Aurelia Butler

The US has warned Russian oligarchs and businesses that it is monitoring their financial transactions for any signs of evasion of Ukraine war-related sanctions as well as tracking those offering them “material support”.A senior US Treasury official said Washington had noted an uptick in efforts by rich Russians and companies to conceal wealth and money transfers in the month since western governments began imposing sanctions on Russia over its war in Ukraine. The US is also tracking those not already subject to sanctions.Wealthy Russians, who are already well-versed in hiding their assets to evade taxes, were exploiting the “leaky” capital controls imposed by Moscow as part of its efforts to prevent a financial system meltdown, the official told the Financial Times.“We’re seeing the transfer of wealth to new associates and the creation of shell companies. We’re watching these moves,” the official said, adding that Russian banks and companies were adopting techniques that oligarchs had used for years to cover their tracks.The official lauded western co-operation on sanctions enforcement, which meant rule-breakers not only risked losing access to the US financial system but euro and sterling-denominated transactions as well.G7 countries and Australia are setting up a task force to track the assets of sanctioned individuals and those who may be targeted by future measures. While some European capitals have expressed scepticism about US secondary sanctions — curbs on individuals and companies in other countries from doing business with US entities — Washington’s partners have promised to lean on others to fall in line. G7 leaders last week committed to “engaging other governments on adopting similar restrictive measures” they had already imposed.The US wants further action to degrade Russia’s military equipment by clamping down on Moscow’s ability to buy foreign-made parts that are essential to prolonging its war, the official said.

The official added that Washington would target “key nodes in supply chains” to weaken Russia’s armed forces and its defence industry, which still relies on western technology.“We’re going to keep going and we’ll keep going as long as the invasion continues,” the official said.The official noted that a rare public appearance by Sergei Shoigu, Russian defence minister, in a video released on Saturday of a meeting to discuss military procurement was indicative of Moscow’s battlefield losses and difficulties replacing captured or destroyed weaponry.The official said western co-operation on exports controls would leave other countries with little option but to comply or risk losing the right to use crucial US technologies in their manufacturing sectors.“Countries may not appreciate having to do this but they are doing it because the alternative is worse,” the official warned.The US commerce department this month adopted export control measures to deny Russia access to semiconductors, telecommunications, information security equipment, lasers and sensors if they contain US technology — even if they are manufactured outside the US.A country exporting these products to Russia without a US licence could in turn be banned from accessing American components.“No country is willing to lose that,” the official said, pointing out that, for example, China was not yet able to produce cutting-edge chips.Washington believes sanctions will do lasting damage to Russia’s economy. Many of the retaliatory measures announced since Russian president Vladimir Putin launched the invasion of Ukraine on February 24 have only taken effect in the past few days.The official said the US was determined to prevent Russia from “projecting its power” in the future, suggesting sanctions may be long-lasting, and added that a ceasefire or peace deal would be required before the lifting of any sanctions would even be addressed.“Ukraine would have to reach an agreement with Russia before we can think about sanctions going forward,” he said.

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Businesses across the US are broadening pay rises as inflation gallops at the fastest pace in 40 years, with employees struggling to match their wages with consumer prices. Retailers, airlines and resorts are boosting starting pay to attract recruits and offering company-wide bumps to staff’s base pay. Some 92 per cent of businesses plan to increase employee pay this year, up from 85 per cent in 2021, according to compensation analysis firm PayScale. Announcements from corporate America confirm trends reported in official data as US inflation reached 7.9 per cent in February, the highest level since 1982. Federal Reserve chair Jay Powell said wages were “moving up at ways that are not consistent” with its 2 per cent inflation target after the central bank decided to raise interest rates this month. A monthly payrolls report due on Friday will shed new light on the strength of the US labour market — and workers’ bargaining power. “Employers recognise that it is very difficult to hire and retain workers right now and they’re raising wages in order to circumvent these labour shortages,” said Daniel Zhao, senior economist at jobs site Glassdoor. “The fact of the matter is that workers who are upset about inflation have more leverage now in order to actually negotiate higher pay.”Workers have been slow to return to the labour force since the start of the Covid-19 pandemic and millions of those who are working have been able to leverage recruiters’ desperation to land new, higher-paying jobs. But then housing, transportation and food costs began to rise, forcing employers to offer broad-based pay rises and bonuses to retain staff.Airlines started announcing rises for their employees after staff shortages caused by the Omicron coronavirus wave forced thousands of flight cancellations around the festive season. Delta Air Lines chief executive Ed Bastian said this month that the carrier would raise base pay by 4 per cent for most of its 75,000 employees starting in May. “This well-earned base pay increase . . . is the direct result of the dedication, hard work and excellence that you demonstrate every day,” Bastian wrote in a memo to Delta employees. Southwest Airlines also raised starting pay for some of its Chicago-based roles to $18 an hour this month, after setting a company-wide minimum wage of $15 an hour in June.Retailers are also offering broad-based pay rises. Target raised its starting hourly rate from $15 to up to $24 for workers in its stores, warehouses and headquarters last month. The Minneapolis-based retailer also cut the number of hours employees need to work each week to qualify for healthcare benefits to 25 from 30. Vail Resorts raised the minimum wage to $20 for workers at its 37 mountain properties in North America. The decision is part of a “pivotal shift in our company’s direction with a new strategic focus on all of you”, chief executive Kirsten Lynch wrote in an email to employees. The average hourly worker will get a 30 per cent rise, she said.The increases are not limited to service workers. Nationwide Insurance will pay employees a minimum of $21 an hour, up from $18, starting next month. “The things that matter to workers in 2022 are competitive wages, flexibility and the ability to work for a company that reflects their values,” said Nationwide chief executive Kirt Walker.Alison Omens, chief strategy officer of Just Capital, a non-profit group that tracks businesses’ impact on society, said boosts to pay were both the result of the intense competition for workers and employers becoming more willing to invest in their workforces after the tumult of the pandemic.“Companies that have not historically seen workers as real value creators are taking a second look at their workers as a potential source of value,” Omens said, “and it may lead to longer-term wage growth.”Both Starbucks and Chipotle have cited increased labour costs as justifications to raise their prices, but Zhao said other companies were more likely to allow pay rises to eat into their profit margins. Workers’ advocates say that even after receiving rises, many salaries still have less buying power than they did before the Covid crisis. Only 44 per cent of organisations are planning to give their employees rises over 4 per cent, according to PayScale, even as inflation rises at almost double that rate. “We’ve seen wages go [up and down] over the past two years,” Omens said. “Half the people working in big companies were not making a living wage, so this was not starting from a good place. Then in the early days of the pandemic, we saw hazard pay, we saw bonuses, we also saw government intervention. The reality of rent increases and gas increases mean that wages are once again decreasing.” More

The war in Ukraine threatens to cause lasting damage to the economies of low- and middle-income countries, pushing millions of people into poverty and tipping dozens of countries into a debt crisis, the World Bank has warned.High commodity prices, collapsing trade growth, rising interest rates and a stronger US dollar will exacerbate fiscal pressures in many countries, making it harder for net importers in particular to service mounting debts, said Indermit Gill, the bank’s vice-president for equitable growth, finance and institutions.Soaring prices for oil and wheat alone will be enough to severely hamper growth in many developing countries unless the war ends quickly, he added. Oil importers such as China, Indonesia, South Africa and Turkey were particularly at risk.“If wheat and oil prices stay high for six months to a year, that will shave a percentage point off the growth rates that we forecast little more than a month ago,” Gill said.Growth in developing countries was already suffering long-term decline before the war began, he noted. In January, the World Bank forecast that output growth in developing countries would average 6.3 per cent in 2021, 4.6 per cent this year and 4.4 per cent in 2023. A percentage point reduction in growth may be manageable in some Asian countries “but for Turkey or Brazil, it is huge”, Gill said. Last year, the bank warned that about 100mn people would be pushed back into poverty, which it defines as living on less than $1.90 a day, or would fall into poverty for the first time as a result of the coronavirus pandemic. While it was too early to predict the impact of the war, that number was now certain to rise, Gill said.About 40 low-income countries were already in debt distress or at risk of falling into debt distress because of the pandemic, he said, adding: “With the war, debt crises may come much sooner, and that can cause a lot of permanent damage.”The economic impact of the war will not be evenly distributed, analysts have said, and is likely to be exacerbated by further disruption to supply chains caused by Covid-19 restrictions in China. A recent report by the Institute of International Finance (IIF), a financial industry association, compared the war’s impact on emerging markets through merchandise exports, overall trade and commodity price effects on current account balances.

Video: China, Russia and the war in Ukraine

It found that central European countries such as Poland, the Czech Republic and Hungary were especially exposed through disrupted trade with Ukraine and Russia, while Turkey and Egypt were even more exposed through both trade and their dependency on imports of oil and wheat. Commodity exporters in Latin America stood to gain from rising food and fuel prices, the IIF noted. But it warned that any further escalation of the war and of sanctions against Russia were likely to cause indiscriminate capital outflows from all emerging markets.Mark Rosenberg, chief executive of political risk consultancy GeoQuant, said some of the most economically exposed countries, including Egypt, Turkey, India, South Africa and Thailand, had favourable relations with Russia. While this would allow them to continue to import food or fuel from Russia, as India has done, it may also leave them exposed to greater fallout from western sanctions on Russia and, possibly, its trading partners.Rosenberg said Egypt was the most exposed to the war, given its trade ties and high risk of political instability. Last week, the country asked for support from the IMF. He added that India was also vulnerable to geopolitical tensions, having “done damage to its relations with those countries forming an anti-Russia alliance”.

The World Bank’s Gill said economic damage from the war was likely to be felt most severely in countries with few or no economic ties to Russia, such as Ghana and Sri Lanka, but whose economies would be damaged through disruptions to trade and worsening global financial conditions. Many countries had limited pandemic-related damage by providing support to businesses and households through debt-financed public spending, which was made possible by very low global interest rates and ultra-loose policies from advanced economy central banks. But with monetary policy tightening around the world, developing countries have already used up what fiscal space they had.“The damage from the pandemic was reversible because it could be dealt with through domestic policy,” Gill said. “But we are very worried by the war. It is not in the hands of domestic policymakers and this could lead to irreversible effects.” More

SINGAPORE (Reuters) – The yen fought for a footing on Tuesday, following its worst session in 16 months, as the Bank of Japan pins down bond yields at a time when they are rising sharply in the rest of the world.The Japanese currency fell as much as 2.4% to 125.10 to the dollar overnight, its lowest since August 2015, before recovering to 124.24 in volatile morning trade in Tokyo.The U.S. dollar was broadly steady elsewhere, keeping the euro at $1.0988 and capping a recent rally in the Australian dollar to hold it at $0.7483. [AUD/]Japan’s central bank bought a little more than $500 million in bonds on Monday and has vowed three more days of unlimited purchases to defend its 10-year yield target of 0.25%.The move, a demonstration of resolve to keep Japan’s monetary policy ultra easy, underscores the stark contrast with an ever-more-hawkish sounding U.S. Federal Reserve and has tipped the already-sliding yen off a cliff.It is down nearly 7% this month and almost 10% on a resurgent Aussie. But with Japanese government bond yields (JGBs) barely retreating it is clear that some investors doubt the longevity of Japan’s policy. [JP/]”Anyone who watched the RBA ‘cap’ blow is probably excitedly (and logically) short JGBs right now hoping for a similar move in Japan rates,” said Brent Donnelly, president at analytics firm Spectra Markets, referring to the Reserve Bank of Australia’s abandonment of its yield target in November.Minutes from the Bank of Japan’s March meeting published on Tuesday showed policymakers stressing the need to keep monetary policy ultra-loose, even as some of them saw signs of growing inflationary pressure.Yet economists see building pressure for a shift if persistent yen weakness exacerbates inflation by raising import costs, particularly for energy, and reckon that 125, roughly where dollar/yen peaked in 2015, is a key level.”Japanese yen depreciation is a big problem for the Japanese economy, because the economy – especially households – is facing rising inflation and yen depreciation could accelerate that,” said Kentaro Koyama, chief economist at Deutsche Bank (DE:DBKGn) in Tokyo.”If the dollar/yen rate exceeded 125 I’d expect some more severe verbal intervention.”Japanese Finance Minister Shunichi Suzuki said on Tuesday that Japan will carefully watch foreign exchange market movement to avoid “bad yen weakening”.Among other majors the New Zealand dollar was a fraction weaker at $0.6889 and sterling was under pressure at $1.3081. [GBP/]European consumer confidence data and U.S. job openings figures are due later in the day.========================================================Currency bid prices at 0105 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0975 $1.0988 -0.10% -3.45% +1.0998 +1.0969 Dollar/Yen 123.8750 123.8650 +0.20% +7.91% +124.3000 +123.4000 Euro/Yen 135.98 136.13 -0.11% +4.34% +136.5100 +135.5400 Dollar/Swiss 0.9342 0.9345 -0.02% +2.43% +0.9356 +0.9334 Sterling/Dollar 1.3083 1.3095 -0.10% -3.27% +1.3106 +1.3080 Dollar/Canadian 1.2522 1.2517 +0.04% -0.96% +1.2530 +1.2515 Aussie/Dollar 0.7479 0.7492 -0.16% +2.90% +0.7507 +0.7475 NZ Dollar/Dollar 0.6891 0.6897 -0.07% +0.69% +0.6908 +0.6889 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More

TOKYO (Reuters) – Bank of Japan policymakers stressed the need to keep monetary policy ultra-loose, even as some of them saw signs of growing inflationary pressure from the Ukraine crisis, a summary of opinions at their March meeting showed on Tuesday.Japan’s consumer inflation will clearly accelerate from April and may hover around 2% for some time due mainly to the boost from energy price rises, one member was quoted as saying.”As wholesale prices rise at historical levels, upward pressure is gradually heightening for consumer inflation,” another member said.Other members, however, warned such cost-push inflation will prove short-lived due to weak domestic demand, the summary showed.”Consumer inflation may move around 2% in the first half of fiscal 2022 due to rising raw material costs. But it could undershoot expectations in the latter half of the year if commodity prices turn down,” one member said.Most of the opinions called on the need for the BOJ to stick to ultra-loose monetary policy as the war in Ukraine heightened uncertainty over the global outlook.”Unlike the United States or Britain, Japan isn’t in a situation where inflation continuously exceeds 2%…It’s therefore important to support the economy’s recovery from the coronavirus pandemic by maintaining monetary easing,” one member said.At the March meeting, the BOJ maintained its massive stimulus and warned of heightening risks to a fragile economic recovery from the Ukraine crisis.Japan’s core consumer inflation hit 0.6% in February, well below the BOJ’s 2% target, as weak consumer spending discourage firms from raising prices. But analysts expect inflation to approach 2% from April, due to soaring fuel costs and the dissipating effect of past cellphone fee cuts. More

WASHINGTON (Reuters) -The U.S. Senate on Monday again approved a bill to provide $52 billion in U.S. subsidies for semiconductor chips manufacturing in a bid to reach a compromise after months of discussions.The 68-28 procedural vote sends the legislation back to the House of Representatives in a cumbersome process to ultimately launch a formal process known as a “conference” where lawmakers from both chambers will seek agreement on a compromise version. A persistent industry-wide shortage of chips has disrupted production in the automotive and electronics industries, forcing some firms to scale back production, and there have been growing calls to decrease reliance on other countries for semiconductors.The Senate first passed chips legislation in June that also authorized $190 billion to strengthen U.S. technology and research to compete with China, while the House passed its version in early February.The bills take different approaches to addressing U.S. competitiveness with China on a wide range of issues, as well on trade and some climate provisions.Senate Commerce Committee chair Maria Cantwell said the vote was crucial to “get us to real negotiations”White House spokeswoman Jen Psaki said the Senate vote was another step “to strengthen our supply chains, make more in America, and outcompete China and the rest of the world for decades to come. We look forward to the House of Representatives moving quickly to start the formal conference process as well.”A senior House Democratic aide said the chamber is set to take up the measure and send it back to the Senate as soon as later this week. The Senate will need to vote again to launch the conference. A final agreement might not be reached until summer.Independent Senator Bernie Sanders criticized the $52 billion in subsidies, calling it “corporate greed” and said taxpayers should get warrants or equity from profitable chips firms in exchange for subsidies.”The financial gains made by these companies must be shared with the American people, not just wealthy shareholders,” Sanders said.U.S. Commerce Secretary Gina Raimondo noted that two decades ago, the United States produced nearly 40% of all chips while today it accounts for only 12% of global production. The Senate vote moved the United States “one step closer toward revitalizing American semiconductor manufacturing, securing our critical supply chains and bringing home good-quality manufacturing jobs.”On Friday, General Motors (NYSE:GM) said it would halt production at a pickup truck plant in Indiana for two weeks in April because of the chips shortage. More