Aurelia Butler

Unprecedented Western sanctions have frozen around half of Russia’s gold and foreign exchange reserves, which stood near $640 billion before Moscow started its military campaign in Ukraine on Feb. 24.The Bank of Russia said this precedent along with discussions about a possible seizure of the frozen part of reserves would prompt other central banks, primarily in Asia and the Middle East, to rethink strategies for their savings.”One could expect an increase in demand for gold and a decline in the U.S. dollar’s and the euro’s role as reserve assets,” the bank said in a report on financial stability.As of late 2021, the Russian central bank held $131.5 billion of its reserves in gold, while the remainder of the $612.9 billion reserves was held in foreign currency assets. As of May 20, Russia’s reserves slipped to $583.4 billion.The central bank said the share of foreign currency liabilities Russian banks had has declined recently as clients stepped up withdrawal of funds from their currency accounts, while the share of banks’ foreign currency assets has increased.”One of the results of the imposed sanctions restrictions for the foreign exchange market was the tendency to increase the use of currencies alternative to the U.S. dollar and the euro,” the central bank said, referring to the Chinese yuan in particular.To speed up the process, Russia could consider imposing negative interest rates on deposits held in dollar and euros, the central bank said.Central Bank Deputy Governor Ksenia Yudaeva clarified later such discussions only concerned corporate clients’ foreign exchange deposits with banks, not those of retail clients.Yudaeva said it was too early to lift the $10,000 limit on Russian citizens’ withdrawals from their currency accounts, in place since the early days of the campaign in Ukraine, but did not rule out its review in Sepember.”We’ll wait for September and we’ll see then,” Yudaeva told reporters.In late 2021, the share of foreign currencies in household assets, including stocks and deposits, has been around 22%, and the central bank at the time said it had no plans to lower it.The central bank also said in the report that Russian private investors have become the stock market’s main driving force amid trading restrictions for non-residents.($1 = 61.1000 roubles) More

But First Deputy Governor Ksenia Yudayeva reiterated that the bank, as the regulating authority, continues to see “relatively high risks” from wider use of cryptocurrency in Russia.Yudayeva also said risks to financial stability in Russia had declined as banks now had ample foreign currency liquidity. More

(Reuters) -U.S. President Joe Biden will meet Federal Reserve Chair Jerome Powell on Tuesday as historic inflation continues to drain Americans’ pocketbooks.The meeting, the first since Powell’s confirmation for a second term by the Senate earlier this month, comes as Biden seeks to lower costs for gasoline, food and consumer goods that have sent inflation to 40-year highs. Biden will reiterate the Fed’s independence, note that the central bank has the tools to address inflation and discuss the U.S. and global economies, White House National Economic Council Director Brian Deese said in television interviews on Tuesday. “We are in this transition from what has been a historic economic recovery — historic in the jobs created, historic in the wealth created for American families — and now we need to transition to more stable and resilient growth,” he told MSNBC.U.S. stock index futures fell on Tuesday ahead of the meeting, scheduled for 1:15 p.m. (1715 GMT).The U.S. economy had its strongest growth in nearly four decades in 2021, after the government poured trillions in COVID-19 relief into the economy, fueling consumer spending that has contributed to higher prices. A Labor Department report earlier this month https://www.reuters.com/business/us-weekly-jobless-claims-decline-moderately-2022-04-21 showed unemployment rolls shrinking to the lowest level in 52 years, helping to drive wage growth.The Fed has already raised interest rates by 3/4 of a percentage point this year and plans to raise rates by half a percentage point more at each of the next two meetings, with potentially more increases to come after that.The Fed hopes inflation will at least in part moderate on its own, as companies sort out supply chain issues complicated by the pandemic, for example, and consumers shift spending toward services.But Powell has also made clear that the Fed is no longer counting on that, and will ratchet interest rates as high as needed. He sees high inflation as the chief economic risk facing the country, and controlling it as the Fed’s top priority during his second term, even if the process proves painful to households and firms, and pushes the unemployment rate a bit higher.For Biden and the Democratic party that could mean a difficult midterm election season, where they are trying to maintain control of Washington. In a Wall Street Journal opinion piece published on Monday, Biden said the Federal Reserve’s main role was to control inflation.Biden said his “predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won’t do this.”The Powell-led Fed has been criticized by some economists for being slow to address high inflation by ending emergency support for the economy and beginning interest rate hikes.U.S. consumer price growth slowed sharply in April as gasoline prices eased off record highs, suggesting that inflation has probably peaked, though it is likely to stay hot for a while and keep the Federal Reserve’s foot on the brakes to cool demand.Powell last week https://www.reuters.com/article/usa-fed-powell-inflation/feds-powell-not-time-for-tremendously-nuanced-readings-of-inflation-idUKW1N2UD02B said that despite some encouraging signs that price pressures may be peaking, the current environment is “not a time for tremendously nuanced readings of inflation,” and U.S. central bank officials will keep tightening policy until inflation comes down in “a convincing way.” More

PARIS (Reuters) – A top airline industry official called on Tuesday for calm surrounding recent travel chaos at some airports as people resume flying after the pandemic, blaming the gridlock on temporary delays in getting clearances for new staff.A snapback in air travel has triggered long queues at some British airports, as well as Amsterdam, Dublin and Toronto, as airport managers struggle to fill jobs fast enough.The time needed to get security badges for newly hired staff has risen from three to four weeks in Britain, for example, to as long as three months, said Willie Walsh, director general of the International Air Transport Association (IATA).”The problem is, you can’t start the training until you’ve got the security clearance,” Walsh told a small group of reporters on the sidelines of a conference on ground operations.”You offer them a job, they accept it, and then you have to go through this period of three months to get security clearance – they’re not going to hang around. They’ll go and find a job somewhere else.”The former British Airways and IAG (LON:ICAG) boss said he did not expect the trend to spread to other regions, but he sounded the alarm on growing pilot shortages in the United States.”I think it needs to be put in perspective; there are issues in some airports, it’s not across the world,” Walsh said.”I think it reflects the very significant increase in activity we’ve seen. It also reflects the fact that we’re coming off a very low base. So as airlines and airports try to rebuild, it is challenging for some of them … It will get addressed.”The pandemic led to international travel virtually shutting down as governments around the world curbed entry. However, the easing of curbs and bottled-up travel demand have led to an abrupt upswing in short- and medium-haul trips.Walsh played down concerns that pent-up demand could prove short-lived as worries about inflation and lower disposable incomes take a toll on future travel spending. Some executives have warned of uncertain demand over the winter.”Without question, what we’re seeing at the moment is very, very strong demand right across the world. It’s stronger than we had expected,” he said, adding traffic was moving towards reaching 2019 levels in 2023, rather than 2024 as previously forecast.Oil prices extended a bull run on Tuesday after the EU agreed to a partial and phased ban on Russian oil. Walsh said airlines had coped in the past with oil prices well above $100 a barrel for benchmark Brent and carriers would eventually pass on these costs to passengers.The crisis has seen the jet fuel prices to soar even more than crude because of scarce refining capacity, but Walsh said he expected that spread to narrow to more normal levels.While Europe scrambles to keep up with travel demand, Asian airspace is comparatively still because of factors such as China’s tough policies to control COVID-19. Air travel in Asia is still at 13% of 2019 levels, compared to about 50% elsewhere. More