2023-11-07 16:20

MOSCOW, Nov 7 (Reuters) - Capital controls on certain Russian exporters that went into force last month may have the opposite of their intended effect in the long term, leading to a weaker and more volatile rouble, the Russian central bank said in a report on Tuesday. The measure, due to last six months, requires 43 undisclosed exporting firms to deposit with Russian banks no less than 80% of foreign currency earned, and then to sell at least 90% of those proceeds on the domestic market within two weeks. The rouble has strengthened from beyond 100 to the dollar since that decree was announced. It was trading around 92.3 to the dollar on Tuesday afternoon. The central bank's higher-than-expected hike in its main interest rate, to 15%, in late October has also helped. The bank also said in its report that it expected annual inflation to start coming down next spring due to Russians' increased savings and higher interest rates. Annual inflation in Russia is seen at 7.25% in the fourth quarter, compared to 6.00% in the third quarter, according to the bank's assessment. Russia's gross domestic produce (GDP) is expected to post year-on-year growth of 1.5% in the last quarter of 2023, slowing from 5.1% in the previous quarter. https://www.reuters.com/markets/europe/russian-cenbank-capital-controls-may-have-reverse-effect-long-term-make-rouble-2023-11-07/

2023-11-07 16:08

WASHINGTON, Nov 7 (Reuters) - Third quarter U.S. economic growth at an annualized 4.9% rate was a "blowout" performance that warrants watching as the U.S. Federal Reserve considers its next policy moves, Fed Gov. Christopher Waller said on Tuesday. "This was an outstanding quarter...this big blowout number," Waller told an economic data seminar at the St. Louis Federal Reserve. While his remarks did not include a policy recommendation, he noted that in looking at the components of U.S. output, "everything was booming. So this is something we are keeping a very close eye on when we think about policy going forward." https://www.reuters.com/markets/us/feds-waller-q3-gdp-blowout-number-that-warrants-watching-2023-11-07/

2023-11-07 15:50

OTTAWA, Nov 7 (Reuters) - Canada's trade surplus with the world increased twice as much as forecast in September, as higher crude prices helped exports gain for a third straight month, data showed on Tuesday. September's trade surplus gained to C$2.04 billion ($1.48 billion), Statistics Canada said, compared with a Reuters poll pointing toward a C$1.00 billion surplus. August's surplus was upwardly revised to C$949 million from C$718 million previously. "A lot of the gains driven by energy pricing," said Stuart Bergman, chief economist at Export Development Canada. Exports rose 2.7% in September and were up 0.4% on a volume basis. Energy products led the gains, mainly due to higher crude oil prices that coincided with the extension of voluntary production cuts by OPEC+. Wheat exports also contribute with a more-than 50% rise, as favorable weather conditions allowed for a more rapid harvest in 2023. Most of the wheat gain is thanks to "the quicker harvest as a result of the good weather we had," Bergman said. "That's going to take off some of the gains we might have seen in future months." The Canadian dollar was trading 0.5% lower at 1.3760 per U.S. dollar, or 72.67 U.S. cents, as oil prices fell and the greenback rallied against a basket of major currencies. Partly offsetting the gains, exports of metal and non- metallic mineral products fell 10.7% in September from an all-time high in August. Total imports increased 1.0%, driven by passenger cars and light trucks. Overall, motor vehicles and parts recorded its sixth consecutive monthly rise, despite strike disruptions in the United States - Canada's biggest trade partner. By volume, total imports were up 1.7%, indicating a decline in prices. The Canadian economy has stalled and it might have slipped into shallow recession in the third quarter as the Bank of Canada's 10 interest rate hikes since last year take effect. The bank expects economic growth to remain muted until the end of 2024, before growth picks up again 2025. "Stripping out price effects, trade looks to have added to growth in the third quarter, leaving us on track for a small positive," said Shelly Kaushik, an economist at BMO Capital Markets, in a note. "However, the details of the report are in line with broader activity slowing to a standstill following aggressive monetary tightening." https://www.reuters.com/markets/canadas-trade-surplus-doubles-september-energy-price-surge-2023-11-07/

2023-11-07 13:36

BRASILIA, Nov 7 (Reuters) - Brazil's central bank flagged interest rate cuts of 50 basis points for each of the next two meetings and does not see any gains in indicating future steps beyond that, the bank's chief Roberto Campo Neto said on Tuesday. Speaking at an event hosted by Bradesco Asset Management, he said policymakers would use these upcoming policy meetings, in December and January, to assess multiple variables, including progress in Congress on measures to stabilize the country's public finances. "We understand that signaling much more than this has no expected value given so much uncertainty that exists, both globally and locally," he said. He reiterated the central bank's commitment to a restrictive terminal interest rate within the easing cycle. Additionally, he pointed out that Brazil still maintains a substantial interest rate differential compared to advanced economies, allowing room for maneuver in monetary policy decisions. However, Campos Neto cautioned that the liquidity environment will dry up, which is why the country needs to do its "homework" and have its fiscal situation in order. Following President Luiz Inacio Lula da Silva's remarks that his government did not need to erase its primary budget deficit next year, as previously proposed to Congress under new fiscal rules, Campos Neto said that increased fiscal risks could impact the central bank's decision-making process, but not mechanically. In the minutes of its latest policy decision, when the bank reduced the benchmark interest rate by 50 basis points for the third consecutive time to 12.25%, policymakers said there remains a substantial journey ahead to bring inflation back to the official target, stressing they had ignited a wide-ranging discussion on the increasingly challenging external scenario. https://www.reuters.com/markets/brazil-cenbank-chief-says-interest-rate-differential-still-big-2023-11-07/

2023-11-07 13:13

SAO PAULO, Nov 7 (Reuters) - Brazil's central bank director Gabriel Galipolo said on Tuesday the country's current pace of interest rate cuts is appropriate as it allows policymakers to adjust the level of monetary contraction while also analyzing how multiple scenarios unfold. Galipolo said foreign exchange rates and oil prices have trended well recently but flagged caution is still needed as the international scenario remains unclear. Brazil has been cutting rates at a pace of 50 basis points per meeting since August. https://www.reuters.com/markets/brazils-galipolo-reiterates-current-pace-rate-cuts-is-appropriate-2023-11-07/

2023-11-07 12:42

NAIROBI, Nov 7 (Reuters) - The International Monetary Fund has agreed to increase Kenya's lending programme by $650 million, the Kenyan president's chief economic adviser said on Tuesday. Sovereign debt investors are paying close attention to the East African nation due to a $2 billion Eurobond that is maturing next June, amid persistent weakness in its foreign exchange rate that is weighing on Kenya's hard currency reserves. "As of now the 2024 Eurobond is fully funded. The refinancing is fully funded," David Ndii, the adviser, told an economic forum hosted by a local commercial bank. "It (IMF) can augment our programme as of now up to $650 million, that they have agreed to do," Ndii said. The government plans to buy back up to a quarter of the bond this year, the governor of the central bank Kamau Thugge told Reuters last month, to be financed by new borrowing. An IMF team arrived in Nairobi last week to conduct the sixth review of a lending programme approved in 2021. The fund has not yet commented on the outcome of the mission, which is yet to be completed. However, the weakening of the shilling is likely to maintain pressure on government finances, said ratings agency Fitch in a statement issued on Tuesday. "There remains a significant risk of further fiscal slippage, particularly if the exchange rate weakens further," Fitch said. The Washington-based Fund has been criticised by some Kenyans on social media for supporting government policies they blame for a worsening cost of living crisis. Such policies include an increase in direct and indirect individual taxes from July. Ndii defended the role of the IMF in the management of the economy. "Without the IMF programme we would probably default," he said, adding that they also have the option of accessing the IMF's exceptional access window, which is used by nations in acute need of balance of payments support. Kenya's international bonds traded flat to a touch lower, as markets awaited confirmation of Ndii's remarks about the increase in IMF funding. , "It is definitely a positive sign. If it is followed quickly by an IMF statement, it will be more reassuring," said a senior trader at a Nairobi commercial bank. https://www.reuters.com/world/africa/imf-agrees-increase-kenya-programme-by-650-mln-presidential-adviser-2023-11-07/