Economy

India deferred imposition of a 2 rupee ($0.025) tax on every litre of gasoline not mixed with 10% ethanol by a month, a government order said on Saturday.In February, Finance Minister Nirmala Sitharaman had announced imposition of the tax from Oct. 1. The tax on sale of diesel has been deferred by six months, the notification said.India’s inflation rate has been above the Reserve Bank of India’s upper tolerance level of 6% for nearly three quarters, forcing the central bank to raise interest rates aggressively.In its latest monetary policy meeting on Friday, RBI raised its benchmark repo rate by 50 basis points, the fourth straight increase, and analysts said further tightening is on the cards.The government has also taken a number of steps to contain price rises such as lowering taxes on fuel and restricting exports of a number of items including wheat and rice. ($1 = 81.5090 Indian rupees) More

The aid is supported by the United Kingdom ($500 million) and the Kingdom of Denmark ($30 million), the World Bank said in a statement. Of the total aid of $13 billion to Ukraine to date, $11 billion has been fully disbursed, the bank added.The World Bank’s most recent analysis puts the total long-term cost of reconstruction and recovery in Ukraine over the next three years at well over $100 billion, said Arup Banerji, World Bank Regional Country Director for Eastern Europe. More

“In the past, we referred to the Swiss franc as being highly valued or even significantly overvalued in order to give a signal regarding the need for intervention. At the moment, the Swiss franc’s valuation is no longer clearly high, and we do not want to comment on every move,” he told the Neue Zuercher Zeitung paper in an interview released on Saturday.His comments come as the SNB focuses on using franc strength to fight inflation after years of currency intervention and negative interest rates to keep a lid on the franc for fear it would cripple the export-dependent economy.Jordan said he did not see a period of competitive currency appreciation as other central banks adopt the same strategy.”The yen is at a historic low, the pound sterling has lost significant value and the euro is comparatively weak. I don’t see signs of competitive appreciation. The two strong currencies, the U.S. dollar and the Swiss franc, are considered safe havens,” he said.If the franc appreciates so strongly that the monetary policy environment becomes too restrictive, the SNB will continue to intervene, he said. “But we also do not want to exacerbate the inflation problem with an excessively weak franc. We deliberately do not want to be more specific.”Jordan said the SNB’s balance sheet was a policy instrument it could use alongside its policy rate to ensure price stability.”We are not going to reduce our balance sheet simply because of the sheer size, but if it helps us ensure price stability, of course we will,” he said.Winding down the SNB’s balance sheet “will probably take considerable time”, he said. “If we were to sell large amounts of foreign currency holdings immediately, this would create too much appreciation pressure. The most favorable time to sell is when we have inflationary pressure, interest rates are clearly positive and the franc is showing a weakening trend.” More

SEOUL (Reuters) -The United States and South Korea agreed on Saturday to implement liquidity facilities to stabilise financial markets if needed, Korea’s finance ministry said after a teleconference between finance chiefs of the two countries.The won is near its lowest level since March 2009, and has weakened 17% against the surging U.S. dollar so far in 2022, amid a broad sell-off in emerging market currencies as the Federal Reserve aggressively raises interest rates.”The two countries are ready to work closely together to implement liquidity facilities when necessary, such as when financial instability is aggravated by the spread of (a) liquidity crunch in major economies, including Korea,” the ministry said in a statement after the call between the U.S. Treasury Secretary Janet Yellen and South Korea finance minister Choo Kyung-ho.The agreement reached on Saturday repeats the U.S. statement made when Yellen last visited Seoul in July, amid growing calls for the Bank of Korea to arrange a currency swap with the Federal Reserve to stabilise the dollar-won market. However, the statement released on Saturday did not elaborate on whether the facilities that may be deployed referred to a currency swap and South Korea’s finance ministry did not give further details. A $60-billion currency swap pact set up in March 2020 between the central banks of the two countries as an emergency step to stabilise markets expired at the end of last year.Such a swap would allow South Korea to borrow a certain amount of U.S. dollars for a pre-set period and rate, in exchange for won, so as to resolve difficulties in dollar liquidity.To help protect one of the world’s worst performing currencies, South Korean authorities has recently arranged a $10 billion currency swap program with the country’s state-run pension fund, a tool that allows the fund to finance its overseas investment with the central bank’s FX reserves, instead of buying dollars in the spot market. More

The move will let the teams in the sanctioned and baseball-loving South American country contract players from the U.S. during their off season.In November 2019, the Treasury Department’s Office of Foreign Assets Control (OFAC) authorized transactions with six of the eight teams in the Venezuelan baseball league, allowing them to bring in Venezuelan and foreign major league players.The teams left out at the time were Navegantes de Magallanes, whose headquarters is in the Venezuelan city of Valencia, and Tigres de Aragua, from the city of Maracay.The Venezuelan Professional Baseball league(LVBP) announced via Twitter on Friday that both teams received licenses from OFAC.The decision comes just weeks before the start of the baseball season in Venezuela.The Treasury Department did not immediately respond to a request for comment.OFAC “issued the licenses on Friday and they are in the hands of the teams’ lawyers,” a source linked to the Venezuelan league added.”People are no longer going to deprived of seeing their stars. … Now they will be uniformed here,” said Oscar Henriquez, president of the sports committee of Tigres de Aragua. More

The UK’s credit rating was threatened with a downgrade late on Friday when S&P, one of the world’s largest credit rating agencies, put the country on a “negative outlook” after chancellor Kwasi Kwarteng’s “mini” Budget last week. The rating agency maintained the UK’s double A investment grade credit rating but warned the outlook was negative. S&P said that after the chancellor’s statement, there were “additional risks” in lending to the UK. The threat of a ratings downgrade will prove embarrassing for the Truss government only a few weeks after the new prime minister took office. The “mini” Budget sent the pound falling and interest rates higher because financial markets thought it would stoke inflation at a difficult time. S&P said its decision was based on the fiscal statement and the government’s plan to “reduce a range of taxes in addition to its previously communicated intentions to extend wide-ranging support for households on energy bills”.Credit rating agencies have lost some of their power since the 2008-09 financial crisis when they failed to warn of the risk in many complex products they had given top triple A ratings. But their sovereign ratings are still closely watched.Most experts in public finances have been more relaxed about the decision to spend billions on a temporary scheme to keep electricity and gas bills down this winter than the permanent cuts to national insurance and income tax, including the highest rate, and the decision not to raise the main level of corporation tax. In the past week, the pound has hit an all-time low against the US dollar, before recovering, the cost of government borrowing has risen more than 0.5 percentage points, the Bank of England has had to intervene to protect the pension system and mortgage lenders have pulled most fixed-rate products from the market. S&P estimated that the UK’s budget deficit would widen by 2.6 percentage points of gross domestic product by 2025 as a result of Kwarteng’s package, making it very difficult for the chancellor to achieve his ambition of bringing public debt down as a share of national income.

The rating agency said “net general government debt will continue on an upward trajectory, in contrast to our previous expectation of it declining as a percentage of GDP from 2023”. S&P said it still expected the UK economy to contract over the coming quarters, adding it was still unclear whether government promises of lower borrowing from public expenditure cuts would materialise and be sufficient to bring debt back to a declining path. This would be especially difficulty, it added, in the context of a weak global economy, rising interest rates hitting the housing market and shaky consumer sentiment. With the government’s fiscal watchdog muzzled until late November, S&P forecast a difficult period for the UK economy. “We consider that our updated fiscal forecast is subject to additional risks, for instance if the UK’s economic growth turns out weaker due to further deterioration of the economic environment, or if the government’s borrowing costs increase more than expected, driven by market forces and monetary policy tightening,” it said. More

FORT MYERS, Fla./CHARLESTON, S.C. (Reuters) – Hurricane Ian slammed into South Carolina on Friday afternoon, making another landfall after a deadly march across Florida that washed away houses, stranded thousands and left an unknown number of people dead.A resurgent Ian swept ashore at 2:05 p.m. (1805 GMT) near Georgetown, a waterfront town about 60 miles (97 km) north of the historic city of Charleston, packing maximum sustained wind speeds of 85 mph (140 kph) as a Category 1 hurricane, the U.S. National Hurricane Center (NHC) said.Roads were flooded with water and encumbered by trees while a number of piers were damaged as the storm left more than 400,000 homes and businesses in the Carolinas without power, according to the tracking website PowerOutage.us.Ian, now classified as a post-tropical cyclone, will bring heavy rain and potential flash flooding to parts of North and South Carolina, Virginia and West Virginia until at least Saturday morning as it weakens, the NHC said. The storm struck Florida’s Gulf Coast on Wednesday as one of the most powerful storms ever to hit the U.S. mainland and then cut a destructive path across the state, transforming beach towns into disaster areas with catastrophic flooding and winds.There have been reports of at least 21 deaths in Florida, Kevin Guthrie, director of the state’s Division of Emergency Management, said at a morning briefing. He stressed that some of those reports remained unconfirmed.Georgetown, with a population of about 10,000, is a tourist destination known for its oak-lined streets and more than 50 sites on the National Registry of Historic Places. The town was heavily damaged by 1989’s Hurricane Hugo.Even before Ian’s arrival, Charleston was seeing torrential rain. Video clips on social media showed several inches of water in some streets in the port city, which is especially prone to flooding.A city-commissioned report released in November 2020 found that about 90% of all residential properties were vulnerable to storm surge flooding.Len Cappe, 68, a retired property manager who moved to Charleston two years ago, said Ian was the first big storm he has encountered.”It’s the wind, it rattles you,” Cappe said. “It’s blowing furiously.”With the tidal Wando River a block away, Cappe said he was worried about his house and has been glued to his television, watching for updates.On Pawleys Island, just north of Georgetown, the pier had collapsed into the ocean and town hall was surrounded by water, according to videos and messages posted online by the local police department.’HOMES JUST WASHING AWAY’Two days after Ian first hit Florida, the extent of the damage there was becoming more apparent. Some 10,000 people were unaccounted for, Guthrie said, but many of them were likely in shelters or without power. Roughly 1.6 million Florida homes and businesses remained without power on Friday, according to PowerOutage.us.”You have homes just washing away,” Governor Ron DeSantis said at a briefing on Friday in Lee County, which suffered widespread damage.President Joe Biden, speaking at the White House, said the hurricane would likely rank among the worst in U.S. history.”We’re just beginning to see the scale of that destruction,” he said.Fort Myers, a city close to where the eye of the storm first came ashore, absorbed a major blow, with numerous houses destroyed. Offshore, Sanibel Island, a popular destination for vacationers and retirees, was cut off when a causeway was rendered impassable.Hundreds of beleaguered Fort Myers residents lined up at a Home Depot (NYSE:HD) on Friday on the east side of the city, hoping to purchase gas cans, generators, bottled water and other supplies. The line stretched as long as a football field. Rita Chambers, a 70-year-old retiree who was born in Jamaica and has lived in Fort Myers since 1998, said Ian was unlike any storm she had ever seen.”And I’ve been in hurricanes since I was a child!” said Chambers, who moved to New York as a teenager.She watched as the storm tore the porch off her home in Cape Coral. Despite it all, she is not thinking of leaving Florida.”I would rather shovel sand from my Florida home than shovel the snow in New York,” she said. “If you live in paradise, you have to put up with a hurricane.”At a mobile home park on San Carlos Island in Fort Myers Beach, trailers had been pushed together by the wind and water. A boat, the “Dreamin,'” lay on its side at a local marina, where another boat had come to rest in a tree.Deborah Grool, 70, lost her home and vehicles to the storm.”This is devastating, because it’s not just homes, it’s businesses,” said Grool, a real estate agent who has lived on the island for 45 years.Her daughter, Katy Bonkowski, who joined her mother to examine the damage, had worried about her parents’ and sister’s decision to stay on the island during the storm.”Don’t misjudge a hurricane,” Bonkowski said. “I wish my parents would have left. I wish my sister would have left. But they wanted to stay.”Read more:Maps-Hurricane Ian batters the Gulf CoastDrone video shows boats washed ashore in Hurricane Ian’s wakeA Florida town rebuilt after one hurricane endures anotherHurricane hunter says Ian’s eyewall flight was ‘worst I’ve ever been on’How hurricanes cause dangerous, destructive storm surges More

NEW YORK (Reuters) – In a year of wild market swings, the third quarter of 2022 was a time when events took a truly extraordinary turn. As the Federal Reserve ratcheted up its monetary policy tightening to tame the worst inflation in decades, U.S. Treasury yields shot to their highest levels in more than a decade and stocks reversed a summer rally to plumb fresh depths. The S&P 500 is down nearly 25% year-to-date, while yields on the benchmark 10 year Treasury note, which move inversely to bond prices, recently hit their highest level since 2008.Outside the United States, the soaring dollar spurred big declines in global currencies, pushing Japan to support the yen for the first time in years. A slump in British government bond prices, meanwhile, forced the Bank of England to carry out temporary purchases of long-dated gilts. Many investors are looking to the next three months with trepidation, betting the selloff in U.S. stocks will continue until there are signs the Fed is winning its battle against inflation. Yet the last quarter of the year has often been a beneficial time for U.S. equities, spurring hopes that markets may have already seen the worst of the selloff. GRAPHIC: Asset performance in 2022, year-to-date – https://graphics.reuters.com/USA-STOCKS/PERFORMANCE/gkplgrxkwvb/chart.pngPASS THE DIPThe strategy of buying stock market dips yielded rich rewards for investors in the past but failed badly in 2022: the S&P 500 has rallied by 6% or more four times this year and went on to make a fresh low in each instance. The third quarter saw the index rise by nearly 14% before reversing to make a fresh two-year low in September after investors recalibrated their expectations for even more aggressive Fed tightening. GRAPHIC: Pass the dip – https://fingfx.thomsonreuters.com/gfx/mkt/jnpweqwblpw/Pasted%20image%201664460535900.pngLOOK OUT BELOW?With several big Wall Street banks expecting the benchmark index to end the year below current levels – Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) both recently published year-end targets of 3,600 – the outlook for dip-buying remains murky.In addition, the current bear market, which has so far lasted 269 days and notched a peak-to-trough decline of about 25%, is still relatively short and shallow compared with past drops. Since 1950, the average bear market has lasted 391 days with an average peak-to-trough drop of 35.6%, according to Yardeni Research. GRAPHIC: A ways to go? – https://fingfx.thomsonreuters.com/gfx/mkt/gkplgrxawvb/Pasted%20image%201664459511809.pngLOOK TO BONDSThough equities have been volatile, the gyrations in bond markets have been comparatively worse. The ICE (NYSE:ICE) BofAML U.S. Bond Market Option Volatility Estimate Index shot to its highest level since March 2020 as the ICE BofA US Treasury index is on track for its biggest annual drop on record. By comparison, the Cboe Volatility Index – the so-called Wall Street “fear gauge” – has failed to scale its March peak. Some investors believe stock turbulence will continue until bond markets calm down. “I think there is a good scenario where once we get through the bond market violence, we get to a more tradable bottom (for stocks),” said Michael Purves, chief executive at Tallbacken Capital Advisors in New York.GRAPHIC: Bonds break down – https://fingfx.thomsonreuters.com/gfx/mkt/akpezdaxjvr/Pasted%20image%201664460769205.png…AND THE DOLLARSoaring U.S. interest rates, a relatively robust American economy and investors’ reach for safe haven amidst a rise in financial market volatility has boosted the U.S. dollar – to the detriment of other global currencies.The greenback is up about 7% for the quarter against a basket of currencies and stands near its highest level since May 2002. The dollar’s strength has prompted the Bank of Japan to shore up the yen through interventions while also presenting an earnings headwind for U.S. corporates. “Market risk-takers are grappling with the double-barreled threat of persistent dollar strength and dramatically higher interest rates,” Jack Ablin, chief investment officer at Cresset Capital, said in a note. GRAPHIC: One buck to rule them all – https://graphics.reuters.com/USA-DOLLAR/znvneydrkpl/chart.png EARNINGS TEST Third quarter earnings may present another obstacle to markets, as companies factor in everything from dollar-fueled currency headwinds to supply chain issues. Analysts have become more downbeat on third quarter profit growth, with consensus estimates falling to 4.6% from 7.2% in early August, according to Refinitiv IBES. So far, that is only slightly worse than the median 2.2 percentage point decline ahead of reporting periods historically, yet warnings from companies such as FedEX and Ford have hinted at the possibility of more pain to come.GRAPHIC: Petering profits – https://graphics.reuters.com/USA-STOCKS/Q3/znpneybgqvl/chart.png’TIS THE SEASONThe calendar may offer weary stock investors some hope. The fourth quarter is historically the best period for returns for major U.S. stock indexes, with the S&P 500 averaging a 4.2% gain since 1949, according to the Stock Trader’s Almanac.GRAPHIC: Seasonal stock strength – https://graphics.reuters.com/USA-STOCKS/SEASONAL/xmvjozlqgpr/chart.png More