Aurelia Butler

MOSCOW (Reuters) -The rouble weakened sharply on Wednesday, sliding to the 72 mark against the dollar, as sanctions on Russian oil and their probable impact on export revenues put pressure on the Russian currency.The rouble lost about 8% against the dollar last week and is on course for a hefty monthly decline after an oil embargo and price cap came into force. The finance ministry has said the recent slump is related to recovering imports. By 1256 GMT, the rouble was 2.2% weaker against the dollar at 71.93 , earlier hitting 72.09 and moving in the direction of the almost eight-month low of 72.6325 struck last week. It lost 1.8% to trade at 76.36 versus the euro and shed 2.3% against the yuan to 10.21.The rouble has experienced high volatility in the past two weeks and is liable to sharp swings amid smaller trading volumes in the run up to Russia’s New Year holidays. “The newly imposed Western sanctions have contributed to the recent falls in energy prices, which is certainly putting pressure on the rouble,” said Olga Yangol, head of emerging markets research and strategy for Americas at Credit Agricole (OTC:CRARY) CIB.The rouble will be relatively resilient going forward though, Yangol added, expecting the oil price to be mainly driven by geopolitics and for OPEC+ to continue to trim its production in response to market fundamentals. Brent crude oil, a global benchmark for Russia’s main export, was down 0.4% at $84.0 a barrel.President Vladimir Putin on Tuesday delivered Russia’s long-awaited response to the Western price cap, signing a decree that bans the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by the cap.Russian stock indexes were lower.The dollar-denominated RTS index was down 2.3% to 937.6 points. The rouble-based MOEX Russian index was 0.5% lower at 2,141.3 points.For Russian equities guide seeFor Russian treasury bonds see More

TOKYO (Reuters) – Japan’s government will make raising wages a top priority in its economic policy next year, Deputy Chief Cabinet Secretary Seiji Kihara said on Wednesday.”The biggest challenge for Japan’s economy is a lack of wage growth. Unless wages rise, consumption won’t pick up and companies won’t increase investment,” Kihara said, speaking during a television programme.While companies are responsible for deciding how much they hike pay, the government can help achieve higher wages through tax incentives, Kihara said. The government can also prod firms to disclose more information on how much they are spending on human resources, he said.The remarks echo those of Bank of Japan (BOJ) Governor Haruhiko Kuroda, who has stressed that achieving higher wages would be crucial for the economy to sustainably achieve its 2% inflation target, driven by strong domestic demand.”The government will increase its focus on achieving wage growth. This is particularly important because prices are rising,” Kihara said.Prime Minister Fumio Kishida’s administration has seen approval ratings plunge due in part to worries over the rising cost of living, as recent sharp yen falls boosted the cost of importing already expensive raw materials.The government’s concern over yen-weakening side-effects of the BOJ’s economic stimulus policy was partly behind the BOJ’s surprise decision earlier this month to tweak its bond yield control and allow long-term interest rates to rise more, sources have told Reuters.Japan’s consumer inflation hit a four-decade high of 3.7% in November, well above the BOJ’s target, hitting households who have yet to see wages rise enough to make up for the spike in prices of consumers goods. More

LONDON (Reuters) -The dollar touched a one-week high against the yen on Wednesday, boosted by a jump in Treasury yields and investor expectations for a rebound in Chinese growth as COVID-19 curbs loosen.Meanwhile, the pound headed towards its largest one-day rise against the dollar in two weeks as UK markets reopened after a long weekend. Gilts, which have not traded since Friday, came under pressure in line with a sell-off in global government bonds the previous day, which pushed yields up and further supported the pound. The yen also eased after the Bank of Japan signalled that a surprise policy shift last week did not mark the start of a broader withdrawal of monetary stimulus. The dollar rallied by as much as 0.67% to 134.40 in Asian trading, the most since Dec. 20, when the BOJ sent the pair spiralling lower with an unexpected loosening of the 10-year Japanese government bond yield policy band.That day the yen staged its biggest one-day rally against the dollar in 24 years, closing 3.8% higher, as traders speculated about an eventual unwinding of stimulus.But a summary of opinions from the meeting, released Wednesday, showed policymakers backing a continuation of ultra-accommodative policy, even as they discussed growing prospects for higher wage growth and sustained inflation next year.”It basically confirmed that the BOJ surprise from last week was a one-off, but from a longer-term viewpoint nobody believes it,” said Osamu Takashima, head of G10 FX strategy at Citigroup (NYSE:C) Global Markets Japan.Takashima expects expects the dollar to weaken past 130 yen in the second half of next year and said the current strength in the dollar against the Japanese currency was likely to be temporary, given the rise in U.S. government bond yields.The 10-year Treasury yield hit a six-week high of 3.862% the previous day. The higher the yield, the more it tends to lift the dollar against other currencies, especially the yen, which is one of the lowest-yielding in the world. Throwing a spanner in the works for markets in the final weeks of the year is China’s rapid dismantling of the strict zero-COVID policies that have severely hampered its economy for nearly three years. Investors are having to reconcile the pick-up in economic activity as China’s consumers and businesses return to some kind of normality with the impact of a surge in infections.”With infection levels running at many thousands per day, it’s little wonder that China’s COVID response should top many analysts’ list of concerns about 2023,” said DailyFX analyst David Cottle.The dollar index, which measures the U.S. currency against six major rivals, eased 0.1% to 104.07. It hit a six-month low of 103.44 two weeks ago, when the Federal Reserve slowed the pace of its increases to interest rates.Fed officials including Chair Jerome Powell though have emphasised since then that policy tightening will be prolonged, with a higher terminal rate, fueling worries of a U.S. slowdown.”The dollar is in a very interesting situation,” said Bart Wakabayashi, a branch manager at State Street (NYSE:STT) in Tokyo.”If we have a recession in the U.S., the Fed will have to cut rates, and obviously you will want to sell the dollar,” he said. “At the same time, if there’s a global recession, people will buy the dollar as a haven. So the dollar is in a bit of a conundrum, and you have to be really careful what currency you’re buying or selling against.” Sterling rose by as much as 0.53% against the dollar to $1.2095, heading for its largest-one day rise in two weeks. Against the euro, the pound was up 0.41% at 88.08 pence.The euro firmed by 0.1% to $1.06515, having traded steadily around six-month highs in the couple of weeks since European Central Bank President Christine Lagarde said that rate hikes would need to continue.The Australian dollar rose 0.91% to $0.6795 while the New Zealand dollar strengthened by 0.95% to $0.633. More