Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Argentina has agreed to relax its strict currency controls as part of a $20bn loan from the IMF, as pressures mount on libertarian President Javier Milei’s plan to revive the economy.The country’s central bank on Friday said it would lift the controls, which limit the movement of dollars outside of Argentina, for individuals while maintaining some restrictions for companies.It will also partially float the peso’s official exchange rate, allowing it to fluctuate between 1,000 and 1,400 pesos to the dollar, compared with 1,108 pesos to the dollar today. This replaces a controversial policy that has strengthened the peso dramatically in real terms by devaluing the currency just 1 per cent a month despite much higher monthly inflation.Economy minister Luis Caputo denied the change constituted a devaluation of the peso, something he has long pledged to avoid. He said the IMF would on Tuesday transfer an initial $12bn to Argentina, and another $2bn in June, which would be used to replenish the central bank’s nearly empty hard currency reserves and calm volatile markets. “It’s true that such a large first disbursement is unprecedented, but it’s also unprecedented for a country to have fulfilled all of [the fund’s fiscal demands] in one year,” Caputo said.The IMF’s board confirmed approval of the deal late on Friday, while the World Bank and Inter-American Development Bank announced separate funding packages worth $12bn and $10bn respectively.The IMF deal, the 23rd for Argentina, a serial defaulter, had become increasingly urgent for Milei. While the former economist has curbed severe inflation, eliminated a chronic fiscal deficit and ended a recession, he has been unable to lift Argentina’s strict currency controls or rebuild the central bank reserves needed to prop up the peso and pay debts.Javier Milei has managed to curb runaway inflation but has failed to lift Argentina’s strict currency controls or rebuild central bank reserves More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldTreasuries dropped on Friday in volatile trading, as market participants warned of growing strains in the $29tn market for US government debt.The 10-year Treasury yield climbed as much as 0.19 percentage points to 4.58 per cent on Friday, amid a deepening slump for an asset traditionally considered the global financial system’s premier haven. The yield later reversed some of those gains to trade at 4.48 per cent after Boston Fed President Susan Collins told the Financial Times the US central bank “would absolutely be prepared” to deploy its firepower to stabilise financial markets should conditions become disorderly. President Donald Trump’s erratic tariff policies have shaken investors’ faith in US policymaking and the economy, sparking an exodus from American assets. The 10-year yield rose almost 0.5 percentage points this week, the biggest rise since 2001, according to Bloomberg data. While Trump backed down from his so-called reciprocal tariffs on non-retaliating countries earlier this week — agreeing to a 90-day hiatus for most major US trading partners — he placed steeper levies on Chinese imports. “There is real pressure across the globe to sell Treasuries and corporate bonds if you are a foreign holder,” said Peter Tchir, head of US macro strategy at Academy Securities. “There is a real global concern that they don’t know where Trump is going.” “We are concerned because the movements you see point to something else other than a normal sell-off,” said a European bank executive in prime services, a division that facilitates leveraged trading for firms including proprietary traders and hedge funds. “They point to a complete loss of faith in the strongest bond market in the world.”Traders said poor liquidity — the ease with which investors can buy and sell Treasuries without moving prices — was exacerbating market moves. Analysts at JPMorgan said market depth, a measure of the market’s ability to absorb large trades without significant shifts in price, had significantly worsened this week, meaning even small trades were moving yields significantly. As he travelled to his Mar-a-Lago resort on Friday, Trump said: “The bond market’s going good. It had a little moment, but I solved that problem very quickly.”When asked to what extent the bond market factored into his 90-day pause of reciprocal tariffs to non-retaliating countries, the president suggested it did not, despite saying so earlier in the week. “I want to put the country in an unbelievable economic position. Which is where we should be,” he said.The head of Treasury trading at a major US bond manager said liquidity was “not great today” and explained that “market depth was running 80 per cent below normal averages” on Friday. “If a stiff breeze blew through the Treasury market today, rates would move a quarter point,” added Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott. Friday’s Treasury volatility was accompanied by a drop in the dollar.A gauge of the currency’s strength against major peers fell as much as 1.8 per cent on Friday. Sterling, the Japanese yen and the Swiss franc all made significant gains. Trump said of the dollar: “We’re the currency of choice. We’re always going to be . . . I think the dollar is tremendous.” More

Donald Trump’s tariff war has been wreaking havoc in global markets, but among exporters in China’s “trinket town” — the eastern city of Yiwu famous for making everything from Christmas trees to Donald Trump campaign caps — the mood is more of stoic defiance than panic.Amid government invocations of late dictator Mao Zedong that are intended to project national strength, Chinese business people on the front lines of the trade war said they were confident their nation would prevail.“Trump wants to steal a slice of China’s pie,” said exporter Kenny Qi in his small store festooned with “Make American Great Again” T-shirts in a vast Yiwu trade exhibition centre.But Qi said Trump got a shock when Beijing retaliated with its own 125 per cent tariffs this week. He predicted the US president, whose visage glowered at him from a Maga T-shirt above his desk, would back down “in half a month at most”.Trump’s new duties on Chinese goods are more than twice the 60 per cent tariffs he threatened during his election campaign — a level that many economists had at the time considered a worst-case scenario. Beijing has stepped up its nationalist rhetoric to steel the public for the economic fallout from a hard decoupling with the US. Foreign ministry spokesperson Mao Ning posted on the social media site X a video of Mao giving a speech during the 1950-53 Korean war, when Chinese soldiers fought against US-led UN forces.“No matter how long this war is going to last, we’ll never yield, we’ll fight until we completely triumph,” then-chairman Mao says in the clip. We are Chinese. We are not afraid of provocations. We don’t back down. 🇨🇳 pic.twitter.com/vPgifasYmI— Mao Ning 毛宁 (@SpoxCHN_MaoNing) April 10, 2025

In another post, the spokesperson quoted Mao as saying in 1964: “The US intimidates certain countries, stopping them from doing business with us. But America is just a paper tiger. Don’t believe in its bluff. One poke, and it’ll burst.”Beijing has accompanied its retaliatory tariffs with a host of other measures, vowing to reduce access for Hollywood movies and warning citizens against travelling to the US or studying there. Meanwhile, state media have pumped out stories about how Americans are struggling to afford basic necessities. The Communist party nationalist tabloid Global Times described one shortage as an “‘egg crisis’ sweeping the nation”.“The news says Americans are already scrambling to buy eggs, flour and cooking oil,” said Nie Ziqin, who runs a store in Yiwu offering Halloween decorations intended for sale to the US and other countries.A hat vendor at the Yiwu International Trade Market More

The US dollar slid on Friday as Donald Trump’s erratic tariff regime heightened global economic uncertainty and triggered a flight into gold and other haven assets. The US dollar index slumped below 100, a key threshold, for the fist time since July 2023 during trading in Asia. The euro rose 0.8 per cent to $1.13 and sterling gained 0.3 per cent to $1.30. The yen strengthened to ¥143.9 per dollar, a six-month high. “You’ve gone from growth and inflation worries to worries about liquidity and market functioning”, said Mitul Kotecha, head of emerging markets macro strategy at Barclays, who also cited “policy uncertainty” from the US as a reason for the decline in the dollar. Gold prices hit a record high and the Swiss franc surged as investors moved into haven assets. Bullion prices jumped as much as 1.4 per cent to $3,218 a troy ounce while the Swiss franc climbed as much as 1.2 per cent against the dollar to SFr0.814. It subsequently pared gains to trade around SFr0.82. On Thursday the S&P 500 dropped 3.5 per cent and the Nasdaq fell 4.3 per cent while Treasuries sold off on concerns of a US recession and trade war with China. On Friday yields on 10-year Treasuries were flat at 4.42 per cent after rising 0.09 percentage the previous day. Bond yields move inversely to prices. Asian equities were mixed with Japan’s Topix falling 2.9 per cent while Taiwan and India rose 2.8 per cent and 2.3 per cent, respectively. Hong Kong’s Hang Seng index gained 1.1 per cent and China’s CSI 300 rose 0.3 per cent. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is an FT contributing editorIn August 2019, central bankers and academics gathered at Jackson Hole in Wyoming to talk, among other things, about the dollar. The guest of honour was Mark Carney, then the departing head of the Bank of England. He gave the kind of speech you can only give on your way out, starting a disagreement that doesn’t yet have a clear answer: is the global dollar system inherently problematic, or is it America’s to lose? Carney warned that the old models of how to be a central banker might not work any more. Everyone in his audience with an economics PhD had learnt that financial co-ordination among countries was inefficient, and that flexible exchange rates and sovereign discretion over their own currencies gave central bankers the tools to fix their own problems. But exchange rates weren’t actually flexible, Carney pointed out, when half of global trade was invoiced in dollars. And when two-thirds of global securities were issued in dollars, tightening at the Fed meant tightening everywhere. It was an illusion that each central bank had sovereign discretion to respond to shocks such as trade wars. The constraints of a global dollar were already familiar to everyone in the room. But what Carney suggested at Jackson Hole was a radical step. Over the long term, he said, the world couldn’t just stumble from one dominant currency to the next. Perhaps it was possible for central bankers to co-ordinate what he called a “synthetic hegemonic currency” — a basket of central bank digital currencies.Stanley Fischer, a former vice-chair at the Federal Reserve who had left his job a few months after Donald Trump’s first inauguration, was the first torespond. “The trouble one has is, the problem is not in the IMFS,” he said, referring to the international monetary and financial system. “It’s in the president of the United States.” The global dollar is an inelegant system. It happened in part because the US was unwilling to co-ordinate with other countries after the second world war when it could just as easily dictate to them. But a decades-long dominant currency regime doesn’t endure through obstinacy alone. The dollar is proof that central bankers already can and do co-ordinate.In the 1960s, as banks in London built out a massive system of offshore dollar loans and deposits that came to be known as eurodollars, countries found it was useful to have their savings sloshing around in the City, rather than coming home as inflation. Large American companies liked the flexibility to borrow through London, particularly when the Fed was tightening at home. The political economists Benjamin Braun, Arie Krampf and Steffen Murau argued that you don’t get a system like that unless central bankers want it to be there. Central bank swaps — short-term trades of Fed dollars for sterling from the Bank of England, for example — grew out of regular conversations among central bankers trying to figure out who would be the lender of last resort for a system no one really owned or wanted to admit existed. When oil producers began to accumulate more profits than they could ever spend on their own populations, the eurodollar system was already in place, rails to move dollars around without ever having to bring them home to wreak havoc. This was the environment that existed when, as the sociologist Greta Krippner has pointed out, the US figured out in the 1980s that it didn’t have to disappoint anyone at home by fixing its current account deficits — it could just sell as many Treasuries as it cared to into an existing offshore dollar system desperate for safe assets. Then, as banks holding offshore dollars began to teeter in 2008 and again in 2020, the Fed offered dollar swaps to a growing collection of central banks, whose policymakers return to Jackson Hole every year in part to reaffirm the social ties that make the dollar system possible. Until now, the dirty secret of the global dollar system has been that a lot of important people quietly loved it.Carney is now the prime minister of Canada, responding to threats from the US to his country’s economy and even sovereignty. Any country other than the US precipitously raising and lowering tariffs, gutting its Internal Revenue Service and nonchalantly considering territorial grabs would have seen smoking-hot capital flight months ago. Only now, though, almost three months into Trump’s second term, are asset managers beginning to reconsider the story of America as an inexhaustible well of safe bets. Only now is the yield on Treasuries climbing, possibly as a sign of risk. The offshore dollar system was already the co-operative, synthetic global currency Carney wanted. The dollar was not imposed by a hegemon. It is instead, as Fischer predicted, being torn apart by a madman.  More

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The number of European travellers visiting the US has fallen sharply as political and economic tension and fears of a hostile border under President Donald Trump threaten the world’s most lucrative air routes. Visitors from western Europe who stayed at least one night in the US fell by 17 per cent in March from a year ago, according to the International Trade Administration. Travel from some countries — including Ireland, Norway and Germany — fell by more than 20 per cent, an FT analysis of ITA data showed.The trend poses a threat to the US tourism industry, which accounts for 2.5 per cent of the country’s GDP. Some airlines and hotel groups have warned of waning demand for transatlantic travel and a “bad buzz” about visiting the US. The total number of overseas visitors travelling to the US dropped by 12 per cent year-on-year in March, the steepest decline since March 2021 when the travel sector was reeling from pandemic restrictions, according to the ITA data.“In just two months [Trump] has destroyed the reputation of the US, shown one way by diminished travel from the EU to the US,” said Paul English, co-founder of travel website Kayak. “This is not only one more terrible blow to the US economy, it also represents reputation damage that could take generations to repair.” Some content could not load. Check your internet connection or browser settings.The decline may have partly reflected the rise in travel during Easter, which fell in March last year, said Adam Sacks, president at Tourism Economics. But he said other data, including from US airports and land crossings from Canada, all showed “it’s very clear something is happening . . . and it is a reaction to Trump”.Transatlantic routes are the most profitable in the world, and airlines have enjoyed booming demand on these flights since the pandemic, especially in premium seats. Virgin Atlantic last week warned of a “modest” slowdown in demand for transatlantic flying from US consumers, and Air France-KLM’s CEO Ben Smith on Wednesday said the carrier had been forced to cut economy class transatlantic fares amid “slight softness” in the market.But British Airways owner IAG and US carrier Delta Air Lines both said they had not seen any impact.Airline fortunes are closely tied to the wider economy, as consumers tend to hold off on flying when they are worried about a recession. Barclays analysts said this week they remained concerned about transatlantic routes, where they expected profitability to be “abruptly diminished”.Naren Shaam, CEO of travel booking site Omio, said cancellation rates for bookings to the US were 16 per cent higher in the first quarter than a year earlier — with travellers from the UK, Germany and France showing an even higher cancellation rate of 40 per cent.Sébastien Bazin, chief executive of French hotel giant Accor, told Bloomberg that reports of detentions at the US border had created a “bad buzz” around visiting the US. Accor last week said bookings for Europeans visitors to the US this summer were down 25 per cent. Some content could not load. Check your internet connection or browser settings.The drop in international visitors to the US underscores the potential economic impact of a more aggressive border policy under Trump.Last year, international visitors spent more than $253bn on US travel and tourism-related goods and services, according to the ITA, or more than 19 per cent of $1.3tn in US travel spending in 2024.The US Travel Association, an industry group, warned of “concerning trends”, which it put down to factors including “a question of America’s welcomeness”. Delta president Glen Hauenstein said that the carrier had seen a “significant” drop in bookings from Canada. The airline pulled its guidance this week amid the wider uncertainty. Gloria Sync, an artist and author in Nottingham, England, said she cancelled a May trip to San Francisco after seeing reports of detained tourists. “The borders seem unsafe,” said Sync, who is transgender and said she was also worried about the “unwanted attention” her identity could bring at the border. “I don’t know if I’ll ever go back, to be honest.”Some content could not load. Check your internet connection or browser settings.Travel from Canadians, a key source of tourism for “winter-sun” destinations, has also declined. Places in the US such as Las Vegas, for example, welcomed 1.4mn Canadians in 2023 — or a quarter of all international visitors.Research firm Tourism Economics, which had previously estimated a 9 per cent increase in international arrivals compared to 2024, last week revised its forecast to a 9.4 per cent decline instead after Trump’s tariff announcement last week.Sacks also pointed to Trump’s aggressive rhetoric towards the EU, Greenland and Canada. “These are all unforced errors, and they have a significant effect on sentiment towards the US, and therefore travel.”Trump’s tariffs and his administration’s dismantling of foreign aid agency USAID led retiree Paul Harrington, a Briton living in Paris, to cancel a trip to Washington DC next year.Both of his daughters in the UK work in education and a recession could put public sector jobs at risk. “I am now contacting my US friends to visit me in Paris,” said Harrington. “I will not visit the States until Trump is gone.” More