Economy

Ukrainian officials have said they are seeking an IMF program worth as much as $15 billion to $20 billion, although such a large amount is seen as unlikey to win IMF approval.The IMF Executive Board, at an informal session on Monday, discussed a plan that could offer Ukraine $1.4 billion in emergency aid through the IMF’s Rapid Financing Instrument. More

TOKYO (Reuters) -The yen may be near 24-year lows, but Japan’s central bank is not even close to trying to support it with higher interest rates.That is the message from three sources familiar with the thinking of the Bank of Japan (BOJ), and it was strongly implied by the country’s top foreign exchange diplomat last week and indeed by central bank chief Haruhiko Kuroda in July.The government – especially the Ministry of Finance (MOF) – has repeatedly and strongly expressed dissatisfaction with this year’s falls in the yen, which on Sept. 7 dropped as far as 144.990 per dollar, down 30% since the end of 2021. But the central bank is independent and by law obliged to attend to inflation and the state of the economy, not the exchange rate.Its support for the weak economy with ultra-low interest rates is the main factor behind the yen’s weakness, since other central banks, notably the U.S. Federal Reserve, are briskly tightening monetary policy, making their currencies more attractive as destinations for capital.The BOJ has no intention of raising interest rates or tweaking its dovish policy guidance to prop up the yen, the sources said.”The BOJ won’t directly target currency rates in guiding policy,” said one of them. “It looks at yen moves in the context of how they affect the economy and prices.””Current economic conditions don’t justify tweaking ultra-loose policy,” that person said, expressing a view echoed by the other two sources.Official statements are in fact consistent with that. The BOJ has joined the finance ministry in warning against sharp falls in the currency. But Kuroda said in July, “It’s hard to believe that just by raising rates somewhat, you can stop the yen’s decline.”That view is still widely shared in the central bank, the sources said.When the MOF expresses its displeasure with the yen’s falls, it is said to be jawboning – dropping a hint that it may intervene in the market to support the currency. This is intended to make traders cautious in selling the yen.Last week’s comments by Masato Kanda, a MOF official who serves as Japan’s top currency diplomat, emphasized the divergence between the government and central bank.Both were “extremely worried” about recent rapid yen moves, Kanda said.But he declined to comment on BOJ policy and said “the government” – instead of “government and the BOJ” – was ready to use all available tools to battle excessive yen declines.”Each of us has our own mandate. That’s why I carefully used ‘government’ as the subject at times and ‘government and BOJ’ at other times,” Kanda told reporters.He was speaking after a meeting between the ministry and central bank.DOVISH POLICY GUIDANCEJapan’s economic weakness gives the BOJ little reason to withdraw the monetary stimulus that is undermining the yen. The central bank is set to maintain ultra-low interest rates and dovish policy guidance at its Sept. 21 and 22 meeting.As for the currency, the most it can do is to maintain, or perhaps strengthen, a warning it inserted in its policy statement in June. It said then that it would “closely watch financial and currency market developments, as well as the impact on Japan’s economy and prices.”That leaves possible MOF market intervention as the main concern for investors betting against the yen. Yet even that looks improbable, considering that Tokyo would have difficulty getting the necessary consent from other members of the G7 group of large economies.”The BOJ’s dovish policy stance will come under the spotlight as European and U.S. central banks hike rates,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui (NYSE:SMFG) DS Asset Management. “The weak-yen trend will continue.”But the BOJ’s focus on inflation and the economy does not mean it would never act in response to currency moves, the sources said. It could feel compelled to respond in the event of a freefall that became so extreme that the economy and price stability were threatened, they said.That, however, is not the current situation. More

Fears of Chinese retaliation and regional tensions are hampering US efforts to rally its East Asian allies behind a proposed semiconductor supply chain alliance.The so-called “Chips 4” initiative is part of a US strategy to strengthen its access to vital chips and weaken Chinese involvement, on trade and national security grounds. It is supposed to comprise the US, South Korea, Japan and Taiwan, offering a forum for governments and companies to discuss and co-ordinate policies on supply chain security, workforce development, R&D and subsidies.But a year after the plans were first drawn up, the four countries are yet to finalise plans even for a preliminary meeting. Concerns include China’s likely response, hesitation over including Taiwan in an intergovernmental forum, and longstanding tensions between South Korea and Japan.Sujai Shivakumar, a senior fellow at the Center for Strategic and International Studies think-tank in Washington, said the US “needs alliances to fortify its supply chain,” and to “give it breathing room” to recapitalise its industrial base in the sector. He added the Chips 4 initiative was also designed “partly to slow China’s progress [on chips]” .The US is pitching the initiative as a positive, multilateral agenda quite separate from the export controls and investment screening it has imposed to make it harder for China to obtain advanced semiconductor technology.But in July, Chinese commerce department spokesperson Shu Jueting warned against the US “damaging and splitting” the global semiconductor supply chain through the Chips 4 alliance, which she said could exacerbate supply chain problems if it was “discriminatory and exclusive”.The opposition of China, which accounts for 40 per cent of global IT production and remains a crucial source of key components and materials, has unnerved several regional governments and chipmakers.Kyung Kye-hyun, the head of Samsung Electronics’ semiconductor business, said last week that Samsung had “delivered our concerns” about the initiative to the South Korean government.“Our stance is that, for the Chips 4 alliance, they should seek understanding from China first and then negotiate with the US,” said Kyung. “We are not trying to exploit the US-China conflict, but trying to find a win-win solution.”Samsung and South Korea’s SK Hynix are global leaders in memory chips, while Taiwan’s TSMC dominates the non-memory sector and Japan is home to some of the world’s leading semiconductor materials producers and equipment makers.A US government official said South Korea, the most reluctant of the potential members of the alliance, had expressed concerns that the initiative would “interfere in the competitive balance between some of the large chip companies,” for example by asking rivals such as Samsung and TSMC to share technology with each other.Some in Korea also worry that Washington could be tempted to use the initiative to give a competitive advantage to US rivals Intel and Micron.Lee Jong-ho, South Korea’s minister of science and ICT and a renowned semiconductor expert, said China had “already become a difficult market to do business in and bring new equipment into even before the alliance was proposed.”But he said it was important to respect the views of private companies, adding that it is “not appropriate to see this as a crisis”.Park Jea-gun, professor of electronics engineering at Hanyang University, said South Korea “should stress to China that it has no choice but to join because of the US pressure, and that it can’t produce memory chips in China without joining the alliance”.But a Japanese government official said that if South Korea did join, then it could limit the initiative’s scope, given unresolved tensions between the two countries. Japan is yet to lift export controls on chemicals to the Korean semiconductor industry that were imposed in 2019 amid a dispute over historical issues.Sanae Takaichi, the new economic security minister, stressed the importance of Japan working with the US and other close countries to make its semiconductor supply chain resilient. But she added: “It is also important, however, to be mindful that efforts in economic security do not restrict business activities and damage innovation or efficiency,” Japan and Korea have also proved reluctant to engage at a governmental level with a formal grouping that includes Taiwan. A senior Korean official said that South Korea had sought assurances from the US that Taiwan’s involvement could not be interpreted by Beijing as a challenge to the One China policy.The Korean official added that South Korea had not made any commitments beyond attending a future “preliminary meeting” of the four countries.

But the US official said that Seoul has now effectively taken the decision to join: “They don’t want to be left out or left behind, and frankly it would be difficult to move forward without them.”Nazak Nikakhtar, a former senior US economic security official now at Washington law firm Wiley Rein, said that the slow progress of the initiative demonstrated that “a multilateral approach only works if everybody has the same desire to move at the exact same time”. “South Korea is not as advanced as the US or Japan on the China issue — they are worried about North Korea, their proximity to China, and so on,” said Nikakhtar. “We also can’t expect Taiwan to self-regulate trade with China, because so many of the raw materials they use to make chips come from China,” she added. “So the notion that you could get Taiwan and South Korea especially to move in lockstep with us on this is absurd.”Additional reporting by Eleanor Olcott in Hong Kong More

The LNG company’s profit is up on soaring prices and LNG demand as Europe tries to end its reliance on Russian gas and find alternative suppliers over the country’s invasion of Ukraine. Cheniere shares rose 3%, or $5, to $165.73 in after-market trading. Europe offers a new growth area for the company after Asia, said Chief Executive Jack Fusco on a conference call with investors where it laid out plans to double its processing capacity over time. “We’ve had good conversations with Europe and felt warmly received by the European Union for everything we’re doing,” he said. “We have significant organic growth left in this business,” said Fusco, adding the company can finance two planned expansion projects while boosting shareholder payouts.Its annual dividend will rise 20% to $1.58 per share from the $1.32 initiated last year, executives said, adding they expect to have more than $20 billion of available cash for payouts and investments through 2026.Fusco also lifted the company’s full-year 2022 distributable cash flow forecast to between $8.1 billion and $8.6 billion, from $6.9 billion to $7.4 billion.Its share buyback program has been increased by $4 billion for an additional three years, as it expects to earn more cash from rising liquefied natural gas (LNG) prices.Cheniere raised its forecast for 2022 pretax earnings for a third time and now expects EBITDA to be between $11 billion and $11.5 billion, compared with its prior estimate of $9.8 billion to $10.3 billion.The largest U.S. LNG exporter added that the increase is primarily due to cargoes being pulled forward into 2022 from 2023 and because of sustained higher margins this year. More

Administration officials are pushing for a settlement to head off a walkout by tens of thousands of workers on Friday.Biden administration officials are racing to prevent a strike by tens of thousands of freight railroad workers that could further disrupt an already strained supply chain and cause billions of dollars in economic damage.The industry failed to reach a contract agreement with two unions representing much of the work force, and a federally mandated 30-day “cooling off” period ends on Friday, opening a door to strikes and lockouts. Some freight companies have started to limit services, and Amtrak, which carries many travelers on lines operated by freight railroads, said it would cancel some passenger service starting on Tuesday.Labor Secretary Martin J. Walsh pressured both sides over the weekend to reach an agreement, and administration officials have held dozens of calls with the industry and the unions, according to the Labor Department.“All parties need to stay at the table, bargain in good faith to resolve outstanding issues and come to an agreement,” the department said in a statement. “The fact that we are already seeing some impacts of contingency planning by railways again demonstrates that a shutdown of our freight rail system is an unacceptable outcome for our economy and the American people, and all parties must work to avoid that.”The deadlock puts President Biden in a complicated position. His administration has taken pains to restore and fortify the supply chain, which was deeply disrupted by the coronavirus pandemic. It has also worked hard to protect and endorse union rights.“A strike doesn’t help anybody,” Mr. Walsh said in an interview late last month. “A strike doesn’t help the workers. A strike doesn’t help the general public. A strike certainly doesn’t help the supply chain.”In July, Mr. Biden established an emergency board to help mediate the dispute between the industry, which includes six of the largest freight rail carriers, and about a dozen unions. Last month, that board recommended a resolution with a cumulative raise of 24 percent from 2020 through 2024, including an immediate 14 percent wage increase covering the first three years.Most of the unions agreed to the proposal, pending a vote of their membership. But two major unions are holding out for improvements to working conditions, which they say have steadily worsened in recent years as rail carriers have cut staffing.The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division, which represent engineers and conductors, say workers must often stay on call for several days at a time, working 12-hour shifts with little notice, and are penalized for calling in sick.“Our unions remain at the bargaining table and have given the rail carriers a proposal that we would be willing to submit to our members for ratification, but it is the rail carriers that refuse to reach an acceptable agreement,” they said in a joint statement. “In fact, it was abundantly clear from our negotiations over the past few days that the railroads show no intentions of reaching an agreement with our unions.”Inflation F.A.Q.Card 1 of 5What is inflation? More

In a statement, Georgieva welcomed Argentina’s commitment to achieve targets for its debt program and said it “will remain unchanged.”Georgieva praised the “strong steps” taken by Argentine economy minister Sergio Massa to stabilize markets and “reverse a scenario of high volatility” in the South American country.The statement follows a meeting between Georgieva and Massa on Monday in the context of a second review of the $44 billion arrangement signed in March this year.The program seeks to boost national reserves and reduce Argentina’s primary fiscal deficit to 2.5% of GDP in 2022 and 1.9% in 2023. More

Good morning. Brussels is set to ban products made using forced labour, a move that could further increase strains in its trade relations with China in the light of allegations about forced labour in the province of Xinjiang. Shoes, clothes and commodities such as timber, fish and cocoa are among the products most likely to be affected, according to those with knowledge of the plans. The US in June enacted a blanket ban on all imports from China’s Xinjiang province, where there have been allegations of widespread human rights violations — including torture, arbitrary detention and forced labour — against Muslim Uyghur and other minorities. The EU ban will instead focus on all products made from forced labour — including those made within the bloc — to avoid breaching World Trade Organization rules on non-discrimination.Thanks for reading FirstFT Asia. Send your feedback on today’s newsletter to [email protected]. — Emily Five more stories in the news1. Russia to press on in Ukraine, says Kremlin Russia will push on with its invasion of Ukraine until all military goals are met, the Kremlin has said, as it responded to Kyiv’s massive counter-offensive in the east, which has reclaimed more than 3,000 square kilometres of terrain.Military developments: Russian troops “fled like Olympic sprinters” as Kyiv retook the north-east in an offensive that was months in the making. Follow the latest with our visual guide to the war.2. Renminbi heads for record annual fall against dollar The drop of 8.7 per cent against the greenback this year to Rmb6.96 puts the renminbi on track for its biggest annual fall since China abandoned its longstanding currency peg and moved to a managed floating exchange rate in 2005.3. Widodo to consider buying Russian oil imports Indonesian president Joko Widodo has said the country needs to look at “all of the options” as it considers joining other Asian economies including India and China in buying Russian oil to offset soaring energy costs.4. Byju’s failure to publish accounts prompts scrutiny India’s most valuable start-up is coming under intense pressure from the government, investors and creditors over repeated failures to publish its accounts, as funding and revenues dry up for the once-booming educational technology sector. 5. King Charles vows to uphold UK democracy King Charles III yesterday devoted himself to upholding “the precious principles of constitutional government”, in a ceremony at Westminster that served as a reminder of the monarch’s constrained role in Britain’s democracy.

King Charles III yesterday devoted himself to upholding ‘the precious principles of constitutional government’

Queen Elizabeth II met countless people during her 70-year reign. Did she ever come to your workplace or community? Please share your story via this short form. The day aheadJapan PPI The nation’s producer price index data for August will be released today.Victoria MPs in Australia swear allegiance to The King Members of Parliament in Victoria, the only Australian state or territory where lawmakers must swear their allegiance to a new monarch after the death of a predecessor, will today pledge allegiance to King Charles III. (Canberra Times) Twitter shareholder vote Elon Musk sent a third letter to the social media company last week attempting to call off his $44bn takeover of Twitter, but the company has repeatedly rejected Musk’s reasoning. Today, shareholders will vote on whether to approve the deal. (CNBC)Swearing in of Kenya’s new president William Ruto will be sworn in on Tuesday after his election victory was confirmed by the country’s supreme court. Now, as the FT editorial board has made clear, he must deliver.What else we’re reading Japan is preparing for a videogaming jamboree Later this week, after a Covid-enforced hiatus, the Tokyo Game Show will reopen its turnstiles for the first time in three years: a huge, 1,883-booth trade fair convened in the faith that cramming a hangar with humans is the best way to sell the idea that the future of gaming is virtual.EY’s challenge is just beginning Partners will begin voting in November on whether to split EY’s advisory and audit arm. But for EY, selling the deal to partners and keeping more than 300,000 employees happy will be just as difficult as winning the backing of the firm’s leaders proved, industry veterans say.The Merge: a blockchain revolution or just more hype? If there is one thing the crypto community has in good supply, it’s promises. Critics have highlighted the industry’s links to criminal activity and its huge carbon footprint. But enthusiasts say Ethereum’s switch to a greener system is a long-awaited chance to prove them wrong.The Ukraine war has reached a turning point After Russia’s setbacks a new and dangerous phase of the conflict is beginning, writes Gideon Rachman. Rather than accept defeat, Vladimir Putin may try to escalate. His options, however, look limited and unappealing.Don’t be indispensable at work The internet teems with advice on how to become “the person no one can live without”. But, as Miranda Green explains, making people dependent on you, can actually be a terrible trap.Add these to your book listAs epic levels of flood, heat and fire strike countries across the world, can 21st-century capitalism deliver the changes needed to prevent further environmental carnage? And do we really understand what is happening to the most fragile wildernesses on the planet? A new crop of environmental books addresses these two questions, now among the most pressing of our time, writes Pilita Clark. More

WASHINGTON (Reuters) -A rocket from Jeff Bezos’ space company Blue Origin failed mid-flight shortly after liftoff on Monday, aborting its cargo capsule to safety before crashing into the Texas desert, according to the company and a live video stream of the mission.Without any humans on board, the rocket lifted off from Blue Origin’s West Texas launch site Monday morning as the company’s 23rd New Shepard mission, aiming to send NASA-funded experiments and other payloads to the edge of space to float for a few minutes in microgravity.But just over a minute after liftoff, and roughly 5 miles (8.05 km) above ground, the New Shepard booster’s engines flared unexpectedly during ascent. The capsule’s abort motor system triggered almost immediately, jetting the craft away from the faulty rocket before parachuting back to land intact.The booster crashed within a designated hazard area, according to the U.S. Federal Aviation Administration, which oversees and regulates launchsite safety. Blue Origin’s fleet of New Shepard rockets is grounded until the FAA signs off on the outcome of a company-led investigation into the mishap, the agency added.”During today’s flight, the capsule escape system successfully separated the capsule from the booster,” Blue Origin tweeted after the mishap. “The booster impacted the ground. There are no reported injuries; all personnel have been accounted for.”The mission, called NS-23, was the first New Shepard launch without humans aboard in over a year, and the fourth mission in 2022. The rocket-capsule system has flown 31 people in all under Blue Origin’s suborbital space tourism business, in which paying customers are launched some 62 miles high for a few minutes of microgravity at the edge of space before their capsule returns to land under parachutes.Billionaire Bezos, the Amazon.com Inc (NASDAQ:AMZN) founder who started Blue Origin in 2000, was among the first passengers to fly New Shepard during its debut crewed mission in 2021.The rocket that crashed on Monday had flown eight times before, but it was not immediately clear whether those past missions included humans. Blue Origin flew New Shepard 15 times before its first crewed flight. More