Aurelia Butler

The move came after a rural banking scandal in central China’s Henan province and eastern Anhui province threatened public confidence in the country’s financial system. Multibillions of dollars of deposits have been frozen in several local banks in what authorities have said was a complex scam.As of Thursday night, authorities have repaid 18.04 billion yuan ($2.68 billion) to 436,000 depositors, the media outlet reported, citing officials at China Banking and Insurance Regulatory Commission as saying at a briefing. That accounted for 69.6% of depositors being affected and 66% of involved deposits, 21jingji reported.($1 = 6.7419 Chinese yuan renminbi) More

MOSCOW (Reuters) – Russia is considering buying the currencies of “friendly” countries such as China, India and Turkey to hold in its National Wealth Fund (NWF), having lost the ability to buy dollars or euros due to sanctions, the central bank said on Friday.The bank said it was sticking to the policy of a free-floating rouble exchange rate but highlighted that it was important to reinstate a budget rule which diverts excess oil revenues into the rainy day fund.In a report on its monetary policy for 2023-2025, the central bank said various options on how to return to the fiscal rule and replenish the NWF are now being discussed, taking into account the Western sanctions against Russia.”The Russian Ministry of Finance is working on the possibility of implementing an operational mechanism of the budget rule mechanism for the replenishment/spending of the NWF in currencies of friendly countries (yuan, rupees, Turkish lira and others),” the central bank said.Under the budget rule, Russia previously bought dollars and euros for the NWF, but not the other currencies. It stopped daily purchases of forex for the fund in early 2022 amid increased volatility in the rouble.The NWF is managed by the finance ministry but is part of the central bank’s international reserves, which also include yuan. These totalled around $640 billion as of February, of which nearly half was frozen under Western sanctions.ECONOMY AND RATESThe Russian economy will return to growth in 2024 after two years of contraction and inflation will slow to the 4% target by then, allowing the central bank to bring the key rate to the 5-6% range in 2025, the central bank said.”Further developments in the Russian economy are characterised by substantial uncertainty… The main challenge in the coming years is to create the conditions for a successful transformation of the economy,” the central bank said.The key interest rate, the main instrument of central bank monetary policy, will average 6.5%-8.5% next year and will gradually decline to 6%-7% in 2024 and 5%-6% in 2025, down from 8% as of now, the bank forecasts in its base case scenario.The central bank also said it saw no strong reason to keep capital controls in place once the risks to the country’s financial stability subside.Russia introduced capital controls after Feb. 24 to limit financial stability risks, including imposing a limit on the withdrawal of foreign currency funds from bank accounts. (This story refiles to correct ‘Russian’ to ‘Russia’ in headline) More

LONDON (Reuters) -The dollar rose on Friday but was still set for a weekly decline as traders looked for signs of U.S. inflation peaking.U.S. inflation figures on Wednesday and Thursday were lower than expected, boosting riskier assets such as equities and weakening the dollar, as markets interpreted the data as indicating the Fed could be less aggressive in rate hikes.But Fed officials made clear they would continue to tighten monetary policy. San Francisco Federal Reserve Bank President Mary Daly said on Thursday she was open to the possibility of another 75 basis point (bp) hike in September to fight too-high inflation.At 1047 GMT, the dollar index was up 0.4% on the day at 105.520, changing course after four days of losses that have put it on track for a weekly decline of 1%.The yen lost out to the dollar’s strength, with the U.S. unit up 0.5% against the Japanese currency at 133.62.Traders were pricing in around a 36.5% chance of a 75 bps Fed rate hike in September and a 63.5% chance of 50 bps.”We think it will take far more evidence of slowing core inflation to temper Fed tightening,” Paul Mackel, global head of FX research at HSBC, said in a note to clients.”Inflation is also a global problem not just a U.S. one, and so global growth and inflation dynamics will also drive the USD,” Mackel said.”The likes of the ECB (European Central Bank) and the BoE (Bank of England) may still find it hard to match market pricing for rate hikes, creating downside pressures for EUR and GBP.”Kit Juckes, head of FX strategy at Societe Generale (OTC:SCGLY), said dollar trading was likely to remain “choppy”.“It’s not going to be going significantly weaker in a straight line because there’s still a danger than the market has to reprice terminal Fed funds higher, given there’s still plenty of inflation,” Juckes said.GDP CONTRACTION The British pound was down 0.8% at $1.212 versus the strong dollar. UK GDP contracted by less than feared in June, even though an extra public holiday had been expected to cause a big drag.The euro was down 0.3% at $1.0291. French inflation was up 6.8% year-on-year in July, while for Spain the figure was 10.8%, the highest since 1984, data showed.The euro has been weighed down by Europe’s struggles with the war in Ukraine, the hunt for non-Russian energy sources, and a hit to the German economy from scant rainfall. Low water levels on the Rhine, Germany’s commercial artery, have disrupted shipping and pushed freight costs up more than five-fold.Commerzbank (ETR:CBKG) said in a note to clients it had revised its euro-dollar forecast lower, as it expects a euro-area recession as a base scenario, having previously been a “risk scenario”. Commerzbank expects the euro to fall to $0.98 in December and to not recover until later in 2023.Inflation in Sweden eased to 8% year-on-year in July, which ING said may lessen expectations for a massive Riksbank rate hike in September.”After a good run in July, we doubt the Swedish krona pushes on too much further against the euro,” ING’s Turner said.The New Zealand dollar was lifted by expectations of a Reserve Bank of New Zealand rate rise next week. More

The UK economy contracted in the second quarter, with households cutting spending as the cost of living crisis began to bite and health sector output falling as Covid cases and testing declined. Gross domestic product, the measure of the quantity of goods and services produced, fell 0.1 per cent in the second quarter of the year after rising 0.7 per cent in the previous quarter.A temporary recovery is expected in the third quarter before the UK slides into recession over the winter as further rises in energy prices squeeze household incomes and hit spending. The decline was sharper at the end of the quarter, with GDP falling 0.6 per cent in June, but this drop reflected two lost work days from the Queen’s platinum jubilee. The Office for National Statistics, however, said the celebrations had “little impact on the quarterly estimates” and the drop in GDP reflected economic growth grinding to a halt.Overall, the figures on Friday were close to those expected by economists and the Bank of England. Darren Morgan, director of economic statistics at the ONS, said the economy “shrank slightly” over the quarter with weak health and retailing partially offset by “growth in hotels, bars, hairdressers and outdoor events across the quarter”. Yael Selfin, chief UK economist at KPMG, said the end of the coronavirus test and trace programme was significant in the second quarter decline in output and while this was temporary, weakness could be seen across the economy. “Households are already bruised by rising inflation, which is putting a squeeze on real incomes, while rising interest rates are making servicing mortgages less affordable. The expected rise in Ofgem’s utility tariff cap this autumn could be the final straw before the UK enters a consumer-driven downturn,” she said. The UK economy performed better than the US in the second quarter, but worse than the other G7 economies of Germany, France, Italy and Canada, which saw greater bouncebacks from the pandemic.Nadhim Zahawi, the chancellor, said: “I know that times are tough and people will be concerned about rising prices and slowing growth, and that’s why I’m determined to work with the Bank of England to get inflation under control and grow the economy.”Some economists were more gloomy and thought the decline in GDP already marked the start of a recession. Stephen Millard, deputy director of the National Institute of Economic and Social Research, said: “It now looks like the UK economy entered a recession [because] we expect output to continue falling over the next three quarters.” The details of the second-quarter figures showed households already feeling the pinch, with consumption down 0.2 per cent, offset by some good news from business investment, which rose 3.8 per cent. Business investment has been erratic in recent quarters and was still 6 per cent lower than pre-pandemic levels. Trade performance was again poor with another record trade deficit, excluding precious metals. Exports were £27.9bn lower than imports on this measure, a gap representing 4.5 per cent of national income, the highest since comparable records began in 1997.Much of this deficit reflects imports of expensive oil and gas, but there have also been notable increases in imports of vehicles and machinery from the EU without corresponding rises in exports. On a sectoral basis, the main decline in output in the second quarter came in services, particularly in the health sector and in retailing, offset by improvements in services related to the booming travel sector. Manufacturing contracted slightly, as did the North Sea oil and gas sector despite record prices. The figures show that the UK economy was 0.6 per cent larger than it was in the quarter immediately before the pandemic, but significantly smaller than expected, suggesting lasting damage to economic performance. More

Good morning. Donald Trump said he backed the “immediate release” of documents related to this week’s FBI search on his Mar-a-Lago estate, just hours after attorney-general Merrick Garland moved to unseal the warrant and the list of items retrieved by federal agents.The former US president called for the papers to be made public in a statement issued just before midnight on Thursday, after huddling with his legal team to discuss the next steps in the legal stand-off pitting him against US law enforcement agencies.“Not only will I not oppose the release of documents related to the unAmerican, unwarranted and unnecessary raid and break-in of my home in Palm Beach, Florida, Mar-a-Lago, I am going a step further by ENCOURAGING the immediate release of those documents,” he wrote. “This unprecedented political weaponisation of law enforcement is inappropriate and highly unethical,” he added.Thanks for reading FirstFT Americas. Have a great weekend — Wai KwenFive more stories in the news1. Asset managers bet big on crypto despite market rout Big-name money managers are stampeding into digital assets, finding new ways to monetise investor interest even as trading volumes and prices for bitcoin and other cryptocurrencies have slumped.How well did you keep up with the news this week? Take our quiz.2. Colombia’s new president Gustavo Petro pushes tax reform to fund ambitious social agenda The country’s first leftist government in modern history has targeted Colombia’s wealthiest residents and its commodities exports in a tax proposal that represents a significant shift for the traditionally conservative nation.3. Miami becomes the new boom town for corporate lawyers Kirkland & Ellis is one of many law firms relocating to capitalise on a migration accelerated by the coronavirus pandemic. In the year to July 2021, more Americans moved to Florida than any other state — 220,890 of them, according to census data.4. GSK reassures shareholders over Zantac lawsuits The pharmaceutical company said the litigation it faced over withdrawn heartburn drug Zantac was inconsistent with the scientific consensus, as it attempted to reassure investors after a slide in its share price. GSK has been named as a defendant in about 3,000 filed personal injury cases in the US alleging that taking the drug led to cancer developing.5. TikTok employees complain of ‘kill list’ aimed at forcing out staff The viral video app company, owned by China’s ByteDance, created what staff have called a “kill list” of colleagues that it wanted to force out of its London office, in a move that some said created a working culture of fear.The days aheadInflation Reduction Act The bill is set to be passed in the US House of Representatives before being signed into law by President Joe Biden.Economic data Monthly industrial production figures for the EU are due, as are France’s final consumer price index data for July, which will give an insight into the extent of rising prices and energy costs.Global inflation tracker: See how your country compares on rising prices

Corporate results The New York-listed Italian luxury retailer Ermenegildo Zegna will report first-half earnings. Several luxury goods brands recently reported sustained consumer demand despite high inflation. Honest Company, the consumer goods business founded by US actress Jessica Alba, will report second-quarter earnings before the bell.What else we’re reading and listening toAfghanistan’s women speak Since the fall of Kabul to the Taliban in August last year, women across the country have had to find ways to cope with their lives being turned upside down. They have used an app to share their thoughts, fears and dreams. Read their messages here.“Although it is daylight, darkness has spread. For girls and women it is like 20 years ago” — Nargis, August 16, 2021, 02:09.

The Taliban said they would defend women’s rights ‘within the framework of Islamic law’, but analysts and diplomats remain deeply sceptical

Arctic melting four times faster than rest of the planet, study says Scientists have for a long time known that the Arctic is heating faster than the rest of the planet, but have not agreed on a rate. The warming effect, along with long-term declines in sea ice levels, are considered two major indicators of climate change.Rhine’s low water levels cause problems for German industry Following an unusually dry winter, a parched spring and a sweltering summer, water levels on the Rhine river have fallen to a record low — well below the 80cm required for fully loaded barges to pass through safely. As a result, container ships are carrying a fraction of their usual cargo, leading to higher transportation costs and severe delays.Russia’s diplomats are reduced to propagandists Once regarded as a sophisticated elite, foreign ministry officials are now using extreme language to prove their loyalty to the Kremlin. Their statements are increasingly targeted not at external audiences but at the domestic one, writes Alexander Baunov, a former Russian diplomat.My handwriting is terrible. Should I be worried? Years of typing and texting have taken their toll on Pilita Clark. “My words jerked across the page like the trails of a snail dunked in crystal meth,” she says. This could be important — studies show we learn more when we write by hand.Travel adventuresFind out where to get really away from it all, in Morocco, Chile, Lapland and New Zealand.An angling trip in the Martin Pescador wilderness © Eleven More

For viewers, one of the joys of Netflix has been the ability to gorge on hours of top-class TV without ever encountering an ad. Now, the streaming giant is introducing a new subscription tier that runs adverts alongside its shows — albeit at a lower price point. The U-turn on something that had been anathema is the latest sign that the economics of the on-demand app industry are becoming stretched. The instant gratification once dished out by streaming, ride-sharing and delivery services may become not only less instant, but also less gratifying.In recent years, Netflix, Uber, Deliveroo and the like have spoiled customers. From original, binge-worthy (and ad-free) dramas at a click, to rapid taxi shuttles and a buffet of global cuisines delivered right to the doorstep — all at minimal expense. In a period in which real wage growth stagnated, low-cost apps made us all feel better off.A decade of cheap cash also stoked an investor boom in the on-demand economy, which subsidised content, rides, and deliveries at below cost prices to drum up demand. Investors betted the strategy would eventually garner large market shares, far outweighing the early losses.With interest rates rising, investor cash and optimism are dwindling. Providing slick services at unbeatable prices is much harder. Prices need to go up, costs need to fall, and new revenue streams need to be found to keep investors engaged. Hence the quest for advertising revenues by Netflix, Disney Plus and other streamers. Uber’s road to profit (after over a decade of losses) has in part been paved by rides becoming more expensive.Higher living costs also make the on-demand business harder. Consumer appetite is under strain, putting pressure on subscriptions. The boost provided by the pandemic, when people were locked down and barred from restaurants and cinemas, has passed. Netflix amassed over 36mn subscribers in 2020, but holding on to them, and attracting more, is harder. A cache of TV shows and fast takeaways seem more like a luxury as inflation erodes real spending power, as reflected by Deliveroo’s widening losses in the first half of 2022.The money thrown into the convenience economy has also created a crowded marketplace. Couch potatoes can choose between Netflix, Amazon Prime, Disney Plus and others, and a glut of ultrafast delivery and takeout services; ride-seekers can switch between Uber, Lyft and Bolt. Streamers are starting to drip-feed episodes, to prevent consumers from devouring entire series then quickly cancelling direct debits. Competition would generally be expected to boost quality across the industry, but it also means more user time wasted screening various apps, and potentially multiple subscription bills.Regulation is kicking in, too. A UK Supreme Court ruling last year means Uber’s drivers are now considered workers, with the added costs of minimum wage, pensions, and holiday pay. Similar rulings elsewhere are increasing pressure on gig-economy companies to raise pay and benefits for workers. Competition for drivers between ride-sharing apps also portends higher wage, and ultimately price, pressures — not to mention longer waiting times.When cost of living pressures finally ease, consumers may once again be willing to pay higher prices and reopen closed subscriptions. Meanwhile, consolidation, casualties, and bundling could yet change dynamics in the industry. Either way, the multiyear summer of cheap and easy consumer convenience looks for now to be a thing of the past. It was good while it lasted. More

Colombia’s first leftist government in modern history has targeted the country’s wealthiest residents and its commodities exports in a tax proposal that represents a significant shift for the traditionally conservative nation.The proposed tax overhaul “should not be viewed as a punishment or a sacrifice”, Gustavo Petro, the country’s new president, said during his inauguration speech on Sunday, a day before sending the bill to Congress. “It is simply a solidarity payment that someone fortunate makes to a society that has enabled them to generate wealth.”Some analysts described the proposed reforms as more pragmatic and less radical than feared when Petro was elected. However, they worry the reform may not be enough to tackle the fiscal deficit while funding the ambitious social programmes that he promised on the campaign trial. The bill, announced on the first day of Petro’s government, seeks to raise an additional $5.8bn next year, about 1.7 per cent of gross domestic product. It projects an average of 1.4 per cent in annual new revenues for the next 10 years after that.The proposal includes a tax increase for those making more than $2,300 a month — Colombia’s top 2.4 per cent, according to its finance ministry. It would also introduce an annual wealth tax on savings and property above $630,000.The bill sent to Congress includes a 10 per cent levy on exports of oil, coal and gold when their prices are above an international reference of $48 per barrel for oil, $87 per tonne for coal and $400 per troy ounce of gold. The price of benchmark US crude oil is currently $94 per barrel, Colombian coal is averaging about $140 per tonne, and the price of gold is about $1,700 per ounce.Oil and coal are Colombia’s top two exports, valued in 2019 at $12.9bn and $4.8bn, respectively, while gold exports totalled $1.6bn. A dividend tax on overseas investors who own shares in Colombian companies would double from 10 per cent to 20 per cent.The additional streams of revenue are crucial to funding the generational change the president has promised voters. During his campaign, Petro, a guerrilla fighter in his youth, pledged to halt opencast mining and new oil and gas exploration contracts alongside a number of progressive reforms, such as funding universal healthcare and higher education and supporting wholesale land and pension reform.A failure to deliver risks quickly angering his supporters, tens of thousands of whom took to the streets last year, initially to protest a tax reform proposal that would have raised VAT.“As we say in Colombia, ‘campaigns are poetry but government is prose’, and the economic and fiscal reality is complicated,” said Luis Fernando Mejía, the executive director of Fedesarrollo, a Colombian economic think- tank.The proposal comes as the Colombian economy faces headwinds. The fiscal deficit this year is projected to reach nearly 5.6 points of GDP and must be adjusted downwards by two points of GDP next year according to the pre-existing fiscal rule. Prices are rising quickly as the country emerges from the coronavirus pandemic — annual inflation is 10.2 per cent, the highest since 1999, while close to 40 per cent of people live in monetary poverty.“Part of this reform will be allocated to reducing the fiscal deficit,” Mejía said. “Another part will go to spending, in line with the social programmes that the government has discussed.”The country’s tax revenue is about 19 per cent of GDP, but just 5 per cent of the population paying personal taxes, according to the OECD. The average for OECD countries is 33 per cent.Petro’s Yale-educated finance minister, José Antonio Ocampo, has pledged to tackle tax evasion and avoidance, saying that revenues would be increased by modernising Colombia’s collection agency. Over half of Colombia’s workforce is estimated to be in the informal economy.Despite the challenges, some economists said that the reform bill could be a model for other progressive governments who have praised its proposed increase in capital gains taxes.

“In Colombia, the truth is that we have never had a reform that was focused on making the people who have the most pay,” said María Fernanda Valdés, co-ordinator of economic affairs at Friedrich Ebert Stiftung, a political foundation. “Almost always the attempt was made to make the middle class pay, such as by increasing [value added tax]. If it passes, it could be the first of a wave of similar reforms in Latin America.”The bill requires approval by Congress, where Petro has a majority coalition made up of centrists from traditional parties as well as leftist outsiders. It is still likely to be amended by lawmakers. Many of Colombia’s powerful business associations had on Wednesday yet to make formal statements about the proposed reforms. But certain provisions, such as a tax on sugary drinks, processed foods and single-use plastics, are likely to worry them. Erica Fraga, senior analyst for Latin America and the Caribbean at the Economist Intelligence Unit, a think-tank, said that the presentation of a “reasonable” tax reform on Petro’s first day in office showed an attempt to secure quick wins in Congress.“However, Mr Petro’s pragmatism will also force him to accept the dilution of his radical agenda,” leading to tension between his leftist allies and traditional parties, Fraga said. “The risk of political turbulence and social unrest when his honeymoon period with both Congress and voters ends remains high.” More