Economy

LONDON (Reuters) -Russia will seek payment in roubles for gas sold to “unfriendly” countries, President Vladimir Putin said on Wednesday, and European gas prices soared on concerns the move would exacerbate the region’s energy crunch.European nations and the United States have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on Feb. 24. But Europe depends heavily on Russian gas for heating and power generation, and the European Union is split on whether to sanction Russia’s energy sector. Putin’s message was clear: If you want our gas, buy our currency. It remained unclear whether Russia has the power to unilaterally change existing contracts agreed upon in euros.The rouble briefly leapt after the shock announcement to a three-week high past 95 against the dollar. It pared gains but stayed well below 100, closing at 97.7 against the dollar, down more than 22% since Feb. 24.Some European wholesale gas prices up to 30% higher on Wednesday. British and Dutch wholesale gas prices jumped. [NG/EU] Russian gas accounts for some 40% of Europe’s total consumption. EU gas imports from Russia this year have fluctuated between 200 million to 800 million euros ($880 million) a day. “Russia will continue, of course, to supply natural gas in accordance with volumes and prices … fixed in previously concluded contracts,” Putin said at a televised meeting with government ministers.”The changes will only affect the currency of payment, which will be changed to Russian roubles,” he said.German Economy Minister Robert Habeck called Putin’s demand a breach of contract and other buyers of Russian gas echoed the point. “This would constitute a breach to payment rules included in the current contracts,” said a senior Polish government source, adding Poland has no intention of signing new contracts with Gazprom (MCX:GAZP) after their existing deal expires at the end of this year.Major banks are reluctant to trade in Russian assets, further complicating Putin’s demand.A spokesperson for Dutch gas supplier Eneco, which buys 15% of its gas from Russian gas giant Gazprom’s German subsidiary Wingas GmbH, said it had a long-term contract denominated in euros.”I can’t imagine we will agree to change the terms of that.” According to Gazprom, 58% of its sales of natural gas to Europe and other countries as of Jan. 27 were settled in euros. U.S. dollars accounted for about 39% of gross sales and sterling around 3%. Commodities traded worldwide are largely transacted in the U.S. dollar or the euro, which make up roughly 80% of worldwide currency reserves.”There is no danger for the (gas) supply, we have checked, there is a financial counterparty in Bulgaria that can realize the transaction also in roubles,” Energy Minister Alexander Nikolov told reporters in Sofia. “We expect all kinds of actions on the verge of the unusual but this scenario has been discussed, so there is no risk for the payments under the existing contract.”Several firms, including oil and gas majors Eni, Shell (LON:RDSa) and BP (NYSE:BP), RWE and Uniper – Germany’s biggest importer of Russian gas – declined to comment. “It is unclear how easy it would be for European clients to switch their payments to roubles given the scale of these purchases,” said Leon Izbicki, associate at consultancy Energy Aspects. He said, however, that Russia’s central bank could provide additional liquidity to foreign exchange markets that would enable European clients and banks to source needed roubles.Moscow calls its actions in Ukraine a “special military operation.” Ukraine and Western allies call this a baseless pretext.ONE WEEK DEADLINEPutin said the government and central bank had one week to come up with a solution on moving operations into the Russian currency and that Gazprom would be ordered to make the corresponding changes to contracts.In gas markets on Wednesday, eastbound gas flows via the Yamal-Europe pipeline from Germany to Poland declined sharply, data from the Gascade pipeline operator showed.”The measures taken by Russia may also be interpreted as provocative and may increase the possibility that Western nations tighten sanctions on Russian energy,” said Liam Peach, emerging Europe economist at Capital Economics.The European Commission has said it plans to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies “well before 2030.”But unlike the United States and Britain, EU states have not sanctioned Russia’s energy sector. The Commission, the 27-country EU’s executive, did not respond to a request for comment.Habeck said he would discuss with European partners a possible answer to Moscow’s announcement. Dutch Prime Minister Mark Rutte said more time was needed to clarify Russia’s demand. “In their contracts it’s usually specified in what currency it has to be paid, so it’s not something you can change just like that,” Rutte said during a debate with parliament.Russia has drawn up a list of “unfriendly” countries corresponding to those that have imposed sanctions. Deals with companies and individuals from those countries must be approved by a government commission.The countries include the United States, European Union member states, Britain, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine. Some, including the United States and Norway, do not purchase Russian gas.The United States is consulting with allies on the issue and each country will make its own decision, a White House official told Reuters. The United States has already banned imports of Russian energy.($1 = 0.9097 euro) More

PARIS (Reuters) -Renault SA, the Western carmaker most exposed to the Russian market, said on Wednesday it would suspend operations at its plant in Moscow while it assesses options on its majority stake in Avtovaz, the country’s No. 1 carmaker. The move came amid mounting pressure over the French company’s continued presence in Russia since the country invaded Ukraine. Ukraine’s foreign minister, Dmytro Kuleba, has called for a global boycott of Renault (PA:RENA). “Renault Group reminds that it already implements the necessary measures to comply with international sanctions,” the company said in Wednesday’s statement, its first on the issue since the start of the war. The statement made no mention of the crisis in Ukraine. The French carmaker on Wednesday revised its operating group margin to around 3% from at or above 4% in 2022 and adjusted its automotive cash flow outlook to “positive” from a previous estimate of 1 billion euros ($1.10 billion) or above. Ukrainian President Volodymyr Zelenskiy earlier accused Renault of financing the war and said Renault, among other French companies, must stop “financing the murder of children and women, of rape.”Kuleba wrote in a tweet on Wednesday, “I welcome @renaultgroup’s statement on cessation of industrial activities in Russia. Responsible move against the backdrop of Russia’s ongoing barbaric aggression against Ukraine.”Renault derives 8% of its core earnings from Russia, according to Citibank, mainly through its 69% stake in Avtovaz, which is behind the Lada car brand.According to two sources close to the matter, Renault’s board of directors considered different scenarios but decided for the time being to maintain a presence in Russia.A decade ago, automakers saw Russia as a promising growth market with the potential to be among the ten largest vehicle-buying nations in the world. The latest sanctions, and earlier measures imposed after Russia’s 2014 annexation of Crimea, have derailed those prospects.The French government has said repeatedly it was up to French companies to decide on the future of their operations in Russia, as long as they comply with international sanctions.After resuming Russian production earlier this month, the company announced a further partial shutdown at its Togliatti and Izhevsk sites this week, citing shortages of electronic components. Its Russian operations last year accounted for almost 20% of total group volume, but Renault Chairman Jean-Dominique Senard said on March 10, two weeks in to the war, that the crisis was unlikely to threaten the French carmaker’s recovery.Renault said on Wednesday it will quantify the value of assets affected by the decision on the Moscow plant when it releases half-year results. Last year those assets stood at 2.2 billion euros ($2.42 billion), the company said.Other companies with operations in Russia have suspended or scaled back operations in the face of Western sanctions, but still maintained some ties to their business in the country. These companies are feeling pressure to further shut down. U.S. automaker Ford Motor (NYSE:F) Co said on March 1 it would suspend shipments of components and other support for a van-making venture 51% owned by Russian manufacturer Sollers. Ford has not said what it will do with its 49% stake in that operation.French food group Danone said on Wednesday it would continue local production in Russia of essential dairy and infant nutrition products, but had cut other ties with the country over its war in Ukraine.Swiss rival Nestle SA (SIX:NESN) said it would halt the sale of a wide range of brands in Russia, including several nonessential products such as KitKat snacks and Nesquik chocolate mix. It had already halted nonessential imports and exports to Russia.Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.($1 = 0.9084 euro) More

The US said it had made a formal determination that Russia’s military has committed war crimes in Ukraine, pointing to atrocities including “indiscriminate attacks deliberately targeting civilians” carried out during Vladimir Putin’s invasion.Antony Blinken, secretary of state, said the Biden administration had made the assessment of Russian war crimes based on a “careful review” of information from public and intelligence sources and will be up to a court of law to determine “guilt in specific cases”.Blinken noted in particular a strike on a theatre in Mariupol that was clearly marked with the Russian word for “children” as well as an attack on a maternity hospital that killed a pregnant woman and her child. The US will continue to gather information on attacks and share them with allies and international institutions, he added.The accusation of war crimes followed shortly after Nato’s announcement that it would provide Ukraine with defences against chemical and nuclear weapons. US president Joe Biden, who called Putin a “war criminal” last week in his sharpest rebuke yet of the Russian president, joins other Nato and G7 leaders in Brussels today to discuss further allied response to the war.More news on UkraineEnergy: Crude oil prices climb higher with Russia’s closure of a main pipeline, halting the export of 1.4mn barrels a day. Meanwhile, Germany’s Olaf Scholz warns that a ban on Russian fossil fuels would trigger a European recession.Business: Nestlé will halt sales of most brands in Russia, but will continue to pay its 7,000+ employees in the country. Markets: The Moscow stock exchange partially reopens today, with limited hours and no short selling, after being closed for more than three weeks.Russian opposition: Top Kremlin official Anatoly Chubais has quit as Vladimir Putin’s climate envoy, making him the highest-ranking official to leave the Kremlin since the start of Russia’s war in Ukraine.Financial services: BNP Paribas and Crédit Agricole of France are the latest big international bank to sever ties with corporate clients in Russia.Opinion: Many foreign policy goals have fallen by the wayside since Russia’s invasion of Ukraine. None has been more thoroughly upended than Japan’s aspiration to partner with Russia against China, writes Kathrin Hille.Share your thoughts with us at [email protected] and we may feature them in the newsletter. Here’s the rest of today’s news — SophiaFive more stories in the news1. Evergrande bondholders threatens legal action A group of bondholders is moving closer to formal legal action against China’s Evergrande after the world’s most indebted property developer made a surprise disclosure that mystery lenders to one of its subsidiaries claimed more than $2bn in cash.

Video: Evergrande: the end of China’s property boom

2. Boston Consulting Group sues GameStop over unpaid fees The firm, one of the world’s largest corporate advisers, has sued the video game retailer and meme-stock archetype GameStop over what it called $30mn in unpaid bills.3. Tencent’s revenue growth hit by China’s regulatory crackdown The Chinese tech group reported its slowest revenue growth on record after diverting resources from game development and restricting the access of minors to its games in order to comply with a barrage of regulations introduced last year.4. Activist shareholders battle Toshiba in critical vote on company’s future Shareholders may bring the company to reopen buyout talks with private equity. The meeting, happening today, is set to be a showdown marking the climax of a four-year struggle between Toshiba and shareholders on the direction of the company.5. Taliban to bar teenage Afghan girls from secondary school The U-turn has sparked international condemnation and left desperate students stranded outside campuses. Girls had been allowed to attend primary school but the Taliban had said students from grade 7, or about age 13, would not be allowed to resume classes.Coronavirus digestVaccines Growing research suggests the elderly and those with health problems would benefit from another dose, but scientists disagree whether to roll out additional shots more broadly.Malaysia is pushing to reopen its economy after two years of Covid-related border closures, but a $100bn megacity spearheaded by a Chinese developer remains largely stuck in neutral.The day aheadBank of Japan minutes published Minutes from Japan’s monthly monetary policy meeting are set to be released. The central bank has maintained a noticeably more cautious stance than that of the US amid surging prices.World leaders meet in Brussels Nato heads of state will gather to discuss next steps in the Ukraine conflict. US president Joe Biden and European leaders face difficult choices amid fears that Vladimir Putin might resort to weapons of mass destruction to break Ukraine’s resistance. The Nato meeting coincides with a pre-planned European Council meeting of EU member state leaders.What else we’re reading Wirecard: the case against Markus Braun The former chief executive of the payments company that went bust with debts of €3bn has swapped his life as a paper billionaire and is now facing fraud charges and the possibility of up to 15 years in prison. But his case is not clear cut.Sunak announces income tax cut At the tail end of UK chancellor Rishi Sunak’s Spring Statement came a promise to cut the basic rate of income tax by 1p in the pound in April 2024. The announcement, described as “desperate” by one senior Tory MP, confirms the grim political and economic situation in which Sunak finds himself.Why ‘shrinkflation’ means you are paying the same for less Some companies are happy to pass on higher costs to customers — others are more sneaky, says Brooke Masters. And shrinkflation does not stop at manufacturers. Service and hospitality providers are under pressure to find creative ways to preserve their margins. Iran’s enemies in the Middle East are closing ranks Efforts to renew the Iran nuclear deal may be in danger, writes David Gardner, as the possibility of the US removing Tehran’s Revolutionary Guard from its foreign terrorist list causes alarm in the region.FilmWriting with Fire follows the all-female staff of Hindi news portal Khabar Lahariya. This “observational documentary” is not just about journalism, but also reveals the complexities of caste and class inequalities. Here’s how a film about fearless Indian female reporters made it to the Oscars.

Suneeta has to fight chauvinism and corruption © BBC/Black Ticket Films More

The reinstated product exclusions https://ustr.gov/sites/default/files/notices/FRN%20for%20Notice%20of%20Reinstatement.pdf will be effective retroactively from Oct. 12, 2021 and extend through Dec. 31, 2022, USTR said. They cover a wide range of the initially estimated $370 billion worth of Chinese imports that former president Donald Trump hit with punitive tariffs of 7.5% to 25%.The list released by USTR includes industrial components such as pumps and electric motors, certain car parts and chemicals, backpacks, bicycles, vacuum cleaners and other consumer goods.The Trump administration initially had granted more than 2,200 exclusions to the tariffs to provide relief to certain industries and retailers. Most were allowed to expire, but 549 were extended for a year, and these expired at he end of 2020.U.S. Trade Representative Katherine Tai last October had launched a review of whether to reinstate those 549 exclusions as part of her strategy to confront China on its trade practices.A series of virtual meetings with her Chinese counterparts since then yielded little improvement in China’s performance under Trump’s “Phase 1” trade agreement with Beijing. More

(Reuters) -Federal Reserve policymakers on Wednesday signaled they stand ready to take more aggressive action to bring down unacceptably high inflation, including a possible half-percentage-point interest rate hike at the next policy meeting in May.”I have everything on the table right now. If we need to do 50 (basis points), 50 is what we’ll do, ” San Francisco Fed President Mary Daly said at an event organized by Bloomberg. “With the labor market so strong, inflation, inflation, inflation is top of everyone’s mind.”Daly has often been more cautious than her colleagues about policy tightening, and her openness to a bigger-than-usual rate hike at the May 3-4 meeting shows a rising sense of urgency that swift and concerted action is needed to stop inflation, running at three times the Fed’s 2% target, from getting entrenched.Accelerating inflation “has necessitated, I think, all of us to think more about how fast they’re going to have to go in order to keep inflation under control,” St. Louis Fed President Bullard told the Mid-Size Bank Coalition of America. “We have to think bigger, maybe, than we thought about in the past.”Bullard was the lone dissenter last week on the U.S. central bank’s March 16 decision to raise the benchmark overnight interest rate by a quarter of a percentage point from the near-zero level. Bullard said a half-percentage-point hike was appropriate to kick off the tightening cycle and he wants the policy rate to rise to 3% this year.It’s now clear Bullard is far from a lone voice in advocating for more aggressive action, especially given a growing sense that higher oil, wheat and other commodity prices stemming from Russia’s invasion of Ukraine will only worsen the inflation picture, while doing little to dent economic growth. Fed Chair Jerome Powell earlier this week said the central bank would move “expeditiously” to move interest rates up after last week’s hike, and left the door wide open to a larger jump in borrowing costs at the May meeting. Fed policymaker forecasts released last week signaled most saw the policy rate rising to 1.9% or higher by the end of the year.”I would like to front-load some of that,” Cleveland Fed President Loretta Mester said on Wednesday in a call with reporters when asked about the path of interest rate increases this year. “That better positions us if we do it earlier rather than later for what happens in the second half of the year.” Mester wants the federal funds rate to increase to about 2.5% by the end of the year, the level she sees as neither braking nor boosting the economy, and which would require “some” 50-basis-point rate rises.Markets have taken that view on board, with traders pricing in two half-percentage-point hikes in coming meetings, and a year-end policy rate range of 2.25%-2.5%. BALANCE SHEET REDUCTIONSPowell, speaking to a National Association for Business Economics conference on Monday, also said May could mark the start of reductions in the central bank’s nearly $9 trillion balance sheet, which ballooned during the COVID-19 pandemic as policymakers strove to bolster the economy.Trimming the Fed’s portfolio of Treasuries and mortgage-backed securities would put further downward pressure on inflation, providing what Daly said on Wednesday would be the equivalent of at least one quarter-percentage-point rate hike this year.”I think the data will tell us whether 50 basis points, or 25 basis points with the balance sheet, is the right recipe; or 50 basis points with the balance sheet,” she said. Daly said she thinks the federal funds rate will likely need to rise above 2.5%, but probably not until next year. Still, she said, “we’re prepared to do whatever it takes to ensure price stability, and in the wake of all of the other challenges that we have.”Mester also told reporters there is nothing to stop the Fed from hiking rates and beginning to reduce its balance sheet at the same policy meeting.”I think given the situation we’re in and the communications that Chair Powell has already made about the balance sheet process, I don’t have concerns that that would be destabilizing, and I think that we have to recognize inflation is very elevated,” Mester said, noting that financial markets could handle such a move. “We have to do what we can with both our policy tools to get inflation under control.”Bullard on Wednesday repeated his preference for the Fed to immediately start paring its balance sheet, with asset sales possible later on if inflation remained high. More

WASHINGTON (Reuters) -The United States will “absolutely” enforce export controls if Chinese companies send semiconductors to Russia that were made with U.S technology, a move that could “essentially shut them down,” Commerce Secretary Gina Raimondo said on Wednesday.Raimondo doubled down on U.S. threats to punish any company in any country that violated tough export controls that the United States has imposed on Russia over its invasion of Ukraine.Raimondo said all Chinese semiconductor companies relied on U.S. software to make their chips, which made them subject to controls. “If we find that they are selling chips to Russia, then we can essentially shut them down by denying them use of that software, and we’re absolutely prepared to do that,” she told Reuters in an interview.President Joe Biden plans to announce a fresh package of sanctions on Russian political figures and oligarchs during emergency talks this week in Brussels with European and NATO leaders, national security adviser Jake Sullivan said on Wednesday.The United States and its allies are seeking to ratchet up pressure on Russian President Vladimir Putin to halt the war, which Russia calls a “special military operation.”They are particularly concerned about China’s relationship with Russia, its failure to condemn the invasion, and U.S. reports that Beijing is willing to provide military assistance to Moscow – all issues on the agenda during Biden’s meetings.Beijing has described the sanctions imposed on Russia as increasingly outrageous, although it has expressed concern about the war.Raimondo said the United States was monitoring for possible violations of its sweeping export controls on Russia “hour by hour, minute by minute,” and would crack down on any violations by any country as they occurred.Asked whether Chinese firms were violating the controls so far, Raimondo said no, but noted that Commerce does not disclose investigations or enforcement actions before they are finalized.The former venture capitalist and Rhode Island governor said Washington expected China to comply because the consequences would be severe and could hit any company, including Chinese semiconductor maker Semiconductor Manufacturing International Corp (SMIC).Raimondo said she mentioned SMIC in an interview with the New York Times earlier this month as an example of the companies that could be affected, and should have said “XYZ company” instead. But she denied that she was softening the threat.”I’m not walking that back. I’m very consistent and clear,” Raimondo said.She said the unprecedented breadth of the concerted Western action against Russia could not be lost on Beijing, and noted recent U.S. agreements on steel and aluminum with the European Union, Britain and Japan that are squarely aimed at cracking down on Chinese overcapacity.”What you’re seeing now is really unprecedented levels of cooperation between the U.S. and our like-minded allies,” Raimondo said. “I’m sure that China takes notice that America is strong and that our relationship with our partners is stronger than it’s been in a long time.” More

Continued exchange rate flexibility would be essential to absorb external shocks, it said in a statement.The IMF is working closely with Egyptian authorities to prepare for discussions with a view to supporting sustainable, job-rich and inclusive growth, it added.The new programme could entail additional IMF funding, an Egyptian Cabinet spokesman said in a separate statement. Egypt is under new economic pressure following Russia’s invasion of Ukraine, which prompted foreign investors to flee emerging markets.On Monday the government let the Egyptian pound depreciate by 14% after it had remained little changed since November 2020. On Wednesday, the currency appreciated slightly to 18.32 pounds to the dollar. Russia and Ukraine were the main exporters of wheat to Egypt – typically the world’s top importer – and major sources of tourism. “The rapidly changing global environment and spillovers related to the war in Ukraine are posing important challenges for countries around the world, including Egypt,” the IMF said. “Continued exchange rate flexibility will be essential to absorb external shocks and safeguard financial buffers during this uncertain time. Prudent fiscal and monetary policies will also be needed to preserve macroeconomic stability.” The government on Monday announced a 130 billion Egyptian pound ($7.05 billion) economic relief package, a move that analysts said seemed designed to win IMF support. In the statement, the IMF praised “authorities’ recent actions to expand targeted social protection.”Egypt has turned to the IMF three times in the last few years. It borrowed $12 billion under an Extended Fund Facility in November 2016, $2.8 billion under a Rapid Financing Instrument in May 2020 and $5.2 billion under a Stand-by Arrangement in June 2020.Egypt is eligible for a new version of any one of the three programmes, according to a person familiar with its discussions with the IMF. But because Egypt has exceeded its normal borrowing quota it would have to adhere to exceptional access criteria, making it subject to a greater level of scrutiny, the person said. More

(Reuters) – St. Louis Federal Reserve Bank President James Bullard on Wednesday said U.S. policymakers need to think “bigger” and act “faster” on raising interest rates, given that inflation is “way over” where it ought to be. Accelerating inflation over the last several months “has necessitated, I think, all of us to think more about how fast they’re going to have to go in order to keep inflation under control,” Bullard told the Mid-Size Bank Coalition of America, referring to his fellow Fed policymakers. He said he expects inflation to rise further this spring, but could be brought under control by next year. More