Latest news with #tradePolicies
Reuters
3 days ago
- Business
- Reuters
Rupee flips back to monthly decline, lags Asian peers
MUMBAI, May 30 (Reuters) - The Indian rupee declined by about 1% in May, reversing course after gaining in the previous two months, influenced by factors such as continued uncertainty over U.S. trade policies, gains in its Asian peers and a conflict between India and Pakistan. The rupee closed at 85.5775 on Friday, capping a day of choppy trading with a mild decline. The currency had rallied to a six-month earlier in May but shed its gains through the month. Initially, a military conflict between India and Pakistan hurt the currency but it rebounded once a ceasefire was reached. Over the rest of the month, dollar demand from corporates and foreign banks weighed on the rupee, traders said. Dollar-buying intervention by Reserve Bank of India also put a lid on the sharp appreciation above the 84.60-84.80 zone, according to one of the traders. Meanwhile, the dollar was set to end the month little changed against major peers as mild relief on the softening of U.S. trade policies, typified by the pact with China, gave way to a legal back-and-forth on the legal validity of reciprocal tariffs. Asian currencies were mostly stronger on the month, led by the Korean won while the offshore Chinese yuan, a closely tracked peer of the rupee, rose nearly 1%. Barclays expects the rupee to underperform its peers going forward as the RBI focuses on replenishing FX reserves and is "unlikely to want to see a renewed richening of the INR," analysts at the firm said in a note earlier this week. India's foreign exchange reserves (INFXR=ECI), opens new tab stood at $685.7 billion as of May 16, about $19 billion below their all-time high hit in September 2024. Traders now await the release of India's economic growth data for the January-March quarter and U.S. PCE inflation data due later in the day. Economists polled by Reuters expect India's GDP to have grown 6.7% year-on-year, up from 6.2% in the previous three months.
CNA
16-05-2025
- Business
- CNA
Japan's economy shrinks more than expected as US tariff hit looms
TOKYO: Japan's economy shrank for the first time in a year in the March quarter at a faster pace than expected, data showed on Friday (May 16), underscoring the fragile nature of its recovery now under threat from United States President Donald Trump's trade policies. the mainstay automobile sector. Real gross domestic product (GDP) contracted an annualised 0.7 per cent in January to March, preliminary government data showed, much bigger than a median market forecast for a 0.2 per cent drop. It followed a revised 2.4 per cent increase in the previous quarter. The decline was due to stagnant private consumption and falling exports, suggesting the economy was losing support from overseas demand even before Trump's announcement on Apr 2 of sweeping "reciprocal" tariffs. "Japan's economy lacks a driver of growth, given weakness in exports and consumption. It's very vulnerable to shocks such as one from Trump tariffs," said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute. "The data may lead to growing calls for bigger fiscal spending," he said, adding the economy could contract again in the second quarter depending on when the hit from tariffs intensifies. On a quarter-on-quarter basis, the economy shrank 0.2 per cent compared with market forecasts for a 0.1 per cent contraction. Private consumption, which accounts for more than half of Japan's economic output, was flat in the first quarter, compared with market forecasts for a 0.1 per cent gain. Capital expenditure increased 1.4 per cent compared with market forecasts for a 0.8 per cent gain, the data showed. External demand shaved 0.8 percentage point off GDP growth as exports fell 0.6 per cent, while imports rose 2.9 per cent. Domestic demand, by contrast, added 0.7 point to growth. "Capital expenditure rose probably due to front-loading ahead of Trump tariffs. The economy may avert negative growth in April to June, but will lack momentum," said Takeshi Minami, chief economist at Norinchukin Research Institute. "If the impact of Trump tariffs is fairly light, the Bank of Japan (BOJ) could raise interest rates again in September or October. But if the tariffs deal a severe blow to capital spending and exports, rate hikes could be put on hold," he said. A global trade war touched off by US tariffs has jolted financial markets and complicated the BOJ's decision on when and how far it can push up interest rates. Having exited a decade-long stimulus last year, the BOJ hiked rates to 0.5 per cent in January and has signalled its readiness to keep hiking borrowing costs if a moderate economic recovery keeps Japan on track to durably hit its 2 per cent inflation target. But fears of a Trump-induced global slowdown forced the BOJ to sharply cut its growth forecasts at its Apr 30 to May 1 policy meeting, and cast doubt on its view that sustained wage hikes will underpin consumption and the broader economy. While a de-escalation of US-China trade tensions offered markets and policymakers some relief, there is uncertainty on whether Japan can win exemptions from US tariffs in bilateral trade talks with Washington.
Reuters
16-05-2025
- Business
- Reuters
Japan's economy shrinks annualised 0.7% in Jan-March
TOKYO, May 16 (Reuters) - Japan's economy shrank an annualised 0.7% in the first quarter, data showed on Friday, underscoring a fragile recovery now under threat from U.S. President Donald Trump's trade policies. The contraction in real gross domestic product (GDP) was much bigger than a median market forecast for a 0.2% drop. On a quarter-on-quarter basis, the economy shrank 0.2%, compared with market forecasts for a 0.1% contraction.
Bloomberg
07-05-2025
- Business
- Bloomberg
Why the Fed Will be Late to Cut Rates No Matter What
Investors are geared up for Wednesday's Federal Reserve decision amid bets officials signal their wait-and-see stance until there's more clarity on the impacts of President Donald Trump's trade policies. Short-term Treasury yields rose as traders trimmed wagers on rate cuts, seeing around three quarter-point reductions in 2025 starting in July. With the central bank expected to keep its benchmark rate steady at 4.25%-4.50% on Wednesday, traders will be scrutinizing comments by Fed Chair Jerome Powell for insight into officials' interpretation of recent data and whether Trump's economic policies are prompting any change in view on when to ease policy. Frances Donald, chief economist at RBC, explains why she believes the Fed will be forced to wait to ease monetary policy based on tariffs' delayed impact on inflation and the slow speed of US labor market softening. Frances speaks with Tom Keene and Tim Stenovec on Bloomberg Radio. (Source: Bloomberg)
Bloomberg
06-05-2025
- Business
- Bloomberg
Fed to Hold Rates Steady as Pressures Mount
Federal Reserve officials are widely expected to leave interest rates unchanged Wednesday as they await clarity on the Trump administration's trade policies, a move likely to frustrate the president and anyone else seeking answers about the US central bank's next move. An aggressive slew of tariffs on imported goods is denting consumer confidence, with households bracing for a potential spike in consumer prices and a weakening job market. Yet the latest data show inflation decelerated in March, while the unemployment rate remained steady in April.
