Aurelia Butler

WASHINGTON (Reuters) -The International Monetary Fund said on Wednesday that its staff has agreed on some $293 million in new financing for Barbados, including $183 million via a new trust fund created to help vulnerable middle-income and island countries.The staff-level agreement is the first under the Resilience and Sustainability Trust approved by the IMF board in April, the IMF said. The Fund also said it reached agreement with Barbados on a new, 36-month Extended Fund Facility (EFF) loan of about $110 million. Both agreements need approval from the IMF Executive Board, which is expected to consider the staff agreement in November or December, Bert van Selm, IMF mission chief for Barbados, told reporters.Van Selm, who announced the agreements in Barbados with Prime Minister Mia Mottley, said the Caribbean nation was ideally suited to be the first country to use the new trust given its successful execution of an earlier IMF program, its location in a region exposed to climate change, and Mottley’s leadership.He said Barbados had not completed all the reforms intended during its previous four-year EFF program due to the COVID-19 pandemic and had sought a follow-on program to complete those efforts. He said it needed to reduce its debt and was planning to start carrying out financial stress tests in coming years that took climate risks into account, he said. The new trust expands access to low-interest loans to about 140 countries, double the number that could tap such resources under the IMF’s Poverty Reduction and Growth Trust. That will be a big help for middle income countries, such as those in the Caribbean, that were hard hit by a loss of tourism during the pandemic and are highly vulnerable to climate change.”It’s obvious to everybody that climate change is the major challenge of our day, and we need to address it, if we can,” van Selm said.IMF managing director Kristalina Georgieva first discussed the new trust in June 2021, telling Reuters it would help a broader range of countries get the aid they needed to tackle climate change and other sustainability challenges.Bangladesh and Argentina have also expressed interest in tapping funds under the trust, which offers 20-year financing. Van Selm said a few more countries were in talks with the IMF and he expected more announcements before the end of the year. More

China’s renminbi fell to the lowest level since 2008 yesterday as the country’s central bank holds back from intervening to prop up the currency in response to the rallying dollar. The renminbi is the latest major currency to succumb to a wave of dollar strength that has sent exchange rates from the pound to the yen spiralling lower this year. As the People’s Bank of China pursues monetary easing to shore up economic growth, continued policy divergence with the hawkish US Federal Reserve is expected to push the Chinese currency down further. The PBoC has so far stopped short of deploying significant foreign exchange reserves, instead relying on indirect measures to discourage bets on continued falls and slow the pace of depreciation.The onshore exchange rate for the currency fell 0.7 per cent to Rmb7.2268 on Wednesday, bringing it 13.8 per cent lower for the year to date.Go deeper: For a heavily-managed currency, the recent weakening trend is pretty stark, writes Robin Wigglesworth in Alphaville. Thanks for reading FirstFT Asia. Here’s the rest of today’s news — EmilyFive more stories in the news1. Bank of England launches £65bn move to calm markets The Bank of England took emergency action yesterday to avoid a meltdown in the UK pensions sector, unleashing a £65bn bond-buying programme to stem a crisis in government debt markets.Go deeper: The Bank of England has gone into full crisis management mode.2. India bans leading Muslim group over terrorism accusations India’s prime minister Narendra Modi has outlawed the Popular Front of India and its affiliates for five years, accusing it of links to terrorist organisations. The move, which followed the arrests in recent days of more than 200 of its members and searches of top leaders’ houses and offices, is likely to foment the country’s deepening communal tensions. 3. EU vows response to ‘deliberate’ pipeline sabotage Norway is deploying the military to oil and gas installations and the EU vowed “a robust and united response” to “deliberate” leaks in two gas pipelines between Russia and Europe. Nato and a growing number of European governments said they believed the leaks were a case of sabotage, while Moscow has denied involvement.Explainer: Here’s what we know so far about the Baltic Sea gas pipelines4. Iran’s morality police disappear from streets Guidance Patrol vans, used by Iran’s morality police to monitor and arrest women who defy the Islamic dress code, have in recent days disappeared from the streets of Tehran. The change comes after massive street protests followed Mahsa Amini’s death while in the custody of the morality police. 5. UK in ‘difficult’ talks over access to India’s financial sector Lord Mayor of London Vincent Keaveny acknowledged in an interview with the Financial Times that India might reject British calls to ease its tight restrictions on foreign financial services firms.The day aheadUS-Philippine bilateral talks US defence secretary Lloyd Austin and Philippine counterpart Jose Faustino Jr will join bilateral military co-ordination talks today, the first time such senior government figures have participated in the annual discussions. The two militaries also plan to double the scale of their annual joint exercise next year.Kuwait parliamentary election The sixth vote in 10 years, which is set to be held today, is a product of the political crises that have rocked the country in the past decade. (Barron’s)Porsche begins trading Shares in the carmaker will begin trading on the Frankfurt stock exchange after the long-awaited flotation of the luxury car brand.What else we’re readingThe soaring value of my second-hand Toyota There’s a silver lining to the fact that the global shortage of semiconductors remains unresolved and broader disruption in the parts and materials supply chain continues. As a result, Leo Lewis found that his Toyota dealer would offer 10 times the expected value to trade in his car — as AI shapes a booming second hand market.Why the strength of the dollar matters In times of trouble, the dollar is the world’s refuge. Messing up macroeconomic policies, especially fiscal management, proves particularly dangerous when the dollar is strong, interest rates are rising and investors seek safety. Kwasi Kwarteng, please note, writes Martin Wolf.The 90km journey that changed the Ukraine war A lightning assault by Ukrainian forces this month allowed Kyiv to reclaim as much territory in a few days as Moscow had captured in months. Our interactive story traces how the counteroffensive dramatically turned the tide of the invasion. Biden’s renewables push to deliver big benefits to South Korea There was consternation in Seoul when President Joe Biden eliminated subsidies for electric vehicles assembled outside of North America. But what amounts to a short-term setback pales in comparison with the benefits likely to be accrued by Korea Inc overall, writes Christian Davies. Related read: As the EV battery race rages on, our reporters go inside the struggles of Britishvolt, which could determine the fate of the UK automotive industry.Deflecting asteroids is only one thing on our worry list Nasa’s mission to slam a small asteroid 11mn km from Earth was, literally, a striking achievement that gives hope we can defend our planet. But human nature and technology present risks of their own, writes Anjana Ahuja.House & HomeDame Prue Leith’s Gloucestershire house is a real showstopper. Leith and her husband John Playfair were never going to go monochrome when they built their dream Gloucestershire home. For this story we went inside the Bake Off star’s technicolour home. More

(Reuters) – The wild swings seen in British markets provided an “opportunity of a lifetime” to trade currencies and bonds, hedge funds and traders said on Wednesday.Sterling and British gilts were whipsawed after the Bank of England stepped into stem a rout in bond markets triggered by Friday’s mini-budget. The BoE said it would buy 65 billion pounds ($71 billion) of UK bonds as needed between now and Oct. 14 to stabilise markets.Since Friday’s UK mini-budget flagged 45 billion pounds worth of unfunded tax cuts, sterling has lost 6% of its value and hit record lows while British bond prices soared.Investors that use signals in the economy to trade in government bonds and currencies say that Wednesday was a day to go big or go home. John Floyd, a currency trader for 30 years and running his own hedge fund, Floyd Capital Management said a UK government policy to bulk up on UK debt and a central bank intent on raising rates but ending up buying bonds had created a perfect storm. Floyd declined to comment on how much money he had under management. “The macroeconomic and geopolitical environment is providing some of the greatest profit opportunities in the currency space since the end of Bretton Woods in the early 1970s,” said Floyd, referring to the U.S. global conference that established a set of guidelines for the international financial system. Floyd is long the dollar and short the pound. He believes Wednesday’s BoE intervention will shake confidence in the pound and “encourage people to look for further weakness.””Intervention only works if it is in line with macro-economic fundamentals,” said Floyd. “Intervention in the gilt market to lower rates will make it that much more challenging to fund the external deficit and a weaker currency will be the equilibrating mechanism.”Family office portfolio manager John Taylor, a veteran currency trader, said the volatility he saw was worse than trading in 2008 when the global financial crisis took hold.”The problem with today’s markets is that I can’t see the conclusion of all of this but it started with Brexit – when people decided that the world getting along was a thing of the past,” said Taylor. Taylor said he was short sterling and had been for most of the year. However, even if he had started trading now, he was still likely to have the same view on the pound.”It’s never too late to be short sterling,” he said. Another fund, with over $4 billion assets under management, which declined to be named, said that they were trying to maintain a measured approach. The fund, which was short the pound, said they were not trading as actively today because being short sterling was a longer-term strategy.Year to date, hedge funds that trade on macroeconomic signals were up on average, 6.47% according to HFRX, a daily reporting index of hedge fund performance from HFR. More

Investors might not often pay much heed to Vladimir Lenin, but they would surely agree with the Soviet revolutionary’s 1917 observation that: “There are decades where nothing happens; and there are weeks where decades happen.”Take Britain, where a government budget on Friday sparked a run on the pound and gilts, accelerated the downdraft across world markets, before prompting an astonishing policy U-turn from the Bank of England on Wednesday. The BoE – which is raising rates and had been about to start ‘QT’ sales of gilts back into the market – intervened in bonds, pledging to buy unlimited quantities on a “temporary” basis to restore order in what was effectively a broken market. This unleashed a wave of buying across British assets – the 30-year gilt yield sank a record 100 basis points and sterling rose 1.5% – and triggered a pent-up recovery across world markets. The relief was palpable: world stocks and the S&P 500 snapped six-day losing streaks, with the S&P 500 jumping around 2%. The 10-year U.S. Treasury yield, which had topped 4%, plunged 25 bps in its biggest one-day fall since 2009. U.S. 10-year Treasury yield https://fingfx.thomsonreuters.com/gfx/mkt/zgpomqbddpd/US10Y.png But how long will the relief last? Investors’ faith in policymakers’ credibility must surely be dented, and the underlying tightening of financial conditions from the strong dollar and high U.S. bond yields remain in place.Then there’s China. The People’s Bank of China on Wednesday said FX market stabilization is its top priority after the yuan weakened to its lowest level since 2008. Its tinkering at the edges seems to have failed, so will it soon have to take more forceful action to support the yuan? Key developments that could provide more direction to markets on Thursday:U.S. final GDP and PCE (Q2)U.S. weekly jobless claimsFed’s Daly speaks ECB’s De Guindos, Rehn, Panetta speakBoE’s Ramsden speaks More