2024-06-20 20:21

BOGOTA, June 20 (Reuters) - Plenaries in Colombia's lower house and Senate on Thursday both approved a request from the leftist government of President Gustavo Petro to increase the debt ceiling to $17.6 billion to finance its development plans and comply with payment terms. The vote comes amid warnings from analysts about the state of the Andean country's fiscal needs and after Petro said last month that Colombia could stop paying its debts or enter an economic emergency if the ceiling was not increased, comments later softened by Finance Minister Ricardo Bonilla. Economic committees from both the lower house and the Senate approved the request last week. "This gives clear rules going forward about how to manage public credit," Bonilla said after the measure was approved. A recent slump in tax collection has set off alarms over how authorities will cover a budget shortfall estimated by analysts at about $7 billion this year. The government has already said it will cut spending by some $5 billion. An independent oversight committee has warned Colombia will not meet its fiscal rule - a 2011 measure designed to prevent deterioration of public finances - this year, citing lower economic growth, potential impact on tax revenue and high debt. Bonilla told lawmakers during hearings on the debt ceiling that the country's current ceiling would have meant a deficit of $1.37 billion for 2024. Petro has promised ambitious reforms to labor laws and healthcare in an effort to right what he says are centuries of entrenched inequality. Lawmakers on Friday approved a pension reform the government says will strengthen state pension fund Colpensiones, reduce subsidies and increase coverage for those without sufficient savings. The government's four-year development plan, approved last May, aims to cut the percentage of the population living in extreme poverty to single digits, secure a transition to clean energy and hand over millions of hectares to poor farmers. It has a cost of around $300 billion. The finance ministry has said the debt ceiling respects government deficit projections, which were revised upward to 5.6% of GDP last week. ($1 = 4,101.87 Colombian pesos) Sign up here. https://www.reuters.com/world/americas/colombia-congress-approves-extension-debt-ceiling-176-billion-2024-06-20/

2024-06-20 20:02

WASHINGTON, June 20 (Reuters) - The U.S. Treasury on Thursday said no major trading partner appeared to have manipulated its currency last year, but it added Japan to a foreign exchange "monitoring list," alongside China, Vietnam, Taiwan, Malaysia, Singapore and Germany, which were on the previous list. The Treasury's semi-annual currency report New Tab, opens new tab found that none of the countries examined met all three criteria triggering "enhanced analysis" of their foreign exchange practices during the four quarters through December 2023. Countries are automatically added to the list if they meet two of the three criteria: a trade surplus with the U.S. of at least $15 billion, a global account surplus above 3% of GDP and persistent one-way net foreign exchange purchases of at least 2% of GDP over 12 months. The Treasury said Japan, Taiwan, Vietnam and Germany all met the criteria for trade surpluses and an outsized current account surplus. Singapore met the criteria for engaging in persistent foreign exchange intervention and a material current account surplus, and Malaysia only met the current account surplus criteria, but once on the list, it takes two currency report cycles to be dropped off. China was kept on the monitoring list because of its large trade surplus with the U.S. and because of a lack of transparency surrounding its foreign exchange policies. "China’s failure to publish foreign exchange (FX) intervention and broader lack of transparency around key features of its exchange rate mechanism continues to make it an outlier among major economies and warrants Treasury's close monitoring," the Treasury said in the report. The report also raises questions about China's reporting of data on its current account balance, which showed its surplus fell to 1.4% of GDP in 2023 from 2.5% in 2022. The Treasury said China's balance of payments data published by the State Administration of Foreign Exchange on the country's trade surplus appear to be at odds with China's own customs data and that of other trading partners. A U.S. Treasury official said the department was trying to understand such "anomalies." JAPAN'S INTERVENTIONS The official said Japan's recent foreign exchange interventions to prop up the value of the yen were not a factor in deciding to add the country to the currency monitoring list. The official cited Japan's high 2023 trade surplus of $62.4 billion with the U.S. and its global current account surplus of 3.5% of GDP, up from 1.8% in 2022. But the Treasury report said that Japan had intervened in April and May 2024 - outside the period covered by the report - for the first time since October 2022, buying yen and selling dollars to strengthen the yen's value. The Treasury said Japan was transparent in its foreign exchange operations but added: "Treasury's expectation is that in large, freely traded exchange markets, intervention should be reserved only for very exceptional circumstances with appropriate prior consultations." Speaking to reporters on Thursday, Japan's top currency diplomat, Masato Kanda, said he did not see a problem with Japan being included on the U.S. currency monitoring list, adding that it was assessed according to mechanical criteria. The report said most foreign exchange interventions in 2023 focused on selling dollars -- actions that strengthen a currency's value against the dollar. The dollar has strengthened over the past two years as the Fed has raised interest rates sharply to cool inflation. The greater concern in the Treasury report is on interventions to buy dollars and thus weaken other currencies. "Thus, it is not a surprise that in the four quarters through December 2023, no trading partner was found to have manipulated the rate of exchange between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade," the Treasury said. Vietnam's current account surplus jumped to 5.8% of GDP in 2023, while its goods and services trade surplus with the U.S. was $103 billion, meeting criteria for the monitoring list. Vietnam, which is seeking U.S. recognition as a market economy, has "credibly conveyed" to Treasury that it made net purchases of foreign exchange equivalent to 1.5% of GDP, below the Treasury's 2% threshold, in 2023. The Treasury said it "remains satisfied" with Vietnam's progress in modernizing the transparency of its monetary policy and exchange rate management and will continue to engage closely with the State Bank of Vietnam. Sign up here. https://www.reuters.com/markets/currencies/us-finds-no-currency-manipulation-2023-japan-added-monitoring-list-2024-06-20/

2024-06-20 19:38

June 20 (Reuters) - President Volodymyr Zelenskiy announced on Thursday a set of measures to protect Ukraine's energy system, including protection for plants coming under Russian fire and the development of alternative renewable energy sources. "Life in Ukraine must be preserved and that includes in particular energy security," Zelenskiy said in his nightly video address. Russia pounded Ukraine's energy system in the first winter of the war, launched in February 2022, and renewed its assault on energy targets last March as Ukraine was running low on stocks of Western air defence missiles. Drone and missile strikes have knocked out half of energy generating capacity since March, according to official accounts. Attacks overnight on Thursday hit four regions and cut power to more than 218,000 consumers, the Energy Ministry said. Zelenskiy outlined plans to minimise the effects of such attacks, including a programme of developing solar energy and energy storage facilities and a schedule for critical infrastructure sites to come up with alternative energy sources. The work, he said, must be completed before winter and the increased energy demand associated with the change in seasons. Zelenskiy said the government would "continue to work on creating new energy generation and new decentralised energy capacities". Also planned was "the construction of new balanced and manoeuvrable capacities for energy". "This process is quite challenging in wartime conditions, but we must implement it just as we have already implemented many difficulty projects," he said. And work was proceeding, Zelenskiy said, on measures to protect existing energy sites. Russia says energy infrastructure is a legitimate military target and denies targeting civilians or civilian infrastructure. Sign up here. https://www.reuters.com/world/europe/zelenskiy-calls-measures-preserve-ukraines-energy-system-2024-06-20/

2024-06-20 18:31

Loonie touches eight-day high at 1.3685 Price of U.S. oil increases 0.7% Canadian bond yields rise across the curve TORONTO, June 20 (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Thursday as oil prices rose and traders managed their positions in advance of large option expiries. The loonie was trading nearly unchanged at 1.37 to the U.S. dollar, or 72.99 U.S. cents, after touching its strongest intraday level since June 12 at 1.3685. "It's kind of stuck in the mud here because of this large option expiry tomorrow," said Erik Bregar, director, FX & precious metals risk management, at Silver Gold Bull. "We are seeing dealer hedging around that event." Canadian dollar options with a notional value of $1.2 billion and strikes between 1.3710 and 1.3720 are due to expire on Friday. The U.S. dollar (.DXY) New Tab, opens new tab rose against a basket of major currencies as French political uncertainty weighed on the euro , while the price of oil, one of Canada's major exports, climbed to a seven-week high. U.S. crude oil futures were up 0.7% at $82.15 a barrel. Canadian retail sales data for April, due on Friday, could offer clues on the strength of the domestic economy. Economists expect an increase in sales of 0.7% from March. Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 4.4 basis points at 3.339%, extending its rebound from a four-month low on Tuesday at 3.258%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-steadies-ahead-large-option-expiries-2024-06-20/

2024-06-20 18:07

ROME, June 20 (Reuters) - Italy plans to adopt measures to beef up surveillance over risks tied to cryptoassets, including high fines for those who manipulate the market, a draft decree reviewed by Reuters showed on Thursday. The decree, due to be approved by cabinet later on Thursday, lays out fines of between 5,000 and 5 million euros ($5,400-$5.4 million) for insider trading, unlawful disclosure of inside information or market manipulation. Central banks and international bodies have warned that cryptocurrencies have no underlying value and pose risks for macroeconomic and financial stability, with investigations around the world also showing they can pave the way to fraud. The scheme, which moves within the framework laid out by a European regulation last year, designates Italy's central bank and market watchdog Consob as the authorities overseeing cryptocurrency activities to preserve financial stability and grant an "orderly functioning of markets." Cryptocurrencies enable people to send money around the world without using the mainstream financial system. The underlying blockchain technology creates a record of transactions where senders and receivers are identified only by their wallet addresses, which are a string of letters and numbers. ($1 = 0.9332 euros) Sign up here. https://www.reuters.com/technology/italy-boosts-crypto-risk-oversight-toughens-sanctions-draft-shows-2024-06-20/

2024-06-20 17:32

NEW YORK, June 20 (Reuters) - The U.S. Federal Reserve is unlikely to cut interest rates this year as easier financial conditions will offset the impact of borrowing costs by keeping inflation sticky and the economy resilient, the chief economist of Apollo Global Management said. The U.S. central bank in December signaled an end to the historic tightening of U.S. monetary policy of the prior two years and that lower borrowing costs were coming, triggering a rebound in capital markets activity that boosted the economy and inflation. "We do believe that easier financial conditions will continue to offset the effects of rate hikes at least for the next several quarters," Torsten Slok told a webinar on Thursday. "The scale is tilted towards the tailwind to growth now coming again from fiscal policy, easy financial conditions still being stronger." Apollo is a global alternative asset manager with $671 billion in assets under management as of March. Since the signalling in December, Fed officials have modified their projections on how aggressively they would cut rates this year, from three 25 basis point rate cuts to just one. As of Thursday, traders were betting on about two 25 basis point cuts this year, after data showing a slowdown in the economy and in price pressures in recent weeks. Still, Slok said time was needed for high interest rates to cool the economy and inflation, as higher borrowing costs have yet to hit many U.S. consumers and companies who are instead benefiting from a booming stock market and higher returns in fixed income. "We just did not see the transmission of monetary policy come through as quickly as many, including the Fed ... expected in 2023," he said. "There are certainly good reasons to expect inflation to come down ... we are just not quite there yet, inflation is unfortunately still too elevated." Sign up here. https://www.reuters.com/markets/rates-bonds/apollo-global-chief-economist-expects-no-fed-cuts-this-year-2024-06-20/