2023-12-30 22:04

SINGAPORE, Dec 30 (Reuters) - In recent months, China has sought to stabilise the yuan by orchestrating buying by state banks and giving market guidance to bankers. The strategy of moral suasion marks a sharp break from Beijing's approach the last time the currency was on the ropes, in 2015. Back then, the People's Bank of China (PBOC) resorted to official intervention as the central bank burned $1 trillion in reserves to shore it up. This year, as China's economy wobbled and money left the country, the PBOC took a starkly different approach, defending the currency by signalling to markets what kind of selling it would and would not tolerate. Interviews with 28 market participants show at least two dozen cases where regulators closely and frequently steered market participants through a range of co-ordinated actions this year to resist strong downward pressure on the yuan. The PBOC and State Administration of Foreign Exchange, the currency regulator, did not respond to Reuters' faxed questions about its approach. PBOC governor Pan Gongshenghas previously said regulators would prevent exchange rate overshooting risks and maintain stable FX market operations. The strategy market participants and analysts described to Reuters has prevented a destabilising yuan slide. However, they told Reuters that it has also chilled large parts of China's foreign exchange market, crashing trading volumes and raising questions about the yuan’s chances of becoming a global reserve currency. "The circumstances ... at the moment are considerably more complicated because there are both domestic as well as global macroeconomic factors," said Eswar Prasad, Tolani senior professor of international trade policy at Cornell University. He described the PBOC's use of "non-standard measures to intervene in foreign exchange markets" as a form of "triage" to stop the yuan falling too rapidly. As the currency of the world's second-largest economy and biggest exporter, the yuan's value determines the price of goods around the world and trillions of dollars in capital flows. It also serves as a barometer of China's challenges. A Chinese forex regulator, speaking on condition of anonymity, said the currency’s value was ultimately determined by fundamentals and currently a product of how "effectively China can thwart decoupling", a reference to Western efforts to reduce economic reliance on China. Ten traders interviewed by Reuters said key warnings first emerged in June when the PBOC's daily yuan guidance that determines its trading range for the day, known as the midpoint, started to diverge from market expectations. In theory, the midpoint is based on contributions from 14 banks and referenced to the previous day's trade and overnight moves, which should make it easy for markets to predict. By August, however, the midpoint's yawning deviation from trader estimates was read by the traders interviewed by Reuters as a signal the PBOC did not want the currency to go where markets were pushing it. AGAINST THE TIDE Managing a currency can be a white-knuckle ride. In 2015, China cut the yuan's midpoint by 2%, with the PBOC saying it was a one-off move to bring the trading band in line with market pricing. Fearing further devaluations, however, investors sold Chinese assets, sending stocks and the yuan into freefall and forcing the bank to use reserves to stabilise the currency. This time, efforts to manage the yuan involved more targeted and specific directions to banks and currency market participants, according to the traders who spoke to Reuters. For example, whenever momentum seemed against the yuan, state-owned banks quietly became buyers, the traders said. This generally happened around psychologically significant currency levels and seemed aimed at containing volatility. Those traders told Reuters that in late May they noticed state banks stepping in with two days of yuan buying after the currency hit its lowest then for 2023. Similarly, state banks' yuan buying intensified in December after Moody’s announced a cut in China’s ratings outlook. Individual traders were not able to estimate the size of buying nor was Reuters able to confirm whether such trading was directed by the central bank. Official data shows no evidence the PBOC sold dollars outright as it did in 2015. However, market participants noted banks sold dollars acquired by currency swaps, which would not be seen in such data. At the same time, smaller lenders have experienced increased "window guidance" or unofficial, verbal advice from regulators to have both banks and their clients reduce dollar holdings, according to six trader and banking sources. In June and July, the China FX Market Self-Regulatory Framework, which is overseen by the PBOC, told major state-owned banks to cut dollar deposit rates, which would encourage exporters and households to switch dollar receipts into yuan, market watchers said. WORKING THE PHONES The pressure on bankers has mirrored pressure on the yuan, which is down almost 2.8% against the dollar this year even though the benchmark dollar index lost 2.2%. On Sept. 8, the yuan struck a 16-year low. A few days later, managers at eight major banks were summoned to Beijing to meet PBOC officials, according to five banking sources, two of whom attended the meeting. They were told companies wishing to buy more than $50 million would need approval from the PBOC, three sources said. Bankers were also told they needed to cut spot trading, stagger dollar buying and not hold net long dollar positions at the end of any trading day, two sources said. Authorities also focused on monitoring exporters' foreign exchange buying and selling plans given their large currency holdings and outsized sway on yuan moves. In recent months, regulators have called banks and queried them with surveys on a near weekly basis on the intentions of exporter customers, according to officials at five banks who spoke to Reuters. Such calls had previously been sporadic and surveys sent only monthly. The volume of yuan traded onshore slumped 73% from August's level to a record low of 1.85 trillion yuan in October. That shows China’s bankers have heeded the call to reduce trading, particularly dollar buying, but also that the central bank’s efforts are chilling the market, analysts say. For now, however, the currency appears to have stabilised comfortably above September's 16-year low. Market players are unwilling to directly fight the PBOC -- but nor are they willing to acquiesce entirely. "I've been closely monitoring dollar prices this year, as I have dollar payments coming in every few weeks," said one Shanghai-based exporter of electronic components surnamed Zhu. "The daily question has been: 'Do I need to save them, or convert them back into yuan?'" So far, she has saved them on expectations of a better yuan price for her dollars. https://www.reuters.com/markets/currencies/how-china-talked-markets-out-run-yuan-2023-12-30/

2023-12-30 21:33

CAIRO, Dec 30 (Reuters) - The United Kingdom Maritime Trade Operations (UKMTO) organization on Saturday received a report of an incident in the Red Sea about 55 nautical miles southwest of the Yemeni port of Hodeidah. The master of the unidentified ship reported "a loud bang accompanied by a flash on the port bow of the vessel" and several explosions in the vicinity of the area, the UKMTO said in an advisory note. No damage was reported and all crew were reported to be safe. The vessel has now cleared the area at full speed to the next port of call, the note said. Yemen's Iranian-backed Houthi militants, who control much of Yemen including the capital Sanaa, have stepped up attacks on commercial vessels in the Red Sea in protest against Israel's war in Gaza. Several shipping lines have suspended operations through the Red Sea in response to the attacks, instead taking the longer journey around Africa. The Houthis have vowed to continue their attacks until Israel halts the conflict in Gaza, and warned that it would attack U.S. warships if the militia group itself was targeted. https://www.reuters.com/world/middle-east/ukmto-receives-report-incident-near-yemens-hodeidah-advisory-note-2023-12-30/

2023-12-30 17:36

AMSTERDAM, Dec 30 (Reuters) - Around 300 climate activists were held by police in Amsterdam on Saturday for blocking a major highway in the Dutch capital for several hours to demand an immediate end to the financing of fossil fuel projects by the country's largest bank, ING (INGA.AS). Hundreds of activists walked onto the A10 highway to the south of the city at about noon (1100 GMT), police said, after road authorities had shut the road down to avoid casualties. Organised by the Extinction Rebellion group, the protest took place at the site of the former headquarters of ING, which the climate activists said is the main financer of fossil fuel projects in the Netherlands. ING said earlier this month it would stop financing oil and gas exploration and production by 2040 and triple new lending to renewable energy over the next two years as part of an updated climate strategy. But the protesters said this was not enough, calling on the bank to immediately ditch all fossil projects. ING called those demands "radical and unrealistic" and said Extinction Rebellion's actions were "unacceptable", as it referred to prior protests at ING offices where the bank said employees had been intimidated. "The capacity and infrastructure to quickly switch to 100% renewable energy simply is not there yet," ING said. "We want to be part of the solution, instead of opting for the easy way out of fossil fuels." Images on local TV station AT5 showed protesters including children and elderly people peacefully sitting and walking on the highway, waving banners and flags. Police started picking up protesters from the road one by one about three hours after the start of the demonstration. The activists were put on buses and taken to another part of town, where most of them were set free again. Amsterdam's city council had banned the A10 protest, instead allocating a nearby field for the demonstration, but protesters climbed up the embankment and onto the highway. https://www.reuters.com/world/europe/climate-activists-block-amsterdam-highway-protest-against-ing-2023-12-30/

2023-12-30 11:15

PARIS/LONDON, Dec 30 (Reuters) - Eurostar train services linking London with Paris, Brussels and Amsterdam will fully resume on Sunday, the company said in a statement late on Saturday, after flooding in railway tunnels in southeastern England forced mass cancellations. "There will be some speed restrictions in place in the morning which may lead to delays, and stations are expected to be very busy," Eurostar said. On Saturday the tunnel flooding brought international rail traffic between London and the European mainland to a halt, disrupting New Year travel for thousands of passengers - the second major headache for customers this holiday season. On Dec. 21, a surprise industrial strike by French workers thwarted Christmas travel plans for thousands. It was not immediately clear what had caused the flooding in the railway tunnels under the River Thames near Ebbsfleet, east of London. Television footage showed water gushing into one of the tunnels and covering the track, while at St Pancras station in London hundreds of stranded passengers with suitcases sat waiting on the concourse. "Eurostar has been working to ensure everyone affected has been supported in all of our stations," the company said in its latest update on the situation. "Customers have had the option to re-book onto alternative services or opt for a refund," it added. https://www.reuters.com/world/europe/flooded-tunnel-near-london-disrupts-eurostar-train-services-2023-12-30/

2023-12-30 05:47

SYDNEY, Dec 30 (Reuters) - Severe thunderstorms battered parts of eastern Australia on Saturday, bringing heavy rain, giant hail and strong winds, days after another storm hit the region over the Christmas holidays. A wild weather system is forecast to stretch more than 1,000 kms (620 miles) from Port Macquarie in the state of New South Wales to Rockhampton in Queensland, with southeastern Queensland expected to bear the brunt of the storm. "We're now entering another active period of thunderstorms," David Grant, forecaster at the Bureau of Meteorology, said during a press briefing. "There is potential for further isolated, very dangerous thunderstorms." Some regions picked up about 110 mm (4.3 inches) of rain, roughly a month's total, in two hours on Saturday morning, while hailstones as big as 6 cm (2.4 inches) were also spotted. The bad weather is expected to continue into the new year. Two people were taken to hospital after lightning strikes, one while inside a car and the other on an excavator. The storms follow severe weather on Dec. 25 and 26 that killed 10 people and knocked out power for tens of thousands of properties across the east, and after Cyclone Jasper earlier this month caused widespread flooding and damage. Australia's December-February summer is under the influence of the El Nino phenomenon, which can cause weather extremes ranging from wildfires to cyclones and prolonged droughts. About 28,000 properties are still without power and the latest storms will hamper reconnection efforts, Queensland state Premier Steven Miles told reporters. As Queensland endures its second major storm in a week, an intense heatwave was sweeping across Australia's north and west. Temperatures in Marble Bar, a remote old mining town in the northwest of the state of Western Australia, are expected to touch 49°C (120°F) on Saturday. But mild weather is forecast for the southeast, including Sydney, on Sunday as Australia's biggest city gears up for New Year's Eve celebrations. Tens of thousands of people are expected to flock to prime harbourside spots to watch the famous fireworks that ring in the new year. https://www.reuters.com/world/asia-pacific/thunderstorms-batter-australias-east-heatwave-grips-north-2023-12-30/

2023-12-30 03:00

VENTURA, California, Dec 29 (Reuters) - Beachfront California residents on Friday cleaned up from flood damage unleashed by massive waves that pounded the coastline a day earlier and braced for another bout of extreme surf and heavy showers forecast into the weekend. The National Weather Service (NWS) posted high surf and coastal flood warnings for much of the California shoreline from San Diego north to the San Francisco Bay area, with breaking waves expected to reach 20, 25 and even 40 feet (12 m) in height in some areas. The treacherous surf and coastal flood threat was attributed to a Pacific storm system also bringing heavy downpours to much of the West Coast on Friday night, while coinciding with the latest arrival of exceptionally high tides known as king tides. "Significant flooding ... is likely over vulnerable, low-lying coastal areas around the time of high tide," the NWS warned. "Large breaking waves can cause injury, wash people off beaches and rocks, and capsize small boats near shore." The seaside town of Ventura, about 65 miles (105 km)northwest of Los Angeles, got a taste of such hazards on Thursday, when heavy surf inundated homes and businesses with seawater, sand and ocean debris. Video footage broadcast by NBC News showed powerful, rogue waves crashing over a seawall onto a beachfront street, knocking people down as others dashed to safety on Thursday in Ventura, where eight people were reported to have been injured. The aftermath was visible on Friday at an ocean side hotel where ground-level porches stood cluttered with debris and shattered first-floor windows were covered over in plywood. Nearby, workers spent the morning stacking sandbags to protect other low-lying properties from further damage. "Well, the water came over the wall, and you probably saw from any of the videos that it washed down the street like it was a river," recalled Dan Roundtree, 63, who told Reuters his residential complex was flooded. "So we're all trying to recoup from yesterday's water and prepare ourselves as best as possible for tomorrow." Even as residents girded for the next onslaught, a few avid surfers donned wetsuits to take advantage of the still high but less ferocious waves that prevailed on Friday, in the relative lull before what forecasters were predicting for Saturday. Kenny Powell, 64, another Ventura resident and surfing enthusiast, said that while many surfers live for the thrill of riding exceptionally big waves, Thursday's conditions proved too challenging for him to venture into the swells. "And we actually picked a few people out of the water," he said. "Mother Nature had a little more than we had planned for." https://www.reuters.com/world/us/california-coast-braces-next-onslaught-treacherous-surf-2023-12-30/