst-hit northern provinces such as Chaco, Santiago del Estero and Tucumán, the losses caused by the disease ranged between 40% and 50%, when normally the figure reached only 5% at worst. He added that severe cases of leafhoppers, which thrive in humid and warm conditions, were also being seen in regions where they usually did not appear, a reflection of the unusual nature of this year's damaging outbreak. "It has reached areas where it never reached before. It took the technicians by surprise. It hit the center and north of (the province of) Santa Fe and (the province of) Córdoba very hard and reached the (agricultural) core region," Russo said. COLD WEATHER OUTLOOK? In response to the outbreak, the government announced last week it was accelerating approval procedures for two insecticide products recommended to combat the spiroplasma disease, though that comes largely too late for the current harvest. Another factor that will determine how the outbreak progresses is the arrival of low temperatures, because the insect cannot resist temperatures below 4 degrees Celsius, Russo said. Argentina is in early autumn. However, scientists at the University of Buenos Aires (UBA) said that a rapid decrease in temperatures was not expected in northern Argentina, the location of the worst outbreaks. "The northern provinces have already had very warm temperatures since the summer," Matilde Rusticucci, an academic at the university's Department of Sciences of the Atmosphere and Oceans, said in a report on Wednesday. "In the coming months they continue to have the possibility of suffering very high maximum temperatures." However, rainfall is likely to subside due to the weakening of the El Niño climate phenomenon, which in Argentina translates into an increase in the rainfall pattern. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/commodities/argentina-corn-harvest-faces-more-deep-cuts-stunt-disease-spread-2024-04-17/

2024-04-17 20:02

WASHINGTON, April 17 (Reuters) - The Inter-American Development Bank plans to release a statement on Saturday with joint goals of multilateral development banks that is expected to entail priority-sharing and the possibility of project co-financing, the bank's president said on Wednesday. In an interview with Reuters at the bank's headquarters, IDB President Ilan Goldfajn said the effort is aimed at making multilateral banks work as a system while they explore new and innovative ways to leverage loan granting. Officials from multilateral development banks, gathering in Washington on Saturday for a retreat promoted by the IDB, are being urged to expand the scope and relevance of their work amid growing needs of developing economies for substantial financing to address the climate transition. According to Goldfajn, a draft of the joint note is expected to be presented at the G20 meeting on Thursday, on the sidelines of the IMF and World Bank spring meetings, after this year's G20 leader Brazil prioritized MDB reform as the theme for the day. "If all goes well, this exercise of ours, which is solely for the MDBs, will become a key input for the G20 and for the Brazilian presidency in their action plan for the MDBs," he said. One instrument the IDB is betting heavily on is the rechanneling of IMF special drawing rights (SDRs) through multilateral development banks (MDBs). Goldfajn said he expects the IMF to approve that in a meeting scheduled for May. That could pave the way for the IDB and other multilateral banks to search for anchor investors in the near future. He said the European Central Bank has shown a cautious stance regarding the use of SDRs with liquidity pledges, which would likely prevent bloc countries from making direct investments. Still, Goldfajn noted that they could engage in the secondary market, which would also be crucial for the project to become a reality and gain traction. Regarding the issuance of a hybrid capital instrument, Goldfajn emphasized that depends on the IDB's treasury, and that "pricing must be worthwhile" for the operation to proceed. After both the IDB and the World Bank published reports on callable capital - the emergency capital pledged by governments, but not paid in, that could help MDBs expand their lending capacity - Goldfajn said the next step is to have an open and comprehensive conversation with rating agencies, which will commence this week. Several studies indicate that MDBs could expand their lending capacity by hundreds of billions of dollars if ratings agencies modified the allowance they make for callable capital, without jeopardizing the AAA credit ratings that enable the banks to borrow at low rates and pass on the savings to developing countries. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/idb-eyes-joint-goals-statement-with-multilateral-banks-saturday-2024-04-17/

2024-04-17 19:49

HOUSTON/CARACAS, April 17 (Reuters) - The expiration of the widest U.S. license so far granted to Venezuela's oil and gas industry will put a ceiling on the South American country's slow crude production growth unless Washington grants enough individual authorizations to compensate, according to analysts and experts. Washington officials said on Wednesday the license would not be renewed. A 45-day license was issued by the U.S. Treasury Department for energy firms to wind down transactions with Venezuela. Companies also are welcome to submit requests for specific authorizations. The move follows weak progress by President Nicolas Maduro and his representatives to implement a roadmap towards a competitive election in Venezuela this year, the U.S. said, showing worry over repression in Venezuela and the impossibility for the opposition to register its chosen candidate. Oil Minister Pedro Tellechea said on Wednesday state energy company PDVSA has "a big strength in trading" for overcoming any scenario. "We are prepared commercially (to any sanction reimposition). Logistically, we will continue producing". GROWTH CUT SHORT The license had allowed Venezuela's state oil company PDVSA in the last six months to recover a portion of its lost crude output, reaching 874,000 barrels per day (bpd) in March, and expand production capacity by adding two drilling rigs at the country's main producing region, the Orinoco Belt. Also helped by individual authorizations to U.S and European oil firms, Venezuela expanded exports to pre-pandemic levels of around 900,000 bpd, improved cash flow and secure imports of diluents for crude production and fuels to avoid another wave of domestic scarcity. Individual licenses are expected to remain in force and new ones for specific transactions could be issued, the U.S. said, but without the widest authorization a planned 35% growth in oil production to 1.2 million bpd through the end of 2025 is now expected to be shorter. "Oil output will lose force," said Caracas-based consultancy Sintesis Financiera in a report this week, referring to a scenario without a wide license allowing exports of Venezuela's oil to its chosen clients, which will cut short the production growth to about 980,000 bpd by the end of next year. WEAKER FINANCES Experts also expect that lower revenues coming from the combination of stagnant oil sales, the return of price discounts and the need for intermediaries will weaken PDVSA's finances and the central bank's ability to avoid further devaluation, leading to accelerated inflation. They noted, however, that individual licenses to the oil sector can provide some relief in the coming months. A large list of oil and gas companies have in recent years requested specific licenses from the U.S. Treasury Department to do business with Venezuela, including for trans-bordering gas projects, oil area expansions and investments that could ramp up revenue. But most of them remain unattended. Venezuela's possible re-approach to political allies Iran and Russia, especially for oil trading and shipping, could also help it ease the effect of reimposing the U.S. sanctions, first imposed in 2019, analysts have said. But the "most catastrophic collapse" of PDVSA's operations and finances began years before the U.S. first imposed sanctions in Venezuela, noted Francisco Monaldi, director of the Latin American Energy Program of Rice University's Baker Institute. Any recovery is not expected to be fast and amid though sanctions the effort will be even harder, the analysts said. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/commodities/expiration-us-oil-license-venezuela-impose-ceiling-output-growth-2024-04-17/

2024-04-17 19:24

April 17 (Reuters) - U.S. economic activity expanded slightly from late February through early April and firms signaled they expect inflation pressures to hold steady, a Federal Reserve survey showed on Wednesday, continuing recent trends that have kept the central bank from being able to cut interest rates. The U.S. central bank released its latest snapshot on the health of the economy a day after Fed Chair Jerome Powell ditched previous guidance on when its benchmark interest rate may be cut and instead said monetary policy needs to be restrictive for longer due to a string of stronger-than-expected inflation readings. "Overall economic activity expanded slightly ... Ten out of twelve Districts experienced either slight or modest economic growth," the Fed said in the survey known as the "Beige Book," which polled business contacts across the central bank's 12 districts through April 8. "The economic outlook among contacts was cautiously optimistic, on balance." Up until the turn of the year, Powell and his colleagues had been buoyed by data that showed inflation, which spiked to a 40-year high two years ago, drifting downwards toward the Fed's 2% target rate, even amid strong economic growth and a low unemployment rate. However, that momentum has stalled and even reversed, calling into question whether the Fed, which in March provisionally penciled in three rate cuts this year, will be able to cut its policy rate in the coming months. Investors now only expect a first cut in September and the odds of a second cut are dwindling. INFLATION TO HOLD STEADY In the Fed's survey, the pace of price increases was described overall by firms as modest on average, but six of the central bank's districts noted moderate increases in energy prices and contacts in a few of them, mostly manufacturers, saw upside risks in the near-term in both input and output prices. "On balance, contacts expected that inflation would hold steady at a slow pace moving forward," the survey noted, even as firms frequently said their ability to pass cost increases on to consumers "had weakened considerably" in recent months. The Fed is expected at the end of its April 30-May 1 policy meeting to leave its policy rate in the current 5.25%-5.50% range, where it has been since last July. By the Fed's preferred measure, inflation in February ticked up to a 2.5% annual rate, while a gauge that strips out more volatile food and energy components, rose at a 2.8% annual rate. Employment rose at a slight pace overall too, the Fed survey showed. Despite more available workers, many Fed districts continued to see persistent shortages of qualified applicants for certain positions, but multiple districts said that annual wage growth rates had recently returned to historical averages. One restaurateur, for instance, told the Cleveland Fed "we've seen wages stabilize and haven't had to escalate wages to hire good people." Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/us-economic-activity-expanded-slightly-recent-weeks-fed-survey-shows-2024-04-17/

2024-04-17 17:10

WASHINGTON, April 17 (Reuters) - British inflation is broadly declining in line with the Bank of England's forecasts, and next month's numbers look on track for a sharp drop towards the central bank's 2% target, Governor Andrew Bailey said on Wednesday. "We're actually pretty much on track for where we thought we would be," Bailey said at an event in Washington hosted by the Institute of International Finance. "I expect that next month's number will show quite a strong drop," he added. After the BoE's last interest rate-setting meeting in March, Bailey said inflation was "moving in the right direction" for a rate cut, and on Tuesday he said the question for policymakers remained when there would be enough evidence to justify this. Official figures earlier on Wednesday showed annual consumer price inflation fell to 3.2% in March from 3.4% in February, a slightly smaller decline than the drop to 3.1% which was the median forecast in a Reuters poll of economists. Last month the BoE said it expected inflation to fall below 2% in the second quarter of this year, due largely to a scheduled fall in regulated energy tariffs. But it has forecast that inflation will rise back towards 3% later in the year due to continued strong wage growth and services price inflation, which some policymakers have said is a bigger factor for them in determining when to loosen policy. Financial markets slightly scaled back their expectations for BoE rate cuts after Wednesday's inflation data, and now have only one quarter-point rate cut fully priced in for this year, most likely in August or September. Labour market data on Tuesday showed less of a fall in wage growth than economists had forecast but a bigger rise in the unemployment rate, which hit a six-month high of 4.2%. Bailey said that overall the labour market appeared to be loosening, but problems with the official labour force survey made it hard to reach a firm conclusion. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/world/uk/boes-bailey-says-latest-inflation-fall-line-with-forecasts-2024-04-17/