Aurelia Butler

KATHMANDU (Reuters) -Nepal is tightening imports of cars, gold and cosmetics as its foreign exchange reserves have fallen, a central bank official said on Monday, after the government suspended the central bank governor and named his deputy the interim chief.The Himalayan country’s foreign reserves have been hit by a slump in tourism in Asia during the pandemic, a problem that has also hit Sri Lanka which is going through a crippling economic crisis due to a shortage of tourist revenue and other funds.”Nepal Rastra Bank (NRB, the central bank) feels the country’s foreign exchange reserves are under pressure and something must be done to restrict the import of non-essential goods, without affecting the supply of essential goods,” NRB deputy spokesperson Narayan Prasad Pokharel told Reuters.He said importers would be issued letters of credit to bring in 50 “luxurious goods” only with full upfront payments with the bank, declining to name all the items.”We have already directed all the border customs points about the new arrangements for the import of these goods,” he said. “This is not banning the imports but discouraging them.”A spokesperson for the central bank referred questions about the governor’s suspension to the finance ministry.A ministry spokesperson said he did not know why NRB Governor Maha Prasad Adhikari was suspended on Friday but that a government panel would investigate the matter.A government official said on condition of anonymity that Adhikari was accused of leaking sensitive financial information to the media. Reuters could not immediately contact Adhikari, whose mobile phone was switched off.With tourism struggling to resume after two years of the COVID-19 pandemic, Nepal’s gross foreign exchange reserves fell to $9.75 billion as of mid-February, down 17% from mid-July last year when its financial year started.The current reserves are sufficient to support imports for about six months for the country of some 29 million people, where India and China jostle for influence.Data from the central bank shows remittances from overseas fell 5.8% to $4.53 billion between mid-July to mid-February.The balance of payments had a deficit of $2.07 billion in the first seven months of the current financial year, compared with a surplus of $817.6 million in the same period the previous year.Opposition parties have criticised Prime Minister Sher Bahadur Deuba’s government for suspending the central bank governor when the economy is weak.”He was doing a good job and his removal at a time when economic indicators are not good is a wrong decision,” said Surendra Pandey, a senior leader and lawmaker of the opposition Communist Unified Marxist-Leninist party.The Asian Development Bank said this month that Nepal’s government debt increased to 41.4% of gross domestic product in the 2021 fiscal year, from an average of 25.1% between 2016 and 2019 due to increased spending during the pandemic.The Philippines-based bank predicted Nepal’s current account deficit would widen to 9.7% of GDP in this fiscal year from 8% last year. More

Investing.com — Bond yields rise to fresh three-year highs ahead of potentially dramatic U.S. inflation numbers on Tuesday. There’s the usual host of Fed speakers ready to comment on that. Elon Musk changes his mind about joining Twitter’s board and continues to snipe about the social media company on its own platform. Emmanuel Macron is set for a tight run-off against right-wing leader Marine Le Pen in France’s presidential elections, and Russia relaxes capital controls as the west’s sanctions prove to be more bark than bite. Here’s what you need to know in financial markets on Monday, 11th April.1. Bond yields hit news highs ahead of March CPI dataThe bellwether 10-Year U.S. bond yield hit 2.75% for the first time since March 2019, at the start of a week likely to be dominated by consumer inflation data for March, which are set to post another 40-year high.By 6:15 AM ET (1015 GMT), the 10-year was at 2.75%, having eased 3 basis points from its overnight high. The 2-Year yield, which is more sensitive to expectations for short-term interest rates, was up 6 basis points from late Friday at 2.58%.Ahead of Tuesday’s data, there will be another salvo of Fed-speak: regional presidents Raphael Bostic, John Williams and Charles Evans are all due to speak in the course of the day, as is DC-based governor Michelle Bowman.The global inflation phenomenon was in evidence overnight: Chinese producer and consumer prices both came in ahead of expectations, although were off their peaks. China’s credit aggregates and money supply also grew more strongly than expected in March. The central bank is still expected to announce an easing of monetary policy in the course of this week, however.2. Musk jilts Twitter boardElon Musk won’t be joining Twitter’s board after all. CEO Parag Agrawal said on Saturday that Musk had declined the board’s offer of a seat, hinting that there was too much of a conflict between the board’s goals and the Tesla CEO’s.Twitter (NYSE:TWTR) stock fell over 4% in premarket trading, having risen as much as 25% last week in response to the news that Musk had built a stake of 9.2%.It’s not clear how Musk intends to proceed now. He has styled his holding as ‘passive’ but spent much of last week and the weekend tweeting about how the company could improve its service and its financials. An ‘activist’ investor is usually required to disclose more about his or her intentions through the usual regulatory channels. Musk – whose activity on the site has already brought him grief from the SEC more than once – hasn’t done that yet.3. Stocks set to open lower; Nio suspends productionU.S. stock markets are set to open lower later, amid ongoing unease at the rise in bond yields and their ability to generate some unpleasant surprises in the upcoming first quarter earnings season.JPMorgan (NYSE:JPM) and others get that ball rolling on Wednesday.By 6:15 AM ET, Dow Jones futures were down 15 points, or less than 0.1%, but S&P 500 futures were down 0.3%, and Nasdaq 100 futures were down 0.7%.The NASDAQ came under renewed pressure last week as the need to factor higher discount rates into stock valuations again weighed disproportionately on technology stocks who aren’t expected to generate positive cash flow for some years yet.Stocks likely to be in focus later include the ADRs of Chinese electric vehicle maker Nio (NYSE:NIO), which said at the weekend it will suspend production due to COVID-19 lockdown-related disruptions. It’s also raising prices for its three SUV models. Also in focus will be JetBlue (NASDAQ:JBLU), which pruned its summer schedule at the weekend in an effort to cut the risk of disruptions.4. Macron set for tight run-off with Le PenIncumbent Emmanuel Macron emerged on top from the first round of voting in France’s Presidential elections, just under four points ahead of the populist right-wing leader Marine Le Pen.The two will now face off in a second round of voting in two weeks’ time. Macron had won a similar face-off by 66%-34% in 2017 but faces a much tighter contest this time after Le Pen scored heavily with a campaign that focused on the cost-of-living crisis and on Macron’s unpopular plans to raise the pension age.Eurozone bond markets and the euro itself both staged a modest relief rally, mindful that Le Pen has the greater momentum. Opinion polls suggest that she has narrowed the gap to Macron from over 30% a month ago to less than 4% now.Elsewhere in Europe, Germany waved through the creation of financial support measures for its energy companies, while data showed the U.K. economy slowed to a crawl in February.5. Russia relaxes capital controlsRussia’s central bank relaxed some of its most onerous capital controls in a further sign that its economy is adapting to the sanctions imposed on it by the U.S., EU, U.K., Japan, and Australia.The central bank will suspend the 12% surcharge on foreign exchange transactions that it had imposed at the end of February to stop panic buying of dollars and euros by the population.The ruble’s official rate fell some 2.6% in response, but its signal value has been undermined by the sanctions, which still restrict the free buying and selling of currency. Elsewhere, the French bank Societe Generale (PA:SOGN) effectively gave back its Russian unit Rosbank to its original owner, the oligarch Vladimir Potanin. More

After taxpayers bailed out money market funds, a key source of short-term corporate and municipal funding, for the second time in 12 years during the pandemic-induced turmoil of 2020, the industry is facing renewed regulatory scrutiny.Money market funds invest in high-quality short-term debt instruments and offer daily redemptions. Investors expect immediate liquidity with little price volatility and are spooked when those expectations are not met during market stress. As the pandemic shut down the economy in March 2020, investors pulled more than $130 billion from some money market funds, contributing to stress in the short-term funding markets, according to a Treasury analysis that is disputed by the funds industry. In December, the Securities and Exchange Commission (SEC) proposed boosting money market funds’ resilience by, among other measures, adjusting a funds’ value in line with trading activity so that redeeming investors bear the costs of exiting a fund and don’t dilute remaining investors. In theory, this “swing pricing” reduces the incentive to run to the exit first. The deadline to submit comments is Monday and the industry is pushing back hard on the swing pricing measures, arguing they would be operationally challenging, impose excessive costs on fund sponsors, and reduce daily liquidity for investors. “We really do believe that it would kill the product,” said Jane Heinrichs, associate general counsel at the Investment Company Institute, which represents the asset managers. “Funds would determine it’s not worth the changes necessary to make it work for a product that will no longer meet the needs of investors.”The SEC has provided no data to support the idea, Heinrichs said. While swing pricing is used by some European funds, it is an unfamiliar concept to U.S. investors, said Peter Yi, a director at Northern Trust (NASDAQ:NTRS) Asset Management. “Without a doubt, swing pricing is going to be very difficult for investors to understand.” An SEC spokesperson did not immediately provide comment. To calm fleeing investors and stem a broader crisis, the Treasury and Federal Reserve in March 2020 launched emergency liquidity facilities to backstop the market. The panic was reminiscent of 2008, when a run on money market funds likewise prompted the U.S. government to prop up the market.That bailout led the SEC in 2010 and 2014 to introduce rules aimed at reducing the risk of investor runs. But 2020 showed those changes were inadequate, said regulatory experts.Advocacy groups say money market funds are operating with an implicit government guarantee, without the stringent capital and liquidity requirements such guarantees usually require. “The government is literally giving private business – the money market fund sponsors – billions and billions a year for nothing,” said Dennis Kelleher, president of the Washington-based advocacy group Better Markets. “And then when there’s market stress, they don’t have to cover the downside.”His group is calling for wholesale reforms that go further than the SEC’s proposal, including bank-like capital buffers. While the Investment Company Institute opposes swing pricing, it supports in principle the SEC’s proposal to raise funds’ liquidity requirements, and to allow fund boards more flexibility to charge for or suspend redemptions during stress, known a fund “gate.”In 2020, investor runs accelerated as funds approached a minimum liquidity threshold that, under the current rules, allows fund boards to gate redemptions. The SEC rule would eliminate that bright line. “By de-linking the fees and gates from the liquidity thresholds and increasing the liquidity levels, you directly address the issues from 2020,” Heinrichs said. More