Economy

Russia’s central bank more than doubled interest rates on Monday in an attempt to steady the country’s financial markets, after unprecedented western sanctions sent the rouble tumbling as much as 29 per cent.The central bank boosted its main interest rate to 20 per cent from 9.5 per cent in an emergency decision, saying that “external conditions for the Russian economy have drastically changed”. The rouble dropped to almost 118 against the US dollar in offshore trading on Monday, according to Bloomberg data, after Russian president Vladimir Putin put his nuclear forces on high alert and the US, Europe and UK unleashed sanctions aimed at cutting the country off from the global financial system. The exchange rate later recovered to around 102 in what market participants described as deeply strained trading conditions that make it difficult for foreigners to sell.Russia’s biggest foreign bond, a $7bn bond maturing in 2047, halved in price to 35 cents on the dollar, according to Tradeweb data. Investors said the market was extremely hard to trade. “If you see a quote on the screen it might be live or it might not,” said one. “There’s nothing certain in this environment. It’s not about fundamentals any more, it’s about compliance issues.”Trading in shares and derivatives on the Moscow Exchange was suspended, Russia’s central bank confirmed on Monday. However Russia-focused shares traded on other markets around the world dropped heavily. Global depositary receipts of Russian companies traded in London, such as Sberbank, Lukoil and VTB, remained open. GDRs are a type of bank certificate that securitises the ownership of shares. Sberbank, which the European Central Bank warned was “failing”, plummeted as much as 75 per cent and TCS Group, which owns Tinkoff, dropped as much as 78 per cent. Gazprom halved in value. The LSE said it would suspend the shares of VTB, the Russian bank, if it remained on the US list of sanctioned companies from May 25.In a further sign of how Moscow is being pushed further to the fringes of world markets, Norway said on Sunday that its $1.3tn oil fund, the world’s biggest sovereign wealth fund, would freeze its investments in Russian assets and begin divesting from the country. BP, the UK energy group, also said it would divest the 20 per cent stake in Russian state-owned oil company Rosneft it had held since 2013. The rouble had already been hit hard in the previous week, sliding to record lows following the invasion and the imposition of sanctions by the US and Europe.The US and its allies ratcheted up those punitive measures on Saturday, taking aim at Russia’s central bank to prevent it from using international reserves. Western allies also agreed to cut some of the country’s lenders out of the Swift messaging system, a crucial piece of infrastructure for global payments.Russians have been forming long queues to withdraw money out of cash machines, with the central bank lacking an obvious mechanism to stabilise its economy and currency. The central bank said on Monday its rate increase was aimed at supporting “financial and price stability and protect the savings of citizens from depreciation”. “Put simply, Russia’s ability to transact with any financial institution at a global level will be severely impaired, because most international banks across any jurisdiction use Swift,” George Saravelos, an analyst at Deutsche Bank, wrote in a note to clients.

Saravelos added that he expected financial markets to reflect intensifying risks to energy supplies, denting investors’ willingness to buy risky assets and potentially also dragging down the euro.“Money markets may experience some deterioration in funding conditions this week on the back of the uncertain impact of an asset freeze on global liquidity. It would be expected that the European Central Bank, Fed and other central banks step in to provide a powerful backstop if needed and we would not rule out inter-meeting announcements,” he said, adding that the rouble and other European emerging market currencies were likely to come under pressure.On Friday, rating agency S&P Global cut Russia’s debt rating to “junk” status, underlining the risk that the military assault on Ukraine could prove even more deeply damaging to the country’s financial markets.“The Russia bond market is not functioning at all, other than EU and US banks working on unwinding any outstanding trades with Russian banks,” said Kaan Nazli, a portfolio manager at Neuberger Berman. “The local bond market has had no liquidity since the beginning of the invasion and this is now made worse by the central bank’s decision to stop local banks from helping foreigners reduce bond holdings. There was some buying of the Russian Eurobonds by the local banks on Friday. Now with the Swift and central bank bans there isn’t activity.”Additional reporting by Philip Stafford and Harriet Clarfelt More

LONDON (Reuters) -The Church of England has joined a growing list of investors looking to exit Russian assets after Ukraine was attacked, although doing so is likely to become harder.The Church Commissioners and the Church of England Pensions Board said they had instructed fund managers on Feb. 24 to sell their direct holdings in Russian companies in response to Russia’s attack on Ukraine.The church said it would also make no further investments in Russian companies.”Prior to the instruction, holdings across portfolios in Russian companies represented approximately 0.16% of total investments. No investments were held in Russian sovereign debt,” a spokesperson said on Monday.The move follows news over the weekend that Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, planned to do the same, and as the New York City Comptroller said he weas reviewing assets for possible divestment.However, investor looking to sell will likely find it harder to do so. Russia’s central bank ordered market participants to reject attempts by foreign clients to sell Russian securities.Meanwhile, Euroclear said on Monday it has closed its link to rival settlement house Clearstream Banking for settling trades in Russian securities in response to European Union financial sanctions. More

Russia’s central bank has more than doubled interest rates to support a plunging rouble as the economic impact of President Vladimir Putin’s invasion of Ukraine hit the Russian economy.In an emergency move, the Russian central bank increased interest rates to 20 per cent from 9.5 per cent as the currency lost nearly a third of its value against the dollar following the announcement of unprecedented sanctions on Russia’s banking system.The central bank also banned foreigners from selling local securities and pushed back trading on the Moscow stock exchange as fears of financial chaos in Russia spread. The Kremlin conceded that the economic reality in Russia had “significantly changed” following the sharp fall in the rouble’s value and the rise in interest rates. Putin has called for an emergency meeting with his economic advisers later today in response to Russia’s growing financial crisis.Over the weekend queues formed at Russia’s empty cash machines as savers feared a collapse of the rouble and worried they would be unable to access the international payments system.In other developments:The Ukrainian military commander leading the defence of Kyiv said his troops had successfully defended the capital from a Russian attack overnight.Luxembourg has become the latest EU country to offer weapons to Ukraine. Over the weekend Germany dropped its longstanding policy not to deliver weapons to conflict zones.Putin put Russia’s nuclear forces on high alert in response to what he called “illegitimate western sanctions”. Ukraine’s President Volodymyr Zelensky agreed to send a delegation to peace talks with Russia “without preconditions”.BP agreed to divest its 20 per cent stake in Russian state-owned oil company Rosneft and Norway’s $1.3tn oil fund said it would dump its Russian investments.The EU announced plans to ban Russian airlines from almost all European airspace, leaving aircraft leasing companies scrambling to recover hundreds of planes.In the western Ukrainian city of Lviv refugees try to escape the war amid an escalating humanitarian crisis.Follow the latest developments on our live blog and track the conflict in maps. We also have an explainer detailing how western sanctions could hobble the Russian economy and our editorial board argues that Putin’s war looks ever more like a miscalculation that could make him more dangerous. Thanks for reading FirstFT Americas. To keep up to date with all that’s happening in Ukraine, sign up here to receive my colleague Valentina Pop’s essential newsletter, Europe Express — Gordon Five more stories in the news1. World’s largest SWF to vote against Apple’s pay policies Norway’s oil fund will vote against the iPhone maker’s pay policies, as well as shareholder proposals on transparency, forced labour, a civil rights audit and sustainability disclosures, according to its voting intention.2. Buffett bemoans few good deals Warren Buffett lamented the lack of attractive investments available to his sprawling $713bn Berkshire Hathaway conglomerate over the weekend. In his annual letter to investors, Buffett wrote that low interest rates had inflated valuations across financial markets and that he and partner Charlie Munger had found “little that excites us”.3. Australian cities under water after ‘rain bomb’ strikes Devastating floods have submerged cities and towns in Queensland and New South Wales, triggering thousands of insurance claims and stoking criticism of the Australian government’s stance on climate change.4. Fried Frank poaches 35 legal staff from rival Cadwalader Fried Frank, the US law firm, has poached a team of financial services lawyers from its rival Cadwalader, Wickersham & Taft, as fierce competition for lawyers rages across the industry.5. Austrian group faces fraud and embezzlement allegations Top executives at packaging company Schur Flexibles are alleged to have embezzled millions of euros and committed accounting fraud, stunning investors that lent the group nearly €500mn less than six months ago.Coronavirus digestCadavers are piling up at Hong Kong’s hospitals and public mortuaries as the number of Covid-19 cases soars in the territory.Three in 10 respondents agreed that surveillance at work had increased during Covid, according to a survey from the UK’s largest federation of trade unions.Russia’s invasion of Ukraine has shattered hopes of a strong global economic recovery from coronavirus — at least in the short term.The day aheadUN summits The UN General Assembly, which comprises all members, will hold an emergency session over Russia’s invasion of Ukraine. The UN Human Rights Council kicks off its 49th session in Geneva, with French foreign minister Jean-Yves Le Drian due to speak on security concerns, and Kenya hosts the fifth session of the UN Environment Assembly.Read on: Chemical and plastics manufacturers are lobbying to weaken a UN plastics treaty proposal to cover the waste problem rather than production.Emmanuel Macron to announce re-election campaign The French president is expected to announce his candidacy for re-election. The FT is tracking national opinion polls in the run-up to the first round of voting in April.What else we’re reading Is fertility a topic for the workplace? When Raina Brands posted updates to her CV on Twitter last year, the focus for the UCL associate professor was not professional but personal: “recurrent pregnancy loss” (2019-20) and the birth of her son (2021). “I believe it is time to update #academic CVs to be inclusive of women’s whole lives,” she wrote.

All the champions and policies in the world will fail if the culture is hostile, a line manager is unsympathetic or personal information is used against employees © Dom Mackenzie

Donald Trump’s accounts may hold him to account The former US president must be feeling more than usually unassailable, after seeing off two impeachments and a special counsel investigation. But despite his love of bombast, Trump’s legal woes are far from over, writes our editorial board.The race to a post-dollar world Russia’s invasion of Ukraine is a critical turning point that will have lasting economic consequences. Among them will be a quickening shift to a bipolar global financial system, one based on the dollar and the other on the renminbi, writes Rana Foroohar. How a Brazilian crime syndicate built a global drug empire Founded as a prison brotherhood 30 years ago in São Paulo, the Primeiro Comando da Capital, or First Capital Command, has evolved into a multinational mafia, with a revenue stream that generates upwards of $500mn every year, according to state prosecutors. Here’s how they did it.Cancer, Covid and me Miranda Green’s cancer diagnosis coincided with the start of the Covid emergency, leading to the postponement of her treatment. “So began the most surreal and extreme period of my life,” she writes.FashionAs Covid restrictions wound down in the UK, designers returned to the catwalk with novel ideas for shows. More than a few of the 37 brands that returned to in-person shows in London this season displayed an urge to do something more considered and memorable.

Richard Quinn was one of many designers setting up memorable shows during London Fashion Week © Mike Marsland/WireImage More

“The guiding principle will be reciprocity, and our own interests will be at the forefront of that,” he told reporters on a conference call. More

The UN has put civilian casualties in Ukraine since Russia invaded at more than 100, including children, while 400,000 have fled the fighting as the commissioner for human rights said the world was at a “tipping point”.“The military attack on Ukraine is putting at risk countless lives,” said Michelle Bachelet, high commissioner for human rights, at the 49th session of the council in Geneva.The UN’s Office for the High Commissioner for Human Rights has recorded 102 killed in the conflict from Thursday morning to Sunday night, including seven children, with 304 injured.“Most of these civilians were killed by explosive weapons with a wide impact area, including shelling from heavy artillery and multi-launch rocket systems, and air strikes,” Bachelet said on Monday. “The real figures are, I fear, considerably higher.“Meanwhile, millions of civilians, including vulnerable and older people, are forced to huddle in different forms of bomb shelters, such as underground stations, to escape explosions,” she said. As many as 422,000 people have fled Ukraine since Thursday morning, with many more internally displaced, the UN High Commissioner for Refugees reported.Monday’s council session, Bachelet said, takes place at a time that calls for “strong and visionary leadership”.“Throughout history, there have been moments of profound gravity, that cut the course of events between a ‘before’ — and a very different, more harmful, ‘after’,” she said. “We are at such a tipping point.” More

Russia’s invasion of Ukraine has injected new uncertainty into the economic outlook but is unlikely to derail the Federal Reserve’s plans to begin raising interest rates from March, as it seeks to combat the highest inflation in 40 years.Episodes of acute geopolitical tension have in the past prompted the US central bank to postpone making major policy decisions to avoid adding more volatility to a tumultuous situation. But one of the tightest labour markets in decades and fears that the conflict will worsen inflation is likely to motivate the Fed to plough ahead in roughly two weeks with the first interest rate increase since 2018.Still, the first rate rise is only expected to be a quarter of a percentage point as opposed to a supersized half-point increase as some have speculated, given concerns about how Russia’s assault on Ukraine could temper economic growth, and earlier resistance from many Fed officials. Financial volatility stemming from new sanctions against Russia’s central bank, which aim to isolate Moscow from the global financial system and strip it of its ability to defend its currency, is likely to further damp the appeal of an aggressive move. “The injection of additional uncertainty in the environment will cool the ardour for rapid adjustment, but will not inhibit them from making the first several steps down the road of policy adjustment,” said David Wilcox, who used to lead the research and statistics division at the Federal Reserve. But he added that the enormous unpredictability of geopolitical tensions alongside updated US employment and consumer prices data ahead of the Fed’s March gathering will give officials a lot of new information to parse.The expected March tightening will mark the start of a series of rate rises aimed at curbing the robust demand that has contributed to inflationary pressures.The Fed typically raises interest rates in quarter-point intervals and has not delivered a half-point adjustment since May 2000.“It doesn’t look like the situation in Ukraine, as horrible as it is, changes the basic fact that the Federal Reserve is facing, which is that monetary policy is very far from neutral,” said Andrew Levin, who worked at the central bank’s board for two decades and now teaches at Dartmouth College, referring to the level of interest rates that is neither accommodative nor restrictive.“The Federal Reserve needs a clear plan and needs to explain that plan to Congress, to the markets and to the public how it is going to make sure that it carries out its commitment to price stability,” said Levin, who supports the central bank opting for a jumbo, half-point rate rise in March, “barring some unthinkable geopolitical event”.Fed chair Jay Powell will get that opportunity this week as he heads to Capitol Hill to testify before the House of Representatives on Wednesday and the Senate on Thursday.Powell is likely to be grilled on the economic implications of Russia’s full invasion of Ukraine, which has sent Brent crude soaring past $100 a barrel for the first time since 2014 when Russia annexed Crimea. He will also face questions about how aggressively the central bank will need to tighten monetary policy in response, and how they will factor in any related market turmoil.

One fear is that starting with a half-point increase could muddle the Fed’s messaging and upend market expectations about the path of interest rates — which Lael Brainard, a governor who was tapped by President Joe Biden to serve as the central bank’s vice-chair, recently acknowledged are “clearly aligned” with the outlook for a “series” of rate increases starting in March.“A quick shift in monetary policy is when the mistakes come,” warned Priya Misra, head of US rates strategy at TD Securities.Traders are still pricing in roughly six quarter-point rate rises this year, which will bring the federal funds rate to 1.5 per cent. More are expected in 2023.Expectations were adjusted after Powell last month refused to rule out either half-point rate rises this year or interest rate increases at each of the remaining seven policy meetings.Wilcox, who is now affiliated with the Peterson Institute for International Economics and Bloomberg Economics, added that by starting at a more gradual pace in March, the Fed gives itself flexibility.“They will buy time during that period during which they can gather additional evidence about how persistent the additional inflation shock is, if there is yet another impulse to inflation coming from a substantial spike in oil prices or other unforeseen aspects of the Ukraine situation [and] how quickly are supply chains otherwise rectifying,” he said.“All of that will inform their decision down the road about how far and how rapidly they need to go in lifting the funds rate.”Investors will gain even more clarity about the possible path forward next month when the Fed releases an updated dot plot of the interest rate projections of individual officials. In December, the last time it was published, a majority of policymakers expected to deliver just three quarter-point rate rises this year. Three months prior to that, they were split on even one 2022 rate rise.March’s version will again be overhauled, showing at least four interest rate increases this year and potentially the need for action at every meeting from then.There are concerns about the Fed moving too gradually, however. In a recent poll conducted by the Financial Times and the Initiative on Global Markets at the University of Chicago Booth School of Business showed, however, nearly half of the economists surveyed said the Fed will fail to control inflation if it delivers only six quarter-point rate rises this year as markets expect.Of the 45 respondents, 40 per cent believe the federal funds rate will need to be at or above 2 per cent this year in order for the central bank to achieve both stable prices and maximum employment. Half of that segment said it should exceed 2.5 per cent. More

Global business leaders who flocked to last November’s COP26 climate conference jostled to position themselves as environmental champions, with promises of aggressive action to put the world on course for net zero carbon emissions.Amid the bullish pledges in Glasgow, however, sceptical observers voiced fears of “greenwashing” — groundless environmental claims by businesses seeking to launder their image without making serious changes.“Greenwashing is the new climate denial,” wrote Laurence Tubiana, chief executive of the European Climate Foundation and a key architect of the 2015 Paris Agreement. “It is dangerous. It is, in fact, more insidious than climate denial because — without accountability rules — it is harder to identify.”Such warnings are now helping to accelerate action by global companies and regulators to deliver wider and more consistent standards of climate-related disclosure.One eye-catching moment came during the Glasgow summit, with the announcement of the International Sustainability Standards Board — a new body that will establish a single framework that regulators around the world can use to set rules on sustainability disclosures.“People forget that we didn’t always have financial accounting standards,” says Janine Guillot, a senior adviser to the ISSB. “Those standards gave companies and investors a common language for talking about financial performance, which is now so standardised that we take it for granted. What we’re trying to do with the ISSB is develop a similar common language for measuring sustainability performance,” she explains.Chaired by former Danone chief executive Emmanuel Faber, the ISSB plans to unveil its new guidelines this year. It remains to be seen how, and to what extent, its framework will be embraced by global regulators.European authorities are separately drafting a sustainability disclosure directive that will apply to most listed companies on the continent. And, while the ISSB rules will require companies to disclose sustainability-related matters that could affect their enterprise value, the European framework will ask them also to report their wider impacts on the environment and society — even if there is no obvious link with the value of the business.However, despite being seen as more proactive than their peers in improving green disclosure, European regulators have been criticised over the details of some of their rules. At the centre of the controversy has been the European green taxonomy — a set of rules that officially define what sorts of activities are considered sustainable, in order to steer investment towards them.The European Commission has drawn fire for a new plan to include nuclear energy and some forms of natural gas power within this taxonomy, raising concerns that it will undermine the credibility of the EU’s push for a new wave of sustainable investment. “Some of the new criteria have weaknesses that make them not well suited to sustainable finance products,” warns Nathan Fabian, chair of a panel of experts set up by Brussels to advise on the new rules. But while the detail of the EU taxonomy remains under debate, asset managers have been expected to report on their alignment with it since January. This has put them in “an impossible position”, according to sustainable investment analysts at investment bank Jefferies.US regulators had been slower than their European counterparts to develop climate-related rules. Now, though, they are showing signs of movement under the Biden administration. Gary Gensler, the head of the Securities and Exchange Commission, has instructed his regulators to draw up draft rules requiring companies to disclose information on their climate risks. Proposals had been expected last October, but the timing has slipped.The delay has drawn criticism from influential Democratic senator Elizabeth Warren, who is pushing for rules that would force companies to disclose all the emissions that result from their activities — including those attributable to their suppliers and customers. While the SEC is considering this, corporate lobbyists have pushed back against the suggestion. They argue that it is not yet possible to provide such estimates with confidence and that mistakes could leave them liable to lawsuits. Amid the fierce political polarisation surrounding climate policy in the US, some prominent Republicans are also pushing back against the SEC’s climate disclosure plans. “Bending to the will of activist investors and money managers to compel climate-related disclosures, especially ones that favour ‘green’ companies or punish ‘brown’ ones, will lead to failure,” said Missouri Attorney General Eric Schmitt in a written submission to the US regulator. Meanwhile, progress on climate disclosure rules in other leading markets continues to vary widely. In the UK, 1,300 large companies will be required from April to report information under the framework set out by the Taskforce for Climate-Related Financial Disclosures, an initiative spearheaded by former Bank of England governor Mark Carney. Chinese central bank governor Yi Gang said last year that China also intends to impose mandatory climate disclosures on companies. However, it will only do so after testing the system with a limited set of banks and businesses.Still, the overall trend towards enhanced sustainability disclosures is causing a rise in demand for consulting and other services to help companies comply with the emerging regulations. This is prompting the big global professional services firms to invest heavily in an area of business that now looks like a main growth driver.

Simon Mundy

“Companies really understand that this is going to happen,” says Bernhard Lorentz, head of climate strategy for Deloitte. “They’re really trying to understand not just what the regulatory standards are now, but what they will be in two or three years. And the faster they understand this, the better they can deliver in the marketplace.”The writer (pictured) is FT moral money editor and author of ‘Race for Tomorrow: Survival, Innovation and Profit on the Front Lines of the Climate Crisis’ (HarperCollins, 2021) More

Masato Kanda, vice finance minister for international affairs who oversees Japan’s currency policy, will meet his counterparts at the Bank of Japan and the Financial Services Agency at 11 a.m. (0200 GMT), the agencies said in a statement.Kanda will speak to reporters after attending the meeting, the statement said.The trilateral meeting is typically held in times of market stress to communicate policymakers’ views or concern over stock or exchange-rate volatility. The meeting was last held in January last year.The safe-haven dollar and yen were in demand on Monday after Western nations imposed fresh sanctions on Russia for its invasion of Ukraine, including blocking some banks from the SWIFT international payments system. More