Russia plans to accept Bitcoin as payment for oil and gas: Crypto Moves
Macro Snapshot — Europe’s Diesel Shortage Threatens Growth; Ghana pledges to cut spending to fight deficit
RIYADH: The central banks of Mexico and Norway opted to raise rates, while their Israeli counterpart predicted that it could also introduce a hike faster than expected.
The Swiss central bank, meanwhile, is clinging to the lifting of the lowest rate in the world.
Ruble closes highest since February on gas sales
The Russian ruble closed Wednesday at its strongest this month against the dollar in both Moscow and offshore markets after President Vladimir Putin said Russia would start selling its gas to ‘unfriendly’ countries in rubles. .
The ruble ended below 100 to the dollar, still down more than 22% this year as Russia faces tough global sanctions, triggered by its invasion of Ukraine at the end of the last month.
The ruble gained 6% to close at 97.7375 to the dollar in Moscow after touching 94.9875, its strongest since March 2. It closed up 8.8% to 96.5 on the EBS platform. Both closing prices were the highest since February.
Europe’s diesel shortage threatens to slow economic growth
European economies face the risk of a shortage of diesel, the preferred fuel for heavy industry, as sanctions on Russian energy threaten to disrupt imports while supplies from elsewhere remain constrained.
Russia is Europe’s largest supplier of diesel and related fuels, sending more than three-quarters of a million barrels a day for use in European heavy machinery, transport, agriculture, fishing, as well as for the electricity and heating.
Soaring diesel prices in Europe have already impacted the industry by driving up fuel and transport costs, which are passed on to consumers through rising costs across the economy. .
“Governments understand very clearly that there is a clear link between diesel and GDP (gross domestic product) because almost everything that goes in and out of a plant uses diesel,” said John Cooper, chief executive of Fuels Europe, a division of the European Association of Petroleum Refiners.
Norway hikes rates and adopts hawkish tilt as inflation rises
Norway’s central bank raised its benchmark interest rate on Thursday as expected and said it now plans to raise it at a faster pace than previously expected to contain inflation and a rapidly growing economy.
Norges Bank’s monetary policy committee raised the overnight deposit rate from 0.50% to 0.75%, its third rise since September, as predicted unanimously in a Reuters poll of economists and in line at the central bank level.
It now plans to make eight quarter-percent rate hikes by the end of 2023, including Thursday’s decision, three more than the central bank’s previous projection and more than the six hikes planned. by economists.
Dollar companies, the yen is at its lowest since 2015
The dollar strengthened as the Japanese yen fell to its lowest level since 2015 as the Russian-Ukrainian conflict and expectations of central bank tightening prompted investors to be cautious.
Stock markets were volatile, with European stocks slipping, following more hawkish comments from the US Federal Reserve on Wednesday.
Fed policymakers have signaled they may take more aggressive steps to bring inflation down, including a possible half-percentage-point hike in interest rates at the next policy meeting in May.
The Japanese yen fell against the US dollar for the fifth straight session, hitting its lowest level since 2015, as the Bank of Japan was expected to delay policy tightening by other major central banks.
Ghana announces sweeping spending cuts to tackle deficit
Ghana’s finance minister on Thursday announced sweeping spending cuts to reduce the deficit, contain rising inflation and slow the cedi’s fall as the country faces a looming debt crisis.
The West African producer of gold, oil and cocoa has seen consumer inflation soar to more than 15%, and the cedi has lost more than 15% of its value against the dollar this year. His credit ratings were downgraded due to concerns about his ability to pass laws to boost his income.
After the central bank announced its biggest interest rate hike of 250 basis points on Monday, Finance Minister Ken Ofori-Atta outlined a series of fiscal measures at a press conference in the capital Accra. .
“We are confident that these measures will help address the short-term challenges facing our nation,” he said.
The government will cut discretionary spending by a further 10%, on top of a 20% cut announced earlier this year, and cut the salaries of government ministers by 30%.
The Bank of Mexico raises its key rate to 6.5%
Mexican President Andres Manuel Lopez Obrador said on Thursday that the Bank of Mexico had voted to raise its benchmark interest rate by 50 basis points to 6.5%, before the latest decision was made public by the central bank. .
While talking about inflation, Lopez Obrador noted that the US Federal Reserve last week raised its benchmark rate for the first time since 2018, then said Mexico’s central bank had voted to raise its benchmark rate again. of 50 basis points.
“We are going to have an interest rate of 6.5 (per cent),” he told a regular government press conference. “The Bank of Mexico took the decision yesterday unanimously, and we respect the autonomy of the Bank of Mexico.”
The bank declined to comment on the unexpected announcement. The president’s office did not respond to a request for comment on whether Lopez Obrador spoke in error.
Rate hikes in Israel could be ‘a bit faster’ than expected
The Bank of Israel can no longer remain patient in its monetary policy as inflation continues to rise, and the process of raising rates could be faster than expected, its deputy governor said Thursday.
By maintaining the benchmark interest rate at 0.1% on February 21, the central bank’s monetary policy committee had deemed that the conditions were in place for the start of a gradual process of raising the interest rate in a context of rising inflation, strong economic growth and rising employment.
However, Bank of Israel Deputy Governor Andrew Abir said the hiking cycle could now accelerate.
“Given the recent acceleration in real inflation and the evolution of inflationary expectations, the process could be a little faster than initially expected,” he told a conference.
After the latest rate decision, Abir told Reuters that the Bank of Israel would not be aggressive in raising interest rates once it began to tighten policy in the coming months, as the inflation should remain under control.
Swiss National Bank focuses on inflation after doubling its forecast
The Swiss National Bank will take “all necessary measures” to combat rising prices in Switzerland, SNB President Thomas Jordan said on Thursday, indicating a change in tone at the central bank which for years has is battling to tame the strong Swiss franc.
The SNB doubled its inflation forecast for this year, citing rising energy costs, production bottlenecks and the war in Ukraine.
It now projects inflation of 2.1% in 2022, lower than many countries but still exceeding its target of limiting annual price increases to 0-2%.
Unlike the US Federal Reserve and the Bank of England, the SNB held back on raising interest rates, sticking to the world’s lowest interest rate of minus 0.75% as expected.
(Contributed by Reuters)