Aurelia Butler

LONDON (Reuters) – Global securities regulators set out on Thursday their first blueprint to make participants in “decentralised finance” (DeFi)accountable for their actions and safeguard market stability.DeFi platforms allow users to lend, borrow and save in digital assets, using the blockchain technology that underpins cryptoassets to bypass the traditional gatekeepers of finance such as banks and exchanges.The collapse of crypto exchange FTX and of the Terra USD stablecoin during 2022 showed how shocks in one part of the crypto market can trigger billions of dollars in outflows from DeFI applications, said IOSCO, the global umbrella body for securities watchdogs from across the world.Such events have seen DeFi shrink from about $180 billion in late 2021 to about $40 billion currently, and the sector is also being used for moneylaundering, IOSCO said.”There is a common misconception that DeFi is truly decentralised and governed by autonomous code or smart contracts,” said Tuang Lee Lim, chair of a fintech taskforce at IOSCO.Stakeholders in DeFi and their roles, and the organizational, technological, and communication mechanisms they use, tend to mimic those in traditional finance.”In reality, regardless of the operating model of the DeFi arrangement, ‘responsible persons’ can be identified,” Lim said.Regulators have little standardised data on DeFI, a situation made worse by market participants using multiple pseudonymous addresses to obfuscate their activities, IOSCO said.The watchdog has proposed a framework for regulators across the 130 jurisdictions covered by its membership to ensure investor protection and stable markets with DeFi, identify and manage risks, obtain clear disclosures and cross-border cooperation to enforce applicable laws.Regulators should use existing laws or introduce new ones where needed to get a full picture of DeFI, including the identities of people and companies involved, IOSCO said.A public consultation on the proposals, which dovetail with proposals from IOSCO in May to regulate cryptoassets themselves, runs until mid-October before the framework is finalised around the end of 2023. IOSCO members commit to applying agreed recommendations, and some member countries like the United States have already begun looking at how DeFi fits into existing securities laws. More

LONDON (Reuters) – The dollar edged up after pushing the yen to a 10-month trough on Thursday and kept the euro and sterling pinned near three-month lows, as investors placed their hopes on a still-resilient U.S. economy.China’s onshore yuan slid to a 16-year low, under pressure from a property slump, weak consumer spending and shrinking credit growth in the world’s second-largest economy.Against a basket of currencies including the euro and sterling, the dollar rose 0.1% to 104.98, holding on to some of its gains from the previous session after scaling a six-month peak as the U.S. services sector unexpectedly gained steam in August.”Stronger-than-expected ISM services reaffirmed the U.S. outperformance narrative, adding broad support to the U.S. dollar,” said Kirstine Kundby-Nielsen, analyst at Danske Bank.The Federal Reserve report known as the “Beige Book”, published on Wednesday, showed that U.S. economic growth was modest in recent weeks, job growth was subdued, and inflation slowed in most parts of the country.Market pricing shows a more than 40% chance that the Fed will deliver another rate hike in November, according to the CME FedWatch tool, though expectations are for policymakers to keep rates on hold later this month.ONSHORE YUAN HIT 2007 LEVELSThe onshore yuan sank to 7.3296 per dollar, its weakest since December 2007.China has rolled out a series of policy measures in recent months to revive a stumbling economy after its post-pandemic recovery fell away quickly. Investors remain on the lookout for further support measures from Beijing to revive market confidence.Data on Thursday showing a lower-than-expected fall in China’s exports and imports numbers in August did little to lift investors’ spirits.”I think that what’s really driving the dollar is not so much that the U.S. economy is doing great, but it’s doing better than elsewhere,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia (OTC:CMWAY).The Australian dollar was about flat at $0.6384, while the New Zealand dollar rose 0.3% at $0.5885, with both languishing near their recent 10-month lows.The two antipodean currencies are often used as liquid proxies for the Chinese yuan.“We see yuan staying under pressure (against the dollar) in the near term,” said Becky Liu, head of China macro strategy at Standard Chartered (OTC:SCBFF) Bank.”The pair could stay range-bound in the foreseeable future without breaking materially higher, as (The People’s Bank of China)’s stance to defend the currency around current level remains very strong.”The China-sensitive euro was last 0.2% lower at $1.0715, after having fallen to its lowest since June on Wednesday.European Central Bank (ECB) policymakers warned investors that the decision for a rate increase next week was still up in the air, but a rise in borrowing costs was among the options on the table.INTERVENTION WATCHIn Japan, traders continued to be on intervention watch as a fragile yen struggled to make headway against a resilient dollar, even as officials stepped up their warnings against a sell-off in the currency.The greenback scaled a fresh top of 147.875 yen in early Asia trade, its highest since last November. The yen last edged 0.2% higher to 147.295 per dollar.Elsewhere, sterling slipped 0.3% to $1.2465, touching a three-month trough.Bank of England (BoE) Governor Andrew Bailey said on Wednesday that the central bank was “much nearer” to the end of its rate-hike cycle, though borrowing costs might still have further to rise because of stubborn inflation pressures.Markets currently see a 71% chance of BoE rate hike on Sept 21. More

UK businesses expect inflation and wage growth to ease, according to a closely watched monthly survey by the Bank of England, providing some relief for policymakers ahead of the interest rate decision later this month. Output prices are expected to increase by 4.9 per cent over the next 12 months, according to August’s Decision Maker Panel, a survey of UK chief financial officers, published on Thursday. The figure, based on a three-month rolling average, represents a fall of 0.5 percentage points from July and well below the peak of 6.6 per cent in September last year. The outlook for wage growth also fell to an average of 5.1 per cent, continuing a downward trend from a high of 6 per cent at the end of 2022. James Smith, an economist at ING, said the data provided “good news” for the central bank’s rate-setting committee. “With two weeks to go until the next Bank of England rate decision, there’s a growing sense that the rate hike cycle is reaching its peak and that story has been offered further ammunition by the latest Decision Maker Panel data,” he added. The outlook for both output price inflation and wage growth was well below the figures reported for the last 12 months of 7.4 per cent and 6.9 per cent respectively, the survey showed. The findings reflect comments by Andrew Bailey, the BoE’s governor, earlier this week as he signalled a further interest rate rise may not be necessary. “The question now is as headline inflation comes down . . . will we see inflation expectations continue to come down? . . . and will that be reflected into wage bargaining?” he told MPs, noting that interest rates were now “much nearer” their peak than before.

The markets still expect the central bank to raise interest rates by a quarter point this month from 5.25 per cent.The survey found that more than half of businesses still report problems recruiting, a factor that has led to recent strong wage growth, although this has declined from 70 per cent of chief financial officers at the start of the year.More evidence of a cooling labour market came from data published by the Office for National Statistics on Thursday. It showed that 10 per cent of businesses reported that hourly wages had increased month on month in July, down from one in four in April. More

BENGALURU (Reuters) – Inflation in India was likely to have eased in August from a 15-month high in July, led by cooling vegetable prices, but held above the upper end of the Reserve Bank of India’s 2%-6% target for a second month, a Reuters poll found.Erratic monsoon rains have ruined some crops of staple food items, prompting the government to subsidise vegetable prices and ban exports of some cereals, providing temporary relief to households.That was sufficient to bring down headline inflation as food prices account for nearly half of the overall inflation basket. However, rising energy prices are likely to limit the decline.The Sept. 4-7 Reuters poll of 45 economists predicted the consumer price index rose 7.00% in August compared to a year ago, a dip from 7.44% in July. The data will be released on Tuesday.Forecasts ranged between 6.50% and 7.65%, with almost two-thirds of respondents expecting inflation to be 7.00% or higher.”The worst is over in terms of the recent spike in vegetables, mainly tomato prices, and much of the headline deceleration we expect to see in the upcoming CPI report should stem from a sharp turnaround in food inflation back down to the single-digit territory,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.Chanco added the erratic monsoon season “means the risks to inflation will remain skewed to the upside over the next few months.”While inflation in Asia’s third-largest economy was expected to remain above the RBI’s upper limit of the target range at least until October, it was forecast to remain higher than the central bank’s 4% medium term target well into 2025.However, the RBI was not expected to hike its key policy rate anytime soon and instead start cutting in Q2 2024.”The systemic decline in food inflation, which will be visible in the October data, should give them some amount of comfort to not (make) any repo hikes. In my expectation, they will continue with the pause during the October meeting,” said Debopam Chaudhuri, chief economist at Piramal Enterprises.The survey also showed wholesale price inflation, the change in producer prices, was likely -0.60% year-on-year in August after a 1.36% decline in the previous month. More

BUENOS AIRES (Reuters) – Argentina’s troubled peso currency is at risk of suffering another devaluation after October’s presidential election or a potential second round in November, a Reuters poll of strategists found.Last month, as part of an agreement with the International Monetary Fund (IMF), the Peronist government depreciated the benchmark official exchange rate by nearly 18% and pegged it at 350 per dollar in the wake of a key primary vote.But now it is expected to trade at 419.8 per dollar in 3 months, according to the median estimate of 19 economists polled Sept. 1-5. This would imply a 16.6% devaluation on the heels of the Oct. 22 vote and a possible second round on Nov. 19.Only one respondent saw the peso virtually unchanged at 355 per dollar in the period while all the remaining participants viewed a break of the peg, with estimates ranging from 383.8 to Goldman Sachs’ forecast of 700 per dollar.”Pegging the official exchange rate is complex because inflation will have eroded any competitiveness gains obtained with the devaluation after the primaries,” said Lorenzo Sigaut Gravina, research director at Equilibra.”That is why, following a few weeks of calm, we expect a significant adjustment in the official exchange rate towards the end of the year … the IMF will demand another correction to make new disbursements,” he added.The Fund, which Argentine media says has questioned the complicated currency scheme of multiple rates, acknowledged “upfront efforts to strengthen the FX regime” as it released a tranche of the country’s credit line after the devaluation.In 12 months, the peso is forecast to weaken 65% to trade at 1,004 per dollar. In freely traded parallel markets, it is already quoted closer to that level, at around 720, for a nearly 100% spread over the official rate.Current President Alberto Fernandez and Economy Minister Sergio Massa – who the Peronists chose as their candidate to replace Fernandez – blame this year’s drought, opposition tactics, and corporate greed for Argentina’s economic woes.By contrast, the main political contenders Javier Milei and Patricia Bullrich, whose parties relegated the Peronists to a third place in the primary, point to excessive spending and money printing as the roots of Argentina’s financial ordeal.”The government will have to devalue again because it’s running out of gas – whether it’s after the presidential vote or the second round, that will depend on the results,” Gabriel Caamaño, managing partner at Consultora Ledesma, said.So far in 2023, the Argentine peso is down 50%. The Brazilian real and the Mexican peso, Latin America’s top currencies, have gained 6.4% and nearly 12% respectively.In one year, the real is expected to trade at 5.03 per dollar, just 1.2% weaker than its value on Tuesday. The Mexican peso is also seen with a relatively small loss of 2.3% in 12 months, changing hands at 17.84 per dollar. (Reporting and polling by Gabriel Burin in Buenos Aires; Additional polling by Devayani Sathyan, Pranoy Krishna and Sujith Pai in Bengaluru; Editing by Alison Williams) More