Aurelia Butler

(Reuters) – The United States on Thursday restricted exports to Russia of a broad set of U.S.-made products as well as foreign-produced goods built with U.S. technology, following the invasion of Ukraine.Here is how the rules are expected to affect U.S. tech companies, according to six experts on U.S. trade law. What technology is newly restricted from export to Russia?U.S. companies must now obtain licenses to sell computers, sensors, lasers, navigation tools, and telecommunications, aerospace and marine equipment. The United States will deny almost all requests.”We expected something sweeping, and this was certainly sweeping,” said Ama Adams, partner at law firm Ropes & Gray. The new rules also force companies making tech products overseas with U.S. tools to seek a U.S. license before shipping to Russia. A similar restriction was first applied in recent years to companies shipping to Chinese technology giant Huawei, to great effect.Which U.S. companies will be most impacted?Many companies may opt to suspend all sales to Russia out of caution, legal experts said. Dan Goren, partner at law firm Wiggin and Dana, said a client that makes electronic equipment had already held shipments to a Russian distributor on Thursday.U.S. exports to Russia were limited to about $6.4 billion last year, U.S. census data show, with machinery and vehicles among big categories in past years. The most severe tech hits to Russia could come from curbs on foreign goods.For example, the Semiconductor Industry Association (SIA), which represents U.S. chipmakers, noted that “Russia is not a significant direct consumer of semiconductors” and that Russia’s communications and tech spending “totaled only about $25 billion out of the multi-trillion global market” in 2019. But many products made in Asia and destined for Russia include chips made with U.S. tooling. Over two dozen members of the European Union, as well as the United Kingdom, Canada, Japan, Australia and New Zealand, are imposing similar export restrictions to limit Russia’s options.How will Russia be affected?Emily Kilcrease, senior fellow at the Center for a New American Security and former deputy assistant U.S. Trade Representative, said the restrictions will freeze Russia’s technology where it is today.”You won’t be able to get new tech into the country,” she said.William Reinsch, a trade expert at the Center for Strategic and International Studies and a former Commerce Department export official, expects a slow escalation of impact.”Eventually they will be hurting, but maybe not for months,” he said. “It’s not an immediate body blow.”The curbs and sanctions are not as comprehensive as U.S. trade actions on Iran and North Korea, but they could have bigger consequences globally because Russia is more intertwined with the world economy, attorneys said.What technology is not covered by new restrictions?The measures include carve-outs for consumer items such as household electronics, humanitarian goods, and technology necessary for flight safety. Cell phones are permitted as long as they are not sent to Russian government employees or certain affiliates.Also not restricted are consumer encryption technologies, which one attorney described as a sign that the United States and its allies do not want to disrupt protesters and media.Nothing precludes the U.S. from later extending sanctions to more items.South Korea was not listed among countries partnering on the rules, and its assistance would be important for blocking Russia’s access to chips from there, Kilcrease said.A senior U.S. administration official said Thursday that more countries were expected to join.The South Korean Embassy in Washington did not immediately respond to a request for comment.South Korea said on Thursday it would join in unspecified multilateral economic sanctions on Russia in response to its military operations in Ukraine, but is not considering adopting unilateral measures.Which companies could benefit from the new rules?Kilcrease and legal experts expect that Chinese technology companies may want to fill some voids created by restrictions on Western tech companies, though Kilcrease said the U.S. rules would discourage them. But the senior U.S. administration official said that China cannot supply Russian crucial military needs, especially for the most advanced chips. More

The People’s Bank of China injected a net 290 billion yuan ($45.8 billion) into the financial system via seven-day reverse repurchase agreements Friday, the most since September 2020. The operation is aimed at keeping liquidity stable at month-end, it said.“The injection is in response to tighter liquidity condition at month-end and also to send a reminder that the easing cycle is still under way,” said Ken Cheung, chief Asia FX strategist at Mizuho Bank Ltd. “The geopolitical tensions posed mounting uncertainties and banks may have preference to keep extra liquidity.”China’s seven-day repo rate had risen to its highest in nearly a month on Thursday, signaling cash tightness in the financial system. The demand for cash typically increases toward the end of the month as corporates borrow to pay taxes and banks hoard funds for regulatory checks.The PBOC made net injections of 190 billion yuan each into the banking system in the previous two sessions to alleviate the cash crunch. It had been draining liquidity in the last two weeks, which is what it tends to do after the Lunar New Year holiday.(Updates with chart and comment in third paragraph)©2022 Bloomberg L.P. More

(Reuters) -Federal Reserve Governor Christopher Waller on Thursday laid out the case for a “concerted” effort to rein in inflation, calling for raising interest rates a full percentage point by mid-year, starting with a half-percentage-point hike in March if data in coming weeks continues to point to an “exceedingly hot” economy.”I believe appropriate interest rate policy brings the target range up to 1 to 1.25 percent early in the summer,” Waller said at the University of California, Santa Barbara, Economic Forecast Project. The Fed should also start trimming its $9 trillion balance sheet “no later than” its July meeting, he said. Once initial rate hikes are made, further increases would be in order if inflation stayed high, Waller said, or could slow or pause if inflation moderates in the second half as he expects. “Of course, it is possible that the state of the world will be different in the wake of the Ukraine attack, and that may mean that a more modest tightening is appropriate,” Waller said. But, he said, it is still far too early to read the impact of the conflict on the U.S. or world economy. And with consumer prices rising the fastest in 40 years, the Fed “must respond decisively to the data so as to maintain our credibility that we will bring down inflation.” Over the past week or so, Fed policymakers largely signaled a preference for beginning the coming round of U.S. interest rate hikes with a modest quarter-point hike, and after Russia’s invasion of Ukraine traders slashed bets on a bigger March hike.BALANCE SHEET A BIG QUESTIONBut Waller’s remarks – which echo the views of St. Louis Fed President James Bullard, his former boss – suggest Fed Chair Jerome Powell will be contending with a divided policy-setting committee when it meets on March 15-16. As Waller made what he called a “strong case” for a 50-basis-point rate hike in March against the backdrop of an economy at full employment and “alarming” inflation, interest rate futures traders boosted bets on such an increase, putting the probability at about 25%, about double what was seen earlier in the day.Two more inflation reports – one of which comes Friday – and a report on the labor market will, along with the situation in Europe, feed into the Fed’s policy decision. At issue is not just whether to “frontload” rate hikes as Waller and Bullard suggest, but also how far to raise rates and how fast to trim the Fed’s balance sheet to tighten monetary policy enough to slow demand and rein in inflation. On Thursday, Waller said the Fed should allow the balance sheet to run off much faster than in 2017 when it last let its holdings shrink, in light of the much stronger economy now and what is now a much bigger balance sheet. The Fed should not put any caps on how quickly to let mortgage-backed securities run off, he said. “With large caps and sizable amounts of securities maturing over the course of the next year or two, I do not see the need to consider asset sales anytime soon,” Waller said, though “down the road” the Fed could consider sales of MBS. As the Fed makes decisions on policy, Waller said, it must “urgently” watch the data, noting how few had foreseen how much inflation would rise in 2021, and his own surprise at how little the most recent COVID surge had slowed the economy. “I will continue to monitor the geopolitical situation to assess the appropriate timing of this near-term monetary policy tightening,” Waller said. “These actions will get us into the second half of the year, when we will have six months of inflation data, and we can assess what the appropriate path will be for the rest of 2022.” More

The People’s Bank of China (PBOC) injected 300 billion yuan ($47.41 billion) worth of seven-day reverse repos into the banking system on Friday, compared with 10 billion yuan of such loans expiring on the same day.For the week, the PBOC injected 760 billion yuan on a net basis – the biggest weekly cash offering since January 2020.($1 = 6.3283 Chinese yuan) More

TOKYO (Reuters) – Japan said on Friday it will appropriately deal with oil release from national reserves in cooperation with the International Energy Agency and relevant countries, after Russia’s attack on Ukraine fueled fears about disruption to global energy supply.Japan also plans to quickly implement further steps to help curb rising prices of fuels such as gasoline and kerosene amid soaring oil prices, industry minister Koichi Hagiuda told a news conference. More

WASHINGTON (Reuters) -The World Bank said on Thursday it was preparing options to provide immediate support to Ukraine’s government, as the development lender and the International Monetary Fund assess the economic fallout from the conflict in Ukraine.”We stand ready to provide immediate support to Ukraine and are preparing options for such support, including fast-disbursing financing,” World Bank President David Malpass said in a statement, adding that the institution was “horrified by the shocking violence and loss of life” in Ukraine.The statement came after Malpass told Ukrainian President Volodymyr Zelenskiy on Saturday that the bank was preparing a $350 million disbursement to Ukraine for budget support by the end of March.It was unclear, however, what resources may be available to aid Ukraine’s people if Zelenskiy’s democratically elected government is deposed by Russian forces.In recent cases of abrupt shifts of government power by force, including coups in Myanmar and Sudan, the World Bank has suspended dealings with military-installed governments.But in Afghanistan, which the Taliban took by force last August, the bank is seeking to use around $1 billion in a frozen Afghanistan trust fund for education, agriculture, health and family programs to ease a worsening humanitarian crisis.NO REFERENCE TO AN “INVASION”For Ukraine, Malpass said the World Bank was mobilizing a global crisis group to coordinate among its divisions and development partners to work on a rapid response. The bank is also coordinating closely with the IMF to assess the “far-reaching economic and social costs.”IMF Managing Director Kristalina Georgieva said in a tweet https://twitter.com/KGeorgieva/status/1496858061797011456?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet that she was “deeply concerned” about the conflict in Ukraine, which “adds significant economic risk for the region & the world.”We are assessing the implications & stand ready to support our members as needed,” Georgieva said, echoing comments she made earlier this month.Neither leader used the term “invasion” in their statements. Russia and Ukraine are members of both institutions, which were created at the end of the last major conflict in Europe, World War Two. The United States holds controlling interests in both organizations.Malpass said the World Bank was also in active dialogue to support neighboring countries affected by the conflict “and will make additional resources available.”The IMF and the World Bank also said they were working to keep remaining employees in Ukraine safe. Most of the World Bank’s Ukraine staff have relocated outside the country, though some remained for personal and family reasons.”We will continue to identify options for those who have decided to not leave the country at this point,” Malpass said in an internal memo to the bank’s nearly 16,000 global employees.A spokesperson for the IMF said the fund had been in contact with remaining local staff in the country. More