2023-11-08 03:40

Real wages don't necessarily need to turn positive before exit Desirable for FX rates to move stably - BOJ Ueda BOJ must keep ultra-easy policy as trend inflation below 2% TOKYO, Nov 8 (Reuters) - Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank does not necessarily need to wait until inflation-adjusted wage growth turns positive before it ends ultra-loose monetary policy. "Real wages would likely have turned positive when a positive wage-inflation cycle kicks off," Ueda said. "But in terms of how long we maintain our massive monetary easing ... real wages don't necessarily have to turn positive before that decision is made," he said. "The decision (of ending ultra-loose policy) could be made if we can foresee with some certainty that real wages will turn positive ahead," Ueda told parliament. Ueda said the pass-through of rising import prices must dissipate and that wages and inflation needed to rise in tandem for the BOJ to consider exiting ultra-easy policy. Analysts expect Japan's inflation-adjusted real wages, which slipped in September for an 18th month, to continue falling well into next year as wage hikes fail to catch up with persistent price rises. The BOJ currently sets a 0% target for the 10-year bond yield under a policy called yield curve control and guides short-term interest rates at -0.1% to reflate growth and sustainably achieve its 2% inflation target. Ueda stressed anew the BOJ's resolve to keep ultra-loose policy until the recent cost-push inflation shifts into price rises driven more by robust domestic demand and higher wages. "When looking at trend inflation, there's still some distance towards our 2% target. That is why we are continuing with massive easing," Ueda said. Japan's core consumer inflation hit 2.8% in September, remaining above the BOJ's target but slowing below the 3% threshold for the first time in over a year as the effect of past surges in global commodity prices dissipated. In current estimates made last month, the BOJ revised up its price forecasts to project core consumer inflation hitting 2.8% this year and next, but slowing back below 2% in 2025. Ueda also said volatile currency moves were among the side effects the central bank was scrutinising in maintaining its bond yield control policy. "If yield curve control heightens market volatility, that is seen as among side-effects of the policy," Ueda said, when asked by an opposition lawmaker whether he saw sharp yen falls as a side effect of the BOJ's ultra-loose monetary policy. After a brief reprieve last week, the yen renewed its slide below 150 per dollar, which traders see as a level that heightens the chance of currency intervention by Japanese authorities. It stood at 150.51 against the dollar on Wednesday. YCC has come under criticism by some lawmakers for widening the U.S.-Japan interest rate gap and causing yen falls that push up import costs. The BOJ tweaked YCC in July and October to allow long-term rates to rise more reflecting higher inflation, a move Ueda explained as responding to the side-effects of the policy including the risk of triggering market volatility. https://www.reuters.com/markets/asia/bojs-ueda-sees-volatile-currency-moves-cost-bond-yield-control-2023-11-08/

2023-11-08 03:11

CANBERRA, Nov 8 (Reuters) - Australia recorded the driest October in more than 20 years due to an El Nino weather pattern which has seen hot, dry conditions hit crop yields in one of the world's largest wheat exporters, the national weather bureau said on Wednesday. In its regular drought report, the Bureau of Meteorology said last month was Australia's driest October since 2002, with rainfall 65% below the 1961–1990 average. It said every part of Australia except the state of Victoria had below-average rainfall and Western Australia state -- by far the biggest grain-exporting region -- saw its driest October on record. After three years of plentiful rain, the El Nino weather phenomenon has brought hot and dry weather to Australia, with September the driest since records began in 1900. Rain in some parts of the country in early October halted a rapid decline in projected crop yields but the country's wheat harvest is still expected to fall by around 35% this year to some 26 million tons. "Areas of (rainfall) deficiency have generally expanded and become more severe in south-west Western Australia, south-eastern Queensland, and parts of the Top End in the Northern Territory and far north Queensland. Deficiencies eased in southern Victoria and eastern Tasmania," the bureau said. Its long range forecast predicts below-median rainfall through to at least January in northern, western and southern Australia. (This story has been refiled to fix the typographical error in the headline) https://www.reuters.com/world/asia-pacific/australias-records-driest-october-since-2002-due-el-nino-2023-11-08/

2023-11-08 03:08

BRUSSELS, Nov 8 (Reuters) - This year is "virtually certain" to be the warmest in 125,000 years, European Union scientists said on Wednesday, after data showed last month was the world's hottest October in that period. Last month smashed through the previous October temperature record, from 2019, by a massive margin, the EU's Copernicus Climate Change Service (C3S) said. "The record was broken by 0.4 degrees Celsius, which is a huge margin," said C3S Deputy Director Samantha Burgess, who described the October temperature anomaly as "very extreme". The heat is a result of continued greenhouse gas emissions from human activity, combined with the emergence this year of the El Nino weather pattern, which warms the surface waters in the eastern Pacific Ocean. Globally, the average surface air temperature in October was 1.7 degrees Celsius warmer than the same month in 1850-1900, which Copernicus defines as the pre-industrial period. The record-breaking October means 2023 is now "virtually certain" to be the warmest year recorded, C3S said in a statement. The previous record was 2016 - another El Nino year. Copernicus' dataset goes back to 1940. "When we combine our data with the IPCC, then we can say that this is the warmest year for the last 125,000 years," Burgess said. The longer-term data from U.N. climate science panel IPCC includes readings from sources such as ice cores, tree rings and coral deposits. The only other time before October a month breached the temperature record by such a large margin was in September 2023. "September really, really surprised us. So after last month, it's hard to determine whether we're in a new climate state. But now records keep tumbling and they're surprising me less than they did a month ago," Burgess said. Michael Mann, a climate scientist at University of Pennsylvania, said: "Most El Nino years are now record-breakers, because the extra global warmth of El Nino adds to the steady ramp of human-caused warming." Climate change is fuelling increasingly destructive extremes. This year, that included floods that killed thousands of people in Libya, severe heatwaves in South America, and Canada's worst wildfire season on record. "We must not let the devastating floods, wildfires, storms, and heatwaves seen this year become the new normal," said Piers Forster, climate scientist at University of Leeds. "By rapidly reducing greenhouse gas emissions over the next decade, we can halve the rate of warming," he added. Despite countries setting increasingly ambitious targets to gradually cut emissions, so far that has not happened. Global CO2 emissions hit a record high in 2022. https://www.reuters.com/business/environment/this-year-virtually-certain-be-warmest-125000-years-eu-scientists-say-2023-11-08/

2023-11-08 01:23

BENGALURU/JOHANNESBURG, Nov 8 (Reuters) - Emerging market currencies will take well into next year to start making noticeable gains against a retreating U.S. dollar, despite a growing view the interest rate cycle has peaked, a Reuters poll of FX strategists showed. After getting battered for most of 2023, emerging market (EM) currencies have made modest gains against the dollar after the Federal Reserve held interest rates steady last week and data suggested the U.S. economy might finally be slowing. That dollar weakening trend was likely to hold in the near-term as a majority of analysts in the Nov. 3-7 Reuters poll expected the dollar to trade lower by year-end. However, with most EM central banks expected to follow the Fed and cut rates next year, their respective currencies were unlikely to recoup double-digit losses they have accumulated over the past couple of years. "We've seen already some pretty sharp gains last week, but the recent gains aren't extending because there is still uncertainty about the Fed ... and at the same time the U.S. is still performing better than most other economies," said Mitul Kotecha, Head of FX & EM Macro Strategy Asia at Barclays. "So it's difficult to see the EM currencies recoup some of the sharp losses that we've seen in the last few months. That said, we do expect some gains, it's just going to be a bit more of a gradual path." This excludes the Russian rouble , which has lost 27% this year, and the Turkish lira , which is down 52%. Only a few Asian currencies, such as the Indian rupee , Thai baht , and South Korean won were expected to recoup their losses by late 2024. In the near term, the rupee is forecast to trade in a narrow range. Although EM currencies gained at the beginning of 2023 and investors brimmed with positivity after China's post-COVID reopening, economic performance in the world's second largest economy has been mostly underwhelming. Indeed, the tightly-controlled Chinese yuan was forecast to only recoup slightly more than half of its 2023 losses. It has fallen over 5% this year. The South African rand is set to gain less than 1% while the Turkish lira is set to fall around 16% in a year. Latin America's stand-out currencies, the Brazilian real and Mexican peso , have gained around 8% and 11% respectively since the year began, although some of their central banks have already begun cutting rates. The peso is expected to lose around 4.5% while the real is seen losing just over 2% in 12 months. "Easier Fed monetary policy should also take some pressure off select emerging market currencies in the second half of next year," noted Nick Bennenbroek, international economist at Wells Fargo. (For other stories from the November Reuters foreign exchange poll:) https://www.reuters.com/markets/currencies/emerging-market-currencies-claw-back-ground-2024-dollar-fades-2023-11-08/

2023-11-07 23:33

Nov 7 (Reuters) - The formation of a base for a multi-polar world order is proceeding with extreme difficulty amid conflict in different parts of the world, Kazakh President Kassym-Jomart Tokayev said in an interview published on Wednesday. But Tokayev, interviewed by the Russian daily Izvestia, said he believed world tensions would subside and be replaced international cooperation focusing on a reformed United Nations. "As we see, the formation of the architecture of the modern multi-polar world is proceeding extremely painfully," Tokayev told the daily ahead of a visit to Kazakhstan this week by Russian President Vladimir Putin. "And against a background of conflicts in widely separated parts of the planet, confrontation over sanctions and trade wars, it is hard to be optimistic." Kazakhstan has remained close to Russia in the post-Soviet era, but has maintained a balanced position on Russia's invasion of Ukraine. It has not recognised Russia's annexation a little more than a year ago of chunks of Ukrainian territory. Tokayev told Izvestia the U.N. would play a central role in international relations once tensions eased. "I believe, however, that reason and cooperation will prevail over the bloc mentality and egoism. That has repeatedly occurred in world history. In the end the global community will move towards a 'long-term sustainable peace'," he said. Tokayev said the Global South and North had to achieve "a common denominator of joint trust" with reforms to the U.N. "The organisation is subject to growing criticism linked to the need for internal reform," he was quoted as saying. "The many crises in different parts of the world have exposed the U.N.'s vulnerability in its attempts to resolve them." Putin, interviewed before his visit by the Kazakhstanskaya Pravda daily, praised the two countries' efforts in the eight-nation Shanghai Cooperation Organisation where he said the main trend was the "formation of a new, more just world order based on the priority of international law". He also praised other bodies composed of ex-Soviet states, including the Commonwealth of Independent States and the six-nation Collective Security Treaty Organisation - which sent troops to Kazakhstan in 2022 to help Tokayev quell civil unrest. Putin said Russia viewed as vital the "creation in Eurasia of a single space for peace, stability and prosperity". https://www.reuters.com/world/kazakh-president-forming-multi-polar-world-painful-reason-will-prevail-2023-11-07/

2023-11-07 23:21

Nov 7 (Reuters) - U.S. oil and gas producer Occidental Petroleum (OXY.N) said on Tuesday BlackRock (BLK.N) would invest $550 million in the development of the carbon capture project, Stratos, in Texas. https://www.reuters.com/sustainability/climate-energy/blackrock-invest-550-mln-occidentals-carbon-capture-project-2023-11-07/