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Dollar steady ahead of key US inflation data, yen retraces gains

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8 months ago

September 13, 2023

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Dollar steady ahead of key US inflation data, yen retraces gains

The dollar was broadly steady on Wednesday ahead of a key US inflation report later in the day, though it rose on the yen as traders assessed comments from Japan’s top central banker on a possible early exit from its negative interest rate policy.

The US currency advanced around 0.2% to 147.36 against the yen, which retraced its biggest one-day percentage rise in two months on Monday, following the remarks from Bank of Japan (BOJ) Governor Kazuo Ueda over the weekend.

As investors have more time to consider Ueda’s comments, “the fundamental driver of the upside pressures on yen” have returned, said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

“I think the market also is reading the statement more carefully. The statement to our mind was quite a conditional one, (Ueda) didn’t promise anything.”

Influential ruling party lawmaker Hiroshige Seko on Tuesday also signalled his preference for ultra-loose monetary policy, after Ueda’s comments pushed up the yen and bond yields.

The yen has been under relentless pressure against the dollar as the BOJ remains a dovish outlier among global central banks, especially since the Federal Reserve began its aggressive rate-hike cycle in March 2022.

In the broader currency market, the dollar stood firm, though moves were subdued as traders stayed on guard ahead of the closely-watched US inflation reading out later on Wednesday.

Sterling slipped 0.01% to $1.2482, while the Australian dollar fell 0.04% to $0.64015.

The US dollar index measure against a basket of key rivals was last steady at 104.67, after slipping to a one-week low on Monday and clocking its largest daily fall in two months.

Analysts attributed the slide to an unwinding of long dollar positions, after a recent run of resilient US economic data boosted the greenback.

Wednesday’s US consumer price index (CPI) data for August comes just a week before Federal Reserve officials gather to decide on interest rate policy.

While the central bank is largely expected to keep rates on hold at next week’s meeting, according to CME’s FedWatch Tool, the Fed’s next move in November remains more uncertain.

“I think there is a chance for the Fed to raise interest rates another time this year,” said Tina Teng, market analyst at CMC Markets.

Elsewhere, the euro ticked down 0.07% to $1.0745, after hitting a one-week high of $1.0777 in the previous session as markets raised their bets of further rate hikes from the European Central Bank (ECB) ahead of its monetary policy decision.

A Reuters report said the ECB expects inflation in the 20-nation euro zone to remain above 3% next year, bolstering the case for a tenth consecutive interest rate increase on Thursday.

“In recent months, European inflation, core inflation in particular, has fallen more slowly than expected. This has given the ECB some serious headaches,” said analysts at Rabobank in a note.

“The high inflation rate warrants another rate hike, but the economic indicators … signal that a recession is imminent.

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

24 hours ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

24 hours ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

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24 hours ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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