Brazil Central Bank studying ‘residual’ cut in Selic rate, says Campos Neto By Reuters



© Reuters. Brazil’s Central Bank President Roberto Campos Neto attends a news conference, amid the coronavirus disease (COVID-19) outbreak, in Brasilia

BRASILIA (Reuters) – Brazil’s Central Bank is studying recent data showing inflation is somewhat above expectations to see if there is room for a “residual” cut in interest rates, its president Roberto Campos Neto told Reuters.

In an interview on Wednesday night, he said he expected the bank’s growth projections to improve as pandemic emergency income relief payments and credit for small and medium companies continued to spur improved growth.

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Lebanese central bank sets 3,900 pound/dollar rate for essential food industries By Reuters



© Reuters. FILE PHOTO: A man counts U.S. dollar banknotes next to Lebanese pounds at a currency exchange shop in Beirut

BEIRUT (Reuters) – The Lebanese central bank will provide foreign currency at a fixed exchange rate of 3,900 Lebanese pounds per dollar for importers and manufacturers of essential food items, it said on Monday.

The central bank “will secure the necessary amounts in foreign currency to meet the needs of importers and manufacturers of essential food items and raw materials used in food industries … at the fixed rate of 3,900 pounds per dollar,” it said in a statement.

The Lebanese pound has lost around 80% of its value since October on a parallel market where one dealer gave exchange rates of 9,000/9,500 on Monday. The official exchange rate remains 1,507.5 pounds per dollar, the central bank said.

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Central Bank Rate Cuts Mean ‘World Has Gone Zimbabwe’ By Cointelegraph



Bitcoin Analyst: Central Bank Rate Cuts Mean ‘World Has Gone Zimbabwe’

(BTC) supporters are watching as almost every central bank in the world lowers interest rates and the global fiat money supply skyrockets.

Statistics compiled by Charlie Bilello, CEO of wealth manager Compound Capital Advisors, show that in 2020, 84 of the world’s 118 central banks have cut interest rates.

Continue Reading on Coin Telegraph

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Russia Cuts Rate Most in Five Years and Signals More Easing By Bloomberg



© Reuters. Russia Cuts Rate Most in Five Years and Signals More Easing

(Bloomberg) — The Bank of Russia cut interest rates by the most in five years and signaled another reduction is likely to help stimulate an economy heading toward a deep recession.The benchmark interest rate was cut 100 basis points to 4.5%, the lowest level since inflation-targeting began in late 2014, the central bank said in a statement on Friday. Policy makers warned that a slump this quarter could be worse than expected and inflation could “significantly deviate” from a 4% target next year.

“If the situation develops in line with the baseline forecast, the Bank of Russia will consider the necessity of further key rate reduction at its upcoming meetings,” the bank said.

A majority of analysts in a Bloomberg survey forecast the move, while a handful had expected a smaller reduction. Five-year government bond yields fell the most in more than a month to trade near a record low and the ruble largely held onto gains.

Governor Elvira Nabiullina will hold a news conference at 3 p.m. Moscow time Friday.

After years of keeping borrowing costs in Russia relatively high, Nabiullina turned dovish earlier this year as the economy of the world’s biggest energy producer took a double hit from the coronavirus pandemic and slump in oil prices. Government bonds have rallied in recent months in expectation of deeper rate cuts.

The economy is forecast to contract by 5.5% in 2020, almost double the global rate, while a recovery next year will be slower than elsewhere, according to the International Monetary Fund. The central bank has said the economy may shrink as much as 6% this year.

Inflation was at 3.1% in mid-June, the bank said, and a recent slump in consumer demand due to Russia’s coronavirus lockdown is likely to add to disinflationary pressures. A 13% surge in the ruble against the dollar this quarter will also curb price growth, the central bank said Friday.

What Our Economists Say:

“With price pressure so weak, the central bank is likely to ease further. Another move could come as soon as July, though on a smaller scale.”

–Scott Johnson, Bloomberg Economics

Economists at Citibank in Moscow said last month that Russia could end up cutting the rate as low as 3%, without specifying timing. Bank of America Merrill Lynch (NYSE:) was less dovish, forecasting 3.5%.

The rate reduction may erode a carry trade that has kept Russia’s government bonds and currency attractive to foreign investors in recent years, though other emerging markets are also easing monetary policy and the Federal Reserve has pledged to keep rates near zero.

“The ruble remains one of the highest yielding emerging-market currencies,” said Piotr Matys, a strategist at Rabobank in London. “The central bank may have to intervene verbally in the coming days or weeks if today’s cut doesn’t dent the ruble’s bullish momentum sufficiently.”

 

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Indonesia makes year’s third rate cut, signals more easing to fight pandemic By Reuters



© Reuters. FILE PHOTO: The logo of Indonesia’s central bank, Bank Indonesia, is seen on a window in the bank’s lobby in Jakarta

By Gayatri Suroyo and Fransiska Nangoy

JAKARTA (Reuters) – Indonesia’s central bank on Thursday cut its benchmark rate for the third time this year and signalled it may ease further, as Southeast Asia’s largest economy struggles to avoid a recession amid the broadening fallout of the coronavirus pandemic.

Bank Indonesia (BI) cut the 7-day reverse repurchase rate by 25 basis points to 4.25%, the lowest since 2018, and Governor Perry Warjiyo said there was space for more cuts as long as the rupiah remained stable.=eci>

Thursday’s cut was predicted by the majority of economists in a Reuters poll.

The move came a few days after the finance minister warned of recession risks, with gross domestic product expected to shrink by 3.1% in the second quarter – the first contraction since 1999 – and possibly contract again in the following three months.

BI trimmed its outlook for 2020 GDP growth to 0.9%-1.9% from 2.3% and pledged to keep all of BI’s instruments “accommodative”.

“With all of these factors: inflation low, the need to lift GDP growth, a small current account deficit, we say there is room for further rate cuts,” Warjiyo told a virtual briefing.

“The timing would depend on global conditions and ensuring the stability of the rupiah is maintained,” he said.

The rupiah strengthened after the announcement before settling little changed at 14,010 a dollar, while the main stock index () fell 1.3% after the announcement.=>

Warjiyo said the currency was undervalued and could strengthen for the remainder of the year.

In total, BI has trimmed its key rate by 75 bps so far this year to stimulate economic activity, on top of four reductions amounting to 100 bps in 2019.

Capital Economics’ analyst Gareth Leather expects BI to continue with gradual easing over coming months due to “the very poor outlook for the economy”.

Bahana Sekuritas’ economist Satria Sambijantoro in Jakarta, who expects another 25 bps cut, said the pace of economic contraction in the second quarter may not be different to the double-digit falls seen in Singapore and Thailand.

“A response from the central bank, especially rate-cuts, would be necessary to maintain investors confidence that policymakers are ready to mitigate growth risks,” he said.

Bank Danamon and ANZ also see a further 25-bp rate cut.

The government has budgeted nearly $50 billion to support the pandemic-hit economy, but had only doled out a small amount.

The country reported its biggest daily rise in coronavirus cases on Thursday, taking total infections to 42,762, with 2,339 deaths.

(This story has been refiled to clarify finmin made her remarks a few days ago and not a day ago)

 

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Russia’s unemployment rate hit 6.1% in May: labour minister By Reuters



© Reuters.

MOSCOW (Reuters) – Russia’s unemployment rate stood at 6.1% in May, Labour Minister Anton Kotyakov said on Wednesday, an increase from 5.8% recorded in April by the state statistics service.

Speaking at a conference run by the Russian Union of Industrialists and Entrepreneurs, Kotyakov said the domestic labour market had made it through the peak of the coronavirus pandemic better than a number of other countries.

He said the domestic labour market was expected to begin its recovery in the fourth quarter.

Russia has the third highest number of coronavirus cases in the world, with more than 550,000 infections.

Moscow, the area of Russia worst affected by the outbreak, last week began lifting a lockdown that had been in place for more than two months.

The unemployment rate announced by Kotyakov is slightly lower than the 6.2% analysts polled by Reuters had expected for May.

Rosstat, the state statistics service, is expected to release its unemployment data for May on Friday.

 

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South Korea Jobless Rate Jumps to 10-year High Amid Pandemic By Bloomberg



South Korea Jobless Rate Jumps to 10-year High Amid Pandemic

(Bloomberg) — South Korea’s jobless rate jumped to a 10-year high in May as businesses continued to reel from the coronavirus pandemic.

The unemployment rate climbed to 4.5% last month, from 3.8% in April, data from the statistics office showed Wednesday. Economists expected a rise to 4%. The number of jobs fell by 392,000 in May from the prior year.

South Korea’s businesses are slashing hiring to cut costs as exports continue to fall and consumption remains sluggish. The rise in the unemployment rate comes despite the government relaxing social distancing restrictions in April, allowing freer public gatherings that unleashed some pent-up demand for services.

Wednesday’s report showed the manufacturing sector lost 57,000 jobs in May, with another 371,000 positions shed by firms in retail, wholesale, restaurant and hotel businesses. The economy added 54,000 jobs in agriculture.

A separate report this week from the labor ministry showed payouts for jobless claims topped 1 trillion won ($835 million) last month, the highest on record.

South Korea Unveils $62 Bln Post-Virus Plan to Reshape Economy

The weakness in the labor market adds urgency to President Moon Jae-in’s push to create jobs in technology sectors less vulnerable to a pandemic. The latest extra budget, part of which is earmarked to fund Moon’s “New Deal” project for jobs, is awaiting parliament’s approval.

South Korea’s government has so far pledged more than 270 trillion won in spending to cushion the impact of the virus, while the Bank of Korea has slashed its key rate to a record low of 0.5%. Still, the government expects the economy to barely grow this year, with no increase in employment.

(Adds chart, detail.)

©2020 Bloomberg L.P.

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Canadian banks’ mortgage deferrals, at double the U.S. rate, likely to curb earnings By Reuters


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© Reuters. FILE PHOTO: The Royal Bank of Canada logo is seen outside of a branch in Ottawa

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By Nichola Saminather

TORONTO (Reuters) – Canada’s top six banks have deferred mortgage repayments at nearly double the rate of their U.S. counterparts, setting themselves up for a tough slog to return to their pre-pandemic performance as higher household debt and insolvencies weigh on borrowing.

Even with about 16% of Canadian banks’ mortgage books subject to deferrals https://tmsnrt.rs/3h42quj, many investors believe the C$11 billion ($8.2 billion) that lenders have set aside to cover potential loan losses are conservative, based on current economic assumptions.

(GRAPHIC – Canada mortgage deferrals: https://fingfx.thomsonreuters.com/gfx/editorcharts/oakveqjwyvr/eikon.png)

They are concerned, however, that elevated unemployment and an expected souring of many deferred mortgages currently marked as performing loans will cap future lending and hurt earnings growth in the next few years.

“There’s going to be limited earnings growth coming through, if any” until employment returns to about 80% to 90% of pre-coronavirus levels, said Sadiq Adatia, chief investment officer at Sun Life Global Investments.

Canada last week posted a surprise jobs gain in May, but the unemployment rate rose to 13.7%, sharply higher than February’s 5.6%.

Despite a nearly six-fold rise in provisions in the April quarter, capital ratios fell by less than 40 basis points from the previous three months, helped by regulators’ treatment of deferred mortgages as performing loans.

That has diminished the risk of dividend cuts and capital increases, Adatia said.

Canadian banks provided six-month deferrals starting in mid-March to help tide customers over the economic crisis sparked by the COVID-19 pandemic. Come September, clients’ balances will be adjusted to reflect the deferral amounts, which they will be required to pay over the course of their mortgage.

U.S. mortgage deferrals stood at 8.5% as of May 24, according to Mortgage Bankers’ Association data, in part due to higher government unemployment benefits and additional stimulus payments regardless of employment status.

With Canada’s household debt-to-GDP ratio rising to 101.3% in the fourth quarter of 2019, making it among the highest in the developed world, the Bank of Canada warned last month that stretched consumers could remain frugal when pandemic-driven shutdowns are relaxed. [https://

Consumer insolvencies, which had been growing at the fastest pace since the global financial crisis even before the COVID-19 outbreak, slowed in March. But Credit Suisse (SIX:) analyst Mike Rizvanovic attributed the declines exclusively to pandemic-driven shutdowns, and predicted a “sizeable backlog” will begin to show up from June.

“The significant deterioration in Canada’s economy and labor market will drive insolvencies materially higher over the medium-term,” weighing on banks’ loan growth, he said in a note. Rizvanovic said bank earnings are unlikely to return to fiscal 2019 levels until 2023.

Greg Taylor, chief investment officer of Purpose Investments, said banks have made an assumption that the situation will rebound quite quickly.

If a recovery is slow to materialize and lenders extend deferrals, “they’d have no choice but to increase provisions,” he added, which would erode earnings.



Lebanese money changers say buying dollars at minimum 3,950 pound rate By Reuters



© Reuters.

BEIRUT (Reuters) – Lebanese money changers will buy U.S. dollars for a minimum of 3,950 Lebanese pounds and sell them at maximum price of 4,000 pounds on Wednesday, the syndicate of money changers said in a statement, marking the end of a one-month strike.

 

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Chile jobless rate hits 9% during pandemic, highest in decade By Reuters



© Reuters.

By Dave Sherwood

SANTIAGO (Reuters) – Chile’s unemployment rate hit 9% between February and April, the government said on Friday, holding its highest level in a decade as lockdown measures battered the South American nation’s ailing economy.=eci>

The trade, fishing and manufacturing industries saw the sharpest drops in employment, the national statistics institute INE said in a statement. The self-employed in all sectors were particularly hard hit, the agency said.

Chile´s unemployment rate had already hit a decade-long high in the first quarter, lifted by months of protests over inequality in late 2019 that paralyzed the country.

Increasingly strict lockdown measures through May in the capital Santiago, the country´s economic engine, are likely to leave many more out of work, the agency said, warning that Friday´s jobless figures still “do not reflect all of the effects of COVID.”

The agency also highlighted a sharp spike in workers who still have contracts with an employer but can collect unemployment insurance under an emergency law while their businesses are closed.

The fate of those workers, called the “absent employed,” will determine how much damage the coronavirus wreaks on Chile´s labor market, Credicorp (NYSE:) Capital said in an analyst note.

“The key question is how many of these jobs effectively will be permanently lost as a result of the crisis,” the consultancy said.

Chile, once among Latin America´s most stable economies, has reported more than 90,000 coronavirus cases and 900 deaths.

The South American nation has already announced an historic stimulus package of $17 billion, worth more than 5% of gross domestic product, to ease the economic impact of the pandemic.

Measures include beefed-up unemployment checks, deferred tax payments and government-backed credit lines for small business.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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