Aurelia Butler

Ghana, one of West Africa’s largest economies, had said on Friday it would hold formal talks with the IMF after hundreds of people took to the streets to protest against worsening economic hardship. It had previously refused to seek IMF support.”We are at an early stage in the process, given that detailed discussions are yet to take place,” the IMF’s mission chief for Ghana, Carlo Sdralevich, said in the statement.Ghana’s Eurobonds rallied on the news, with the 2026 maturity up 1.3 cents in the dollar at 0929 GMT, according to Tradeweb data, although the yield was still above the level where new debt is affordable, at more than 20%.Ghana’s bonds had been among the worst performing in Sub-Saharan Africa this year, according to Refinitiv data, but are up 6.6% in the past month after its government said last week it would open talks with the IMF. More

Inflation in South Korea has quickened to its fastest pace since the 1998 Asian financial crisis, intensifying pressure on the Bank of Korea to deliver the first 50 basis point rate rise in its history.South Korea’s consumer prices rose 6 per cent in June from a year earlier, the fastest rate since November 1998 and up from a 5.4 per cent increase in May.Last August, South Korea became the first big Asian economy to raise interest rates since the start of the coronavirus pandemic, when the central bank increased the seven-day repurchase rate by 25 basis points from a record low of 0.50 per cent.The Bank of Korea has delivered five quarter-point rate rises since then, bringing its benchmark rate to 1.75 per cent, the highest level in three years.Its latest rate decision, due next week, will be watched with interest in other parts of Asia.Australia’s central bank on Tuesday raised rates for the third successive month, announcing an increase of 50 basis points to 1.35 per cent. The Reserve Bank of Australia has warned that inflation, which is already running at a 21-year high, could hit 7 per cent by the end of the year.

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In Japan, central bank governor Haruhiko Kuroda’s decades-long ultra-loose monetary policy has faced intense scrutiny under the pressure of global inflation.Responding to Tuesday’s inflation figures, Lee Hwan-seok, Bank of Korea deputy governor, forecast that the inflation trend would continue and stressed that the bank “needs to be particularly vigilant against further strengthening of inflationary expectations”. Employees in the public and private sectors are also seeking higher wages. Workers demanding pay increases from Hyundai Motor Company, one of the country’s largest businesses, voted last week to strike.South Korea decided last week to raise the minimum wage next year by 5 per cent and to increase household gas and electricity prices this month.The weakness of the Korean won will also be an important factor in the BoK’s rate decision. The currency depreciated 6.7 per cent against the dollar in the second quarter of 2022 to become the worst-performing in Asia after the yen, driving up the price of imports.

Some analysts have predicted that the BoK would remain cautious about raising interest rates too fast, given the country’s record-high household debt and slowing export growth. South Korea’s exports in June reported their slowest growth in 19 months, raising concern about the economic outlook.But others have argued that the BoK would seek to keep pace with the US Federal Reserve, which is considering another large rate rise this month after delivering a 75-basis point rate increase in June.Analysts from Nomura Holdings warned this week that big economies, including South Korea, risked entering recession over the next year owing to higher living costs and policy tightening.Additional reporting by Nic Fildes in Sydney More

The pick-up in activity is welcome news for a government betting on domestic demand to put the world’s third-largest economy firmly on a recovery track and help overcome production pressures on the country’s manufacturing industry. The final au Jibun Bank Japan Services purchasing managers’ index (PMI) rose to a seasonally adjusted 54.0, marking the fastest pace of expansion since October 2013. That was stronger than May’s final 52.6 growth, though it remained below a 54.2 flash reading for June released last month.”Japanese service sector firms reported a solid increase in activity,” said Usamah Bhatti, economist at S&P Global (NYSE:SPGI) Market Intelligence, which compiles the survey.Greater demand for services and rising fuel and raw material prices, however, caused firms’ average input prices to increase at a record pace. Survey data goes back to September 2007.”This pushed firms to raise prices charged for services at the quickest rate since October 2019,” said Bhatti.A resurgence in COVID-19 cases overseas, especially in Japan’s major trading partner China, hindered international sales, according to the survey.It also showed the fifth straight month of job growth in the services sector, though the rate of job creation was softer than in May.The composite PMI, which is estimated using both manufacturing and services, rose to 53.0 from the prior month’s final of 52.3, growing at the fastest rate in seven months. More

WELLINGTON -New Zealand’s business confidence continued to worsen in the second quarter of this year as companies grappled with increased costs and higher interest rates, a private think tank said on Tuesday.A net 65% of firms surveyed expected general business conditions to deteriorate compared with 40% pessimism in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.It added that business confidence is now at its lowest level since the first quarter of 2020 when the COVID-19 pandemic was declared.On a seasonally adjusted basis, 62% expected business conditions to worsen, versus 34% pessimism recorded in the previous period. The survey’s measure of capacity utilisation fell to 93.4%, from the previous quarter’s 97.1%.The services and building sectors were the most downbeat in the June quarter. The building sector faces acute capacity constraints, and the services sector expects weaker demand as interest rates move higher, NZIER said in its report.A net 78% reported increased costs in the June quarter, it said. Despite the shakier outlook for the New Zealand economy, inflation pressures have continued to intensify, the report said. More

BUENOS AIRES (Reuters) -Argentina’s new economy minister Silvina Batakis was sworn in on Monday and quickly moved to calm markets that slid after the shock resignation of her predecessor on fears his exit would spark a shift towards more populist policies and state spending.The closely watched black market peso plunged around 8% as people flocked to popular parallel foreign exchange markets to buy dollars after the abrupt exit on Saturday of moderate and long-standing economy minister Martin Guzman.Batakis, a career civil servant widely viewed as close to the hard left-wing of the ruling Peronist coalition that wants to increase spending, immediately pledged fiscal restraint.”I believe in fiscal balance and I think we have to move in that direction,” she said in her first comments.On Monday the black-market peso slid to 260 per dollar, over double the official exchange rate of 126 pesos per dollar which is shielded by capital controls. Argentina’s S&P Merval stock index fell 1% and bonds lost 0.8% in thin trading due to the July Fourth holiday in the United States.Guzman’s exit highlighted splits in the government, dealt a blow to President Alberto Fernandez ahead of 2023 elections and stoked investor fears that the government would spend more heavily to ease high poverty levels.Guzman was the architect of a $44 billion deal sealed this year with the International Monetary Fund (IMF), which came with economic targets including on fiscal balance and inflation. Markets viewed him as a moderating influence on the government.Citi had issued a note saying Batakis’ first comments would be key to gauge how sharp a swerve to expect on policy, adding that any shift toward price controls and further FX restrictions could move the country towards economic “populism”.Then, “the deterioration in sentiment and market conditions that has been taking place in the last few weeks could accelerate,” the bank added.Investors fear that a much looser economic policy could be set as Vice President Cristina Fernandez de Kirchner’s populist wing of the government gains ground.”The conflict has tipped the field in favor of Cristina, who is concentrating power again,” political analyst Ricardo Rouvier told Reuters, referring to the former two-term president.Local consultancy Portfolio Personal Inversiones said Batakis would likely be largely led by the “Kirchnerists” and Citi said Batakis would not create the same “balancing force” as Guzman had.”This is undoubtedly a shift to more unorthodox policies,” wrote Morgan Stanley (NYSE:MS) economist Fernando Sedano.Presidential spokeswoman Gabriela Cerruti told local radio that there would be “no modifications” under Batakis.”The economic direction is guaranteed. The goals (with the IMF) for the first quarter were fully met. Now Silvina has to sit down and take charge of the Ministry and come up with her own operating scheme,” Cerruti said.The South American country has widely divergent exchange rates due to tough currency controls that limit dollar purchases to just $200 per month, pushing people into parallel and informal markets where greenbacks command far higher premiums.Currency controls in place since 2019 have kept the official peso exchange rate on a slowly weakening path, but the gap to popular parallel markets has become increasingly wide given a swirling economic crises, high inflation and debt fears.^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Argentina: currency split https://tmsnrt.rs/3zXEJ2yArgentina: currency split (Interactive graphic) https://tmsnrt.rs/3HFqAsJ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ > More

Wirecard’s ex-head of accounting has admitted to forging documents requested by KPMG during a special audit, ahead of a trial that is set for later this year, according to people familiar with the matter. Stephan von Erffa is one of three defendants charged with fraud, breach of trust and market manipulation in a case brought by Munich prosecutors over the spectacular downfall of one of Germany’s highest-flying technology companies. Wirecard crashed into insolvency in June 2020 after admitting that half of its stated revenues and €1.9bn of corporate cash purportedly held in escrow accounts in Asia did not exist. Von Erffa denied any involvement in the wider fraud and blamed Wirecard’s fugitive second-in-command Jan Marsalek during a parliamentary inquiry into the scandal last year. However, the police investigation found evidence that von Erffa forged documents in early 2020 that were then shared with auditors at KPMG and EY.The 47-year-old is the first senior Wirecard executive to admit wrongdoing since Oliver Bellenhaus, head of a Dubai subsidiary, turned himself in to authorities in July 2020 and turned chief witness for the prosecution. Von Erffa, Bellenhaus and former chief executive Markus Braun, who denies wrongdoing, are set to face trial this year. Thanks for reading FirstFT Asia. Here’s the rest of today’s news. — SophiaFive more stories in the news1. Beijing silent over Xi’s brush with Covid-19 in Hong Kong A Hong Kong lawmaker has sparked concerns over the health of Xi Jinping after testing positive for Covid-19 just two days after his meeting with the Chinese president. Xi’s brush with Covid-19 comes as lockdown measures and mass testing are reintroduced in the east of China following a new outbreak of cases.2. UK politicians raise alarm over Chinese CCTV providers MPs and peers from across the political spectrum have called on prime minister Boris Johnson to ban the sale of surveillance equipment in the UK from Chinese companies Hikvision and Dahua, which have already been blacklisted by the US over Beijing’s use of their equipment in the repression of Uyghur Muslims in China.3. US concludes unintentional Israeli fire killed Al Jazeera journalist The US state department said that Palestinian-American Al Jazeera journalist Shireen Abu Akleh was probably shot by Israeli defence forces. The report comes a week before US president Joe Biden’s Middle East trip.4. Germany warns of ‘historic challenge’ as trade slides into deficit Soaring energy prices and disrupted trade have pushed the country into a $1bn monthly trade deficit — the first since 1991. Economists expect Germany to enter a recession this year, with difficult years of recovery ahead.5. Abducted Canadian billionaire faces trial in Shanghai Missing tycoon Xiao Jianhua faced a Shanghai courtroom, more than five years after the enigmatic dealmaker was snatched from Hong Kong’s Four Seasons hotel by Chinese security guards. He faces charges related to fraud after his Tomorrow Group collapsed following a debt-fuelled acquisition binge.The day aheadPMI data China, France, Germany, Italy, the UK and the US markets will see purchasing managers’ index data from the services sector. The eurozone S&P Global composite for manufacturing and services will also release PMI data today.Cannes Film Festival The 75th annual Festival de Cannes opens today, celebrating the best of artistic cinema.Paris Fashion Week Haute couture week begins today for the autumn/winter season in Paris.Independence Day Algeria and Venezuela both celebrate their independence today.Workers on strike Staff at washing machine maker Whirlpool will be balloted for strike action today over what the union bosses have called an “insulting” pay offer.What else we’re readingGlobal inflation: Japan faces a moment of truth The Bank of Japan’s decades-long ultra loose monetary policy is under increasing pressure from rising global inflation. Analysts say the yen — and Japan’s economy — stands at a critical juncture with two starkly different outcomes, depending on the central bank’s next steps.Erdoğan is an infuriating but indispensable ally Turkish president Recep Tayyip Erdoğan’s move to blackmail Nato over Finland and Sweden’s admission raises uncomfortable questions for the rest of the global alliance at a time when western resolve is already being tested.Time to change my subscription model As we slog through subscription fatigue in a market saturated with monthly membership fees, Robert Shrimsley investigates his personal ecosystem of deliveries, streaming services, newsletters and other reoccurring payments. No longer, he vows, will he fall into the demographic that’s interested enough to sign up but too stupid to cancel.‘The thing that really works for Trump is: the system’s rigged’ Michael Lewis, one of the greatest chroniclers of America’s financial crisis, takes aim at Donald Trump and the US response to Covid-19 in an interview with the FT’s chief features writer Henry Mance.Pop-up leaders and flexible staff are ready for a new crisis The entire workforce has just taken a global stress test in double-digit inflation and economic recession. Now, senior managers are more prepared to tackle upheaval than executives appreciate, writes Andrew Hill.BooksRare books command huge prices. It’s not easy to profit from “priceless” books on the black market — but it doesn’t stop thieves from trying. From high-tech heists to antiquarian crime rings, the literary underworld would make a gripping novel of its own.

© Illustration by Uijung Kim More