June 30 (Reuters) &#8211; Most emerging market currencies firmed against the dollar on Wednesday, on track to record gains for June and the second quarter, with traders eyeing U.S. jobs data due later this week for clues on economic recovery and the Federal Reserve&#8217;s stance.



Turkey&#8217;s lira added 0.6% and South Africa&#8217;s rand climbed 0.4%. The rand was set to post its first monthly fall in five, down 4% in June so far to be one of the worst EM performers this month.



Private-sector credit in South Africa contracted 0.42% year on year in May from a contraction of 1.76% in April, central bank data showed on Wednesday.



MSCI&#8217;s index of EM currencies was set for the weakest month since March, but the strongest second-quarter since 2014.



EM currencies are better placed to handle possible rate hikes and any tapering by the Fed, compared with the crisis in 2013, Commerzbank analyst Thu Lan Nguyen said, as many countries such as Brazil, Mexico, Russia, and Turkey have already started raising local interest rates this year.



&#8220;But that does not mean that the currencies are out of the woods yet. A majority of them may be in a better position fundamentally… but we urge caution as the improvement is likely to be largely due to weaker demand as a result of the pandemic.&#8221;



Belarusian bonds were flat after the United States on Tuesday banned ticket sales for air travel to and from Belarus, after Minsk forced a Ryanair flight to land and arrested a dissident journalist aboard. Belarus and its President Alexander Lukashenko have faced heavy criticism over the incident, prompting sanctions from the European Union.



The Belarusian rouble was up 0.3% against the dollar, set for its best quarter since the same time last year.



Looking ahead for emerging markets, several of which look to revenue from tourism, the picture looked bleak with a United Nations study on Wednesday showing that international tourism arrivals are set to stagnate this year, causing up to $2.4 trillion in losses.



The sector is not expected to rebound fully until 2023, the study said.



Among equities, an index of EM stocks fell as a strong handover from Wall Street faded as investors looked toward U.S. jobs data on Friday. The index was on course to mark its fifth straight quarter of gains, up more than 4%.



But the gains were a far cry from 17.3% in the same period last year when shares rallied on hopes of reopening gains after a pandemic-driven steep fall in March.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh</a> 



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V)

Macro view of a screen of trading terminal with abstract financial graph and digits. Trading and forex concept. 3D Rendering

Best Q2 in 7 years for EM currencies

SYDNEY, June 29 (Reuters) &#8211; Asian shares dropped on Tuesday on concerns new coronavirus outbreaks in the region could undercut an economic recovery, even as robust momentum in the United States prompts the Federal Reserve to contemplate a quicker exit from accommodative policy.



MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan was 0.15% lower, hovering near recent highs, though momentum has stalled as some countries re-impose lockdowns to contain the spread of the Delta virus variant.



Japanese and Australian shares took the brunt of early losses, with the Nikkei falling 0.91% and the ASX/200 index down 0.37%, while the South Korean market was 0.71% lower.



Chinese stocks were also down 0.95% as investors booked profits after a rally on the back of the country&#8217;s strong rebound from the impact of the COVID-19 pandemic, with financial and consumer firms leading the retreat.



Fears over the spread of the highly infections Delta virus variant are denting sentiment at a time markets are on edge after the Fed shocked traders with a hawkish tilt earlier this month.



It was a &#8220;wait and watch mode for markets ahead of the U.S. June employment report,&#8221; Citigroup analysts said.



European stocks, which were weighed down on Monday as Hong Kong said it would ban passenger flights from the United Kingdom while infections spiked in California, looked set to extend their cautious tone.



EuroSTOXX 50 futures were 0.09% higher while FTSE futures moved 0.01% lower. U.S. stock futures, the S&amp;P 500 e-minis, were also down 0.11%.



Australia is battling small but fast growing outbreaks with snap lockdowns in several cities, while Indonesia is also grappling with record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.



&#8220;U.S. growth will still be very strong in absolute terms, but … the outbreaks of the Delta strain are causing some reasons for a little bit of doubt on that view, I think,&#8221; said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney.



On Friday, a closely-watched U.S. jobs report for June will be released, which could sway the Fed&#8217;s policy outlook and bring forward expectations for interest rate increases.



&#8220;Inflation is already much higher than the Fed was anticipating, so it is really the pace of improvement in the labour market that stands head and shoulders above every other indicator in terms of when the Fed will feel comfortable signalling the start of tapering,&#8221; said Attrill.



News of a possible bipartisan U.S. infrastructure spending agreement over the weekend helped boost risk appetite overnight.



On Wall Street, the Nasdaq and S&amp;P 500 had gained 0.98% and 0.23%, respectively, on Monday to hit all-time highs, fuelled by tech stocks as investors bet on a robust earnings season.



Big tech companies including Facebook Inc, Netflix Inc, Twitter Inc and Nvidia Corp were among the leaders, helping the S&amp;P 500 sustain momentum after it registered its best weekly performance in 20 weeks on Friday. In contrast, the Dow Jones Industrial Average fell 0.44, and cyclical sectors dropped sharply on fears over the spike in COVID-19 cases across Asia.



In currency markets, the U.S. dollar held largely steady as investors stayed on the sidelines ahead of Friday&#8217;s jobs report. The dollar index was trading 0.9% higher at 91.963.



Investors are also looking at U.S. consumer confidence data later on Tuesday as well as the Institute for Supply Management&#8217;s manufacturing index on Thursday for clues as to where interest rates are headed.



Both the dollar and yen have benefited from some safe-haven demand driven by concerns over the spread of the Delta virus strain. The euro was at $1.1912, edging back toward the 2-1/2-month low of $1.8470 touched on June 18, while against the Japanese yen, the greenback was holding steady at 110.46 yen .



Yields for benchmark 10-year U.S. Treasuries were steady at 1.481.



Concerns over the virus spread also hit oil prices, which slipped for a second day as investors worried about slower fuel demand growth.



Brent crude was down 0.47% at $74.33 a barrel, while U.S. light crude was off 0.41% at $74.61 per barrel.



Spot gold was little changed at $1,777.05 per ounce by 05:24 GMT).



(Reporting by Paulina Duran in Sydney; Editing by Shri Navaratnam)

asian stock market

Asia shares slip as fears over Delta virus variant grow, U.S. data eyed

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-820x547.jpeg" alt="" class="wp-image-408048" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-120x80.jpeg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-768x513.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-1536x1025.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-1229811691-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Kopano Mofokeng, owner of Kasi Convenience, in the Soweto district of Johannesburg, South Africa, on Thursday, Aug. 3, 2020. Seven months of lockdown regulations have slammed&nbsp;South Africas economy and prolonged a recession the government was struggling to reverse&nbsp;before the pandemic hit. Photographer: Waldo Swiegers/Bloomberg via Getty Images</figcaption></figure>



As the COVID-19 pandemic continues to put pressure on&nbsp;Small, Medium, and Micro-Enterprises&nbsp;in South Africa, six in ten business owners say they are proactively planning for and anticipating growth in the next year. This is according to the Mastercard SME Index, which surveyed 300 SMMEs in South Africa between April and mid-May this year.



While the majority (84%) of South African SMMEs say that the pandemic has negatively impacted their revenue, 79% are projecting that their earnings will either hold steady or grow in the next year.



SMMEs in South Africa identified &#8220;upskilling staff for the future&#8221; (58%) as the top area that offers the highest growth potential for their businesses, closely followed by &#8220;better data, analytics and insights&#8221; (57%). ‘Digitising business operations, sales and admin’ (53%) came in as the third driver, followed by ‘the acceptance of digital payments across multiple channels’ (48%). 



<h2 class="wp-block-heading" id="h-adapting-to-a-new-normal">Adapting to a new normal</h2>



This omnichannel approach is an important consideration for all businesses as last month’s&nbsp;<a href="https://newsroom.mastercard.com/mea/press-releases/mastercard-new-payments-index-south-africas-consumer-appetite-for-digital-payments-takes-off/#:~:text=The%20Mastercard%20New%20Payments%20Index%20shows%2095%25%20of%20South%20African,code%20in%20the%20next%20year." target="_blank" rel="noreferrer noopener">New Payment Index</a>&nbsp;found that&nbsp;95% of&nbsp;South African&nbsp;consumers will consider using at least one emerging&nbsp;payment&nbsp;method in the next year, varying from contactless, QR codes, biometrics or <a href="https://www.cnbcafrica.com/category/crypto/">cryptocurrency</a>.&nbsp;In an increasingly connected world, the ability to ‘do business and transact internationally’ (48%) rounded out the top five drivers.



When asked about what keeps them up at night, 39% of SMMEs in South Africa mentioned being ‘able to maintain and grow their business’, while 29% are worried about staying in business or going bankrupt. Looking ahead at the next year, three-quarters (76%) identified the rising cost of doing business, 63% cited red tape and regulations, and 51% mentioned getting access to capital as their biggest business concerns.



Private sector partnerships (84%), international government or business collaborations (56%) and government-led initiatives (44%) were identified as having the biggest potential to positively impact SMMEs and the wider South African market.

Lockdowns in South Africa Freed Township Entrepreneurs to Thrive

SMME Business confidence improving in South Africa – Mastercard Index

SYDNEY, June 28 (Reuters) &#8211; Asian shares started the week in a cautious mood on Monday, as a spike in coronavirus cases across the region over the weekend hurt investor sentiment while oil hovered around 2-1/2 year highs.



MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan was last a shade weaker at 702.57. Japan&#8217;s Nikkei slipped 0.2%, with South Korea&#8217;s benchmark KOSPI down about the same amount.



Investors were concerned about a spike in coronavirus infections in Asia, with Australia&#8217;s most populous city of Sydney plunging into a lockdown after a cluster of cases involving the highly contagious Delta strain ballooned.



Indonesia is battling record high cases while a lockdown in Malaysia is set to be extended. Thailand too announced new restrictions in Bangkok and other provinces.



Chinese shares were a touch higher with the CSI300 index up 0.2%. Data over the weekend showed profit growth at China&#8217;s industrial firms slowed again in May as surging raw material prices squeezed margins and weighed on factory activity.



Investors will keep a close eye on an official survey of Chinese factory activity due Wednesday. The manufacturing reading is expected to slow to 50.8 from 51. The private sector Caixin Manufacturing PMI will follow later in the week.



Futures pointed to a cautious open for share markets in Europe as well. Pan-region Euro Stoxx 50 futures slipped 0.05%, while FTSE futures edged 0.01% higher.



S&amp;P 500 futures added 0.05%.



Global shares weakened about 0.1% after reaching record highs last week as weaker-than-expected U.S. inflation and news of a bipartisan U.S. infrastructure agreement boosted risk appetite.



The infrastructure plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.



&#8220;Investors are keenly watching the progress of U.S. President Biden&#8217;s bipartisan infrastructure deal through congress. The package could boost demand significantly, driven by investment in renewables and electronic vehicle (EV) infrastructure,&#8221; ANZ analysts wrote in a note.



Oil prices slipped slightly after earlier climbing to their highest since October 2018 on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.



Brent futures lost 8 cents to $76.10 a barrel, while U.S. crude was flat at $74.05.



On Friday, the S&amp;P 500 rose 2.7% for the week, its strongest weekly gain since early February after data showed a measure of underlying inflation rose less than expected in May, easing fears of a sudden tapering in stimulus by the Federal Reserve.



The Dow climbed 0.7% while the tech-heavy Nasdaq dropped 0.06% after holding near the previous session&#8217;s record high.



Later in the week, a closely-watched U.S. jobs report will be released for June which could point to strong labour demand.



Yields for benchmark 10-year U.S. Treasuries, jumped back above 1.50% to close out a week in which rates notched their largest gains since March.



Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions.



Boston Federal Reserve Bank President Eric Rosengren on Friday warned a build-up of financial stability risks linked to a low interest rate environment could lead to another downturn that interrupts the labour market recovery and impedes a return to maximum employment.



In currencies, the U.S. dollar was slightly firmer at 91.856 against a basket of other currencies.



The euro eased to $1.19225, while the Japanese yen strengthened to 110.625 versus the greenback.



(Reporting by Swati Pandey. Additional reporting by Kevin Buckland; Editing by Shri Navaratnam and Jacqueline Wong)

World map with charts and graphs as symbols of global finance

Asian shares strike cautious tone as COVID-19 cases spike

JOHANNESBURG, June 28 (Reuters) &#8211; South Africa&#8217;s rand weakened early on Monday after the government tightened COVID-19 restrictions to cope with the speed and scale of new coronavirus infections.



At 0623 GMT, the rand traded at 14.1800 against the dollar, 0.37% weaker than its previous close.



President Cyril Ramaphosa announced tighter COVID-19 restrictions for 14 days saying the current containment measures were insufficient with the country, the worst-hit on the African continent in terms of recorded cases and deaths, in the grip of a &#8220;third wave&#8221; of infections.



&#8220;This scenario, although necessary, is likely to hamper an already faltering economy, and the rand is likely to remain under pressure, with any strength in the local unit likely to be met with fresh demand for USD,&#8221; analysts at Nedbank wrote in a note.



Government bonds also weakened, with the yield on the instrument due in 2030 rising 4.5 basis points to 9.035%. 



(Reporting by Olivia Kumwenda-Mtambo; Editing by Toby Chopra)

South African Economy As Inflation Rate Rises For First Time In 2017

South Africa’s rand weakens as government tightens COVID-19 restrictions

JOHANNESBURG, June 27 (Reuters) &#8211; State-owned energy companies from South Africa and Mozambique have exercised their rights to buy the 30% stake in the ROMPCO natural gas pipeline that Sasol is selling, the companies said on Sunday.



Petrochemical firm Sasol said last month it was selling the stake in the ROMPCO pipeline from Mozambique to South Africa to a consortium of investors including Reatile Group for an initial amount of 4.15 billion rand ($293 million).



But that deal was subject to pre-emptive rights on the shares held by existing shareholders iGAS, a subsidiary of South Africa&#8217;s Central Energy Fund, and Companhia Moçambicana de Gasoduto (CMG), a subsidiary of Mozambique&#8217;s Empresa Nacional de Hidrocarbonetos.



iGAS and CMG will now increase their stakes in ROMPCO to 40% each from their current level of 25%. Sasol, which is trying to shed assets to pay off debt, will reduce its shareholding from 50% to 20%.



The transaction will be fully funded from past and future dividends generated by the 865-kilometre pipeline, the Central Energy Fund and Empresa Nacional de Hidrocarbonetos (ENH) said in a joint statement.



&#8220;Having both governments as majority shareholders of the cross-border pipeline is strategic, since the pipeline is the single source of gas to the South African market,&#8221; ENH Chief Executive Estêvão Pale said in the statement.



Sasol did not immediately respond to an email seeking comment.



($1 = 14.1412 rand) 



(Reporting by Alexander Winning; Editing by Toby Chopra)

South Africa’s Sasol cuts production, sales target due to COVID-19 lockdown

S.Africa, Mozambique state energy firms to increase shareholding in gas pipeline

LONDON, June 25 (Reuters) &#8211; Oil prices fell on Friday, but remained on track for a fifth consecutive weekly gain on expectations demand growth will outstrip supply and OPEC+ producers will be cautious in returning more supply to the market from August.



Brent was down 27 cents, or 0.4%, at $75.29 a barrel at 1028 GMT, but was heading for a 2.4% rise on the week.



U.S. West Texas Intermediate (WTI) crude fell 30 cents, or 0.4%, at $73.00 a barrel, but on track for a 1.9% weekly gain.



Both benchmark contracts settled at their highest levels since October 2018 on Thursday.



&#8220;Oil prices have been supported in recent weeks, benefiting from the ongoing decline in global oil inventories as oil demand continues to grind higher, although unevenly,&#8221; said UBS analyst Giovanni Staunovo.



&#8220;With larger oil inventory declines ahead, we expect oil prices to keep moving higher during 3Q21,&#8221; he added, referring to the third quarter of this year.



Oil prices also found support as the approval of a U.S. infrastructure bill boosted optimism over the energy demand outlook, analysts said.



All eyes are on the Organization of the Petroleum Exporting Countries, Russia and allies &#8211; together called OPEC+ &#8211; who are due to meet on July 1 to discuss further easing of their output cuts from August.



&#8220;The producer group has ample space to boost supply without derailing the drawdown in oil stocks, given the rosier demand outlook,&#8221; said Stephen Brennock of oil broker PVM.



On the demand side, the key factors OPEC+ will have to consider are strong growth in the United States, Europe and China, bolstered by vaccine rollouts and economies reopening, according to analysts who said this was countered by rising COVID-19 cases and outbreaks in other places.



The prospect of sanctions on Iran being lifted and more of its oil hitting the market anytime soon has dimmed, with a U.S. official saying &#8220;serious differences&#8221; remain over a range of issues over Tehran&#8217;s compliance with the 2015 nuclear deal.



(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Pravin Char and Jason Neely)

2770193028_68edc662a9_b

Oil declines but on track for fifth weekly gain on strong demand

June 25 (Reuters) &#8211; Gold rose on Friday and was heading for its first weekly gain in four as a preliminary deal on U.S. infrastructure spending drove a dollar retreat, while investors awaited inflation data.



Spot gold gained 0.4% to $1,783.02 per ounce at 0910 GMT, and was up over 1% for the week. U.S. gold futures were 0.3% higher at $1,782.30.



While the weaker dollar is helping, gold is struggling to regain investor confidence after last week&#8217;s U.S. Federal Reserve meeting, Commerzbank analyst Daniel Briesemann said.



A surprise hawkish tilt from the Fed had driven a sharp slide in bullion.



However, the spending plan should be positive for gold, as it has to be financed to a large extent with higher debt, Briesemann added.



Progress on the plan weighed on the dollar index, making gold cheaper for those holding other currencies, ahead of U.S. producer price data that could paint a clearer picture on rising inflation.



But investors in gold, considered an inflation hedge that also benefits from a lower interest rate environment since it translates into reduced opportunity cost of holding bullion, were still trying to process mixed signals from the Fed.



Two Fed officials warned on Thursday that inflation could rise more than policymakers&#8217; expectation near term, after Fed chief Jerome Powell said it would not be the only determinant of interest rate decisions.



UBS analyst Giovanni Staunovo said platinum has also come under pressure, further dampened by its lower liquidity compared to gold and concerns that rate hikes could slow economic growth.



Platinum advanced 0.9% to $1,101.86 per ounce, while palladium rose 0.2% to $2,644.15. Silver rose nearly 1% to $26.19. 



(Reporting by Arundhati Sarkar in Bengaluru; Editing by Alexander Smith)

gold-is-money-2430051_1920

Gold gains on dollar dip, while focus turns to inflation

SHANGHAI, June 25 (Reuters) &#8211; Asian shares rose on Friday and a gauge of global equities edged closer to record highs after U.S. President Joe Biden embraced a bipartisan Senate infrastructure deal, raising hopes for an extended rebound in the world&#8217;s largest economy.



Investors have been looking to an infrastructure agreement to extend the U.S. recovery after massive fiscal stimulus helped the U.S. economy grow at a 6.4% annualized rate in the first quarter. The plan is valued at $1.2 trillion over eight years, $579 billion of which is new spending.



Futures pointed to a higher open for share markets in Europe. Pan-region Euro Stoxx 50 futures added 0.18, DAX futures rose 0.16% and France&#8217;s CAC 40 futures were up 0.17%. FTSE futures edged 0.03% higher.



&#8220;The positive market tone recognizes the potential growth benefits of the compromise, but with the smaller size tempering some of the tax implications to pay for it,&#8221; said Kerry Craig, global market strategist at J.P. Morgan Asset Management.



Securing bipartisan agreement on the deal required Biden to sacrifice some of his original ambitions on schools, climate change mitigation, and support for parents and caregivers, as well as tax increases on the rich and corporations.



&#8220;We continue to expect progress on further fiscal stimulus in the months to come and the larger size of those packages will likely necessitate rising taxes, especially if they come via the U.S. Congressional budget reconciliation process rather than partisan support,&#8221; said Craig.



MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan rose nearly 1%, as Chinese blue chips rallied 1.84%. MSCI&#8217;s all-country index rose 0.21%, putting it less than 0.3% below a record high touched on June 15.



Hong Kong&#8217;s Hang Seng added 1.38%, Seoul&#8217;s Kospi was up 0.44% and Australian shares climbed 0.45%. Japan&#8217;s Nikkei rose 0.66%.



Asian stocks rebounded after falling earlier in the week amid concerns of earlier-than-expected policy tightening by the U.S. Federal Reserve, after it signalled higher rates in 2023 last week.



&#8220;The reality remains that the timing of any tapering scare, or indeed tapering, is most likely to be driven by market-driven inflation expectations. And the pressure on this front has eased of late,&#8221; Christopher Wood, global head of equity strategy at Jefferies, said in a note.



Overnight, the S&amp;P 500 gained 0.58% and the Nasdaq Composite added 0.69%, lifting both indexes to record high closes. The Dow Jones Industrial Average rose 0.95%.



In the currency market, the dollar index was down about 0.1% at 91.764 as investors continued to weigh the likelihood of Fed tightening in the face of persistent inflation.



The Japanese yen edged higher to 110.84 and the euro gained 0.07% to $1.1938.



Benchmark 10-year U.S. Treasuries, which saw yields dip after Biden&#8217;s announcement of an infrastructure bill were last at 1.4952%, up from a close of 1.487% on Thursday.



Yields on the 30-year bond were barely higher at 2.098% from 2.095% on Thursday.



Oil prices ticked up to near three-year highs, supported by drawdowns in U.S. inventories and accelerating German economic activity. U.S. West Texas Intermediate crude rose 0.14% to $73.40 per barrel and global benchmark Brent crude was at $75.65, up 0.12% on the day.



Spot gold was up 0.11% at $1,777.09 an ounce, on track for its first weekly rise in four.



(Reporting by Andrew Galbraith; Additional reporting by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa and Kim Coghill)

Global shares near record on U.S. infrastructure bill

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972-820x547.jpeg" alt="" class="wp-image-407861" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972-120x80.jpeg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/pexels-photo-4198972.jpeg 1124w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Stock image via Pixels</figcaption></figure>







Rising world food prices for producers are making headlines and causing concerns among the public. The most recent data show a moderation in consumer food price inflation globally, but as we explain below, that could change in the coming months.&nbsp;This would only add to the high prices that consumers in many countries already lived through last year.



If prices eventually rise again, there will likely be sizeable differences between countries. Due to various factors, it is probable that the effect would be felt most by consumers in emerging markets and developing economies still wrestling with the effects of the pandemic.



Fact #1: Food price inflation started increasing before the pandemic.



The increase in consumer food price inflation predates the pandemic. In the summer of 2018, China was hit by an outbreak of African swine fever, wiping out much of China’s hog herd, which represents more than 50 percent of the world’s hogs. This sent pork prices in China to an all-time high by mid-2019 creating a ripple effect on the prices of pork and other animal proteins in many regions around the world. This was compounded by the introduction of Chinese import tariffs on US pork and soybeans during the US-China trade dispute.



<div class="wp-block-group"><div class="wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow">
<h2 class="wp-block-heading" id="h-chart-1-food-prices">Chart:1 Food Prices</h2>



<figure class="wp-block-image"><a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDQsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvMjAyMS8wNi8yNC9mb3VyLWZhY3RzLWFib3V0LXNvYXJpbmctY29uc3VtZXItZm9vZC1wcmljZXMvP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.qaK0ZT-agerz3Q3yTa8fK2xROiuFyTgSMPQuIknAGho/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2021/06/4665970/chart1-food_original.png" alt="native"/></a></figure>
</div></div>



 Fact #2: Early lockdown measures and supply chain disruptions induced a spike in consumer food prices.



At the start of the pandemic, food supply chain disruptions, a shift from food services (such as dining out) towards retail grocery, and consumer stockpiling (coupled with a sharp appreciation of the US dollar) pushed up consumer food price indices in many countries—with consumer food inflation peaking in April 2020—even though producer prices of primary commodities, including food and energy, were declining sharply as demand for primary food commodities was disrupted. By early summer 2020, however, various consumer food prices had moderated, pushing down consumer food inflation in many countries.



So while food prices at your grocery store (i.e., consumer food prices) may have increased, it is an exaggeration to say that they are currently rising at their fastest pace in years. They are also not currently contributing to headline inflation, though they may do so later this year and in 2022 (see the outlook below). Producer prices, on the other hand, have recently soared (see fact #4). But it takes at least 6-12 months before consumer prices reflect changes in producer prices. Also, on average, the pass-through from producer to consumer prices is only about 20 percent. This is because consumer food prices include the shipping costs of primary food commodities, the processing, marketing and packaging of food, and final distribution costs such as transport costs.



The last two facts will help us understand what to expect for consumer food prices.



<figure class="wp-block-image"><a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDUsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvMjAyMS8wNi8yNC9mb3VyLWZhY3RzLWFib3V0LXNvYXJpbmctY29uc3VtZXItZm9vZC1wcmljZXMvP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.TB05pduhJHQs5EIhWxFLRIRrsGQpmBnIf5vQ5sFpvwo/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2021/06/4665979/chart2-food_original.png" alt="native"/></a></figure>



 Fact #3: Soaring shipping and transport costs.



Ocean freight rates as measured by the Baltic Dry Index (a measure of shipping costs) have increased around 2-3 times in the last 12 months while higher gasoline prices and truck driver shortages in some regions are pushing up the cost of road transport services. Higher transport costs will eventually increase consumer food inflation.



<figure class="wp-block-image"><a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDYsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvMjAyMS8wNi8yNC9mb3VyLWZhY3RzLWFib3V0LXNvYXJpbmctY29uc3VtZXItZm9vZC1wcmljZXMvP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.mNxV1K_Ad-vV1JpQQJwaOhxzOiQJEU14kqnfPfpxfnE/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2021/06/4665985/chart3-food_original.png" alt="native"/></a></figure>



 Fact #4: Global food producer prices have rallied reaching multi-year highs.



From their trough in April 2020, international food (producer) prices have increased by 47.2 percent attaining their highest (real) levels on May 2021 since 2014 (highest level ever in current dollar terms).&nbsp; Between May 2020 and May 2021, soybean and corn prices increased by more than 86 and 111 percent, respectively.



<figure class="wp-block-image"><a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDcsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvMjAyMS8wNi8yNC9mb3VyLWZhY3RzLWFib3V0LXNvYXJpbmctY29uc3VtZXItZm9vZC1wcmljZXMvP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.X-LbdEwqhXKH1biHx1skmtFQznPcTAGhMXJmzILdtzU/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2021/06/4665991/chart4-food_original.png" alt="native"/></a></figure>



 There are three main factors behind the recent rally in producer prices: (1) Demand for staples for both human consumption and animal feed has remained high, especially from China, as countries have stockpiled food reserves due to pandemic-related worries about food security. (2) The recent 2020-2021 La Niña episode—a global weather event occurring every few years—has led to dry weather in key food exporting countries, including Argentina, Brazil, Russia, Ukraine, and the United States. This has caused, in some cases, harvests and harvest outlooks to fall short of expectations. As demand has outpaced supply, US and world stocks-to-use ratios—a measure of market tightness—reached multi-year lows for some staples. (3) Strong demand for biofuels increased speculative demand by non-commercial traders, and export restrictions are additional factors supporting world producer prices.



<h2 class="wp-block-heading" id="h-outlook">Outlook</h2>



Based on the four facts presented, it is plausible that consumer food price inflation will pick up again in the remainder of 2021 and 2022. Indeed, the recent sharp increase in international food prices has already slowly started to feed into domestic consumer prices in some regions as retailers, unable to absorb the rising costs, are passing on the increases to consumers. More is likely to come, however, since international food prices are expected to increase by about 25 percent in 2021 from 2020, stabilizing in 2021. A pass-through of 20 percent (13 percent in the first year and 7 percent in the second) would, thus, imply an increase in consumer food price inflation of about 3.2 percentage points and 1.75 percentage points on average in 2021 and 2022, respectively. An additional 1 percentage point to the 2021 global consumer food inflation could be added by the higher freight rates. &nbsp;



The impact, however, will vary by country. Consumers in emerging markets could experience even higher increases due to the higher dependency on food imports (e.g. countries in sub-Saharan Africa and the Middle East and North Africa). The pass-through from producer prices to consumer prices also tends to be larger for emerging markets. For low-income countries struggling from the pandemic, the effects of further food inflation could be dire and risk a backslide in efforts to eliminate hunger.



Emerging markets and low-income countries are also more vulnerable to food price shocks because consumers in these countries typically spend a relatively large proportion of their income on food. Finally, for emerging markets and developing economies an additional risk factor is the currency depreciation against the US dollar—possibly due to falling export and tourism revenues and net capital outflows. Since most food commodities are traded in US dollars, countries with weaker currencies have seen their food import bill increase.



<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDgsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvYmxvZ2dlcnMvY2hyaXN0aWFuLWJvZ21hbnMvP3V0bV9tZWRpdW09ZW1haWwmdXRtX3NvdXJjZT1nb3ZkZWxpdmVyeSJ9.o5-T2HJOiqYMK1iJFXmifypJft-wKMaV38dYAOpZpJw/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener">Christian Bogmans</a>&nbsp;is an economist in the IMF’s Research Department.



<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDksInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvYmxvZ2dlcnMvYW5kcmVhLXBlc2NhdG9yaS8_dXRtX21lZGl1bT1lbWFpbCZ1dG1fc291cmNlPWdvdmRlbGl2ZXJ5In0.n3tiDb9nB0xJT0JXZt9u84NxONRDiRBOm1YxjTtg3g4/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener">Andrea Pescatori</a>&nbsp;is an economist in the IMF&#8217;s Western Hemisphere Department.



<a href="https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMTAsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTA2MjQuNDIzNTA0MTEiLCJ1cmwiOiJodHRwczovL2Jsb2dzLmltZi5vcmcvYmxvZ2dlcnMvZXJ2aW4tcHJpZnRpLz91dG1fbWVkaXVtPWVtYWlsJnV0bV9zb3VyY2U9Z292ZGVsaXZlcnkifQ.N2cMQWNBQ0efk2dEzlYbcQhxjfIUsRe2SUEOQQBoyB0/s/1121717145/br/108365982531-l" target="_blank" rel="noreferrer noopener">Ervin Prifti</a>&nbsp;is a senior economist with the IMF&#8217;s Research Department.

pexels-photo-4198972

Four Facts about Soaring Consumer Food Prices

JOHANNESBURG, June 24 (Reuters) &#8211; Karpowership has been refused environmental approvals for three gas-to-power projects in South Africa for reasons including that it did not comply with public participation rules, the Department of Forestry, Fisheries and the Environment said on Thursday.



Turkey&#8217;s Karpowership was a major winner in a 2,000 megawatt (MW) government emergency power tender designed to help ease crippling electricity outages in Africa&#8217;s most industrialised nation. Delays in plugging the power shortfall could prolong national power cuts costing a weak economy billions of dollars and undermining investment.



Three of Karpowership&#8217;s floating natural gas power stations &#8211; with a combined capacity of roughly 1,200 MW &#8211; were selected among preferred bidders in March.



But since then the tender has been challenged in court by a company that lost out, and environmental activists have expressed opposition to the Karpowership projects.



&#8220;The Competent Authority in the Department has decided, after due consideration of all relevant information … to refuse the applications for the environmental authorisations,&#8221; the environment department said in a statement.



Among factors why the authorisations were not granted, the department said the potential environmental impact of the Karpowership projects could not be properly evaluated because of the lack of a proper underwater noise study and &#8220;significant gaps and limitations&#8221; with other assessments.



A Karpowership spokesperson said the company would appeal the decision and was confident of success.



&#8220;Karpowership SA conducted a robust public participation process, met all South Africa&#8217;s stringent environmental requirements and is confident that it will win the appeal,&#8221; the spokesperson said in a statement, adding it was the victim of a &#8220;misinformation campaign&#8221;.



The environment department previously told Reuters that Environment Minister Barbara Creecy was not involved in the decision-making process for the approvals.



She is the designated appeal authority, however.



Environmental groups welcomed the decision to refuse approvals.



&#8220;This shows community voices matter, … it cannot be that projects that compromise livelihoods get approved,&#8221; said Liziwe McDaid, strategic lead for the environmental justice group Green Connection.



Oyster farmers and small-scale fishermen say the Karpowership projects could harm their livelihoods. 



(Reporting by Alexander Winning and Wendell Roelf; Editing by Jason Neely and Mark Potter)

Karadeniz Powership Gökhan Bey Photo: via Wikimedia Commons

Karpowership refused environmental approvals for South Africa projects

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="787" height="443" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-86362200.jpeg" alt="" class="wp-image-407771" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-86362200.jpeg 787w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-86362200-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-86362200-140x80.jpeg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/GettyImages-86362200-768x432.jpeg 768w" sizes="auto, (max-width: 787px) 100vw, 787px" /><figcaption>A view of Table Mountain from the newly renovated Victoria and Alfred Waterfront</figcaption></figure>



CAPE TOWN, June 23 (ANA) – A study released by Mercer on Tuesday showed that the capital city of Chad, N’Djamena, ranked as the most expensive city for expatriates, while Zambia’s Lusaka came in as the least expensive.



The New York-based consulting firm conducted a global survey in light of the impact of the Covid-19 pandemic, which showed that half of the world’s 10 most expensive cities for expatriates are in Asia.



N’Djamena, which earned top spot for Africa, ranked 13th on the global list ahead of major developed cities such as New York, London, Copenhagen, Sydney and Milan.



According to the statement released by Mercer, the study is meant to provide insight for multinationals looking to relocate and for human resource leaders to attract the right skills when recruiting as more expensive destinations become more costly.



“More organisations are introducing virtual assignments, where an employee performs the same job remotely as they would do if they were to relocate to the host location,” said Stevens Kawoubouga, a senior associate at Mercer Africa.



“For example, a professional based in Ghana would be able to perform tasks and be responsible for operations in Kenya… Alternatively, organisations could start hiring more local foreign talents to fill in the gaps in their talent acquisition programmes,” he said.



Kawoubouga added that N’Djamena remains the most expensive city in Africa for another year as the Chadian economy continues to recover from the pressures of a plummeting oil price and growing debts.



The capital city of Zambia, Lusaka, has become a more attractive destination for expatriates and is currently the cheapest city in Africa, followed by Tunisia’s Tunis and Windhoek in Namibia.



Meanwhile, Nigeria is slowly recovering from its worst recession in four decades and the city of Lagos came in second as the most expensive city for expatriates, followed by Libreville (Gabon), Abidjan (Ivory Coast) and Bangui (Central African Republic).



In South Africa, Cape Town remains a more expensive city to live in than Johannesburg, and both cities moved up in the global rankings to 178 and 184, respectively.

Table Mountain

Most expensive African cities

SYDNEY, June 24 (Reuters) &#8211; Asian shares marked time on Thursday, with China nudging lower, while the U.S. dollar held below an 11-week high as investors reassessed U.S. Federal Reserve statements on inflation and looked to upcoming data for direction.



In early European trades, the pan-region Euro Stoxx 50 futures were up 0.2%, German DAX futures were up 0.1% while FTSE futures were flat. U.S. stock futures, the S&amp;P 500 e-minis, edged up 0.3%.



MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan was flat at 694.32 points, off a one-month trough of 685.12 touched earlier this week.



Japan&#8217;s Nikkei was unchanged too at while Chinese shares barely moved with the blue-chip CSI300 index up 0.1%. Australian shares finished 0.5% lower.



On Wall Street, the Nasdaq closed at a record high on Wednesday, while other major U.S. indexes ended lower alongside European stocks.



The market has whipsawed over the last week, feeling the after-effects of a surprise projection for rate increases as soon as 2023 by the U.S. Federal Reserve which knocked stocks, boosted the dollar and led to the flattening of the U.S. bond yield curve.



Investors are now pricing the first full U.S. interest rate rise for February 2023 compared to December 2022 in the immediate aftermath of the Fed meeting.



Overnight, 10-year Treasury yields remained below 1.5% in muted trading.



&#8220;Until bond yields break out in a sustainable fashion, in either direction, it remains very hard to determine which direction stocks are headed in over the near term,&#8221; JPMorgan analysts wrote in a note.



&#8220;Much continues to hinge on the upcoming growth data.&#8221;



Europe released strong manufacturing activity data on Wednesday, while figures on ISM manufacturing and U.S. non-farm payrolls are due next week.



The U.S. dollar vacillated below an 11-week high versus major peers as traders navigated conflicting signals from Fed officials on the timing of a withdrawal of monetary stimulus.



On Wednesday, two Fed officials said a period of high inflation in the United States could last longer than anticipated, just a day after Fed Chair Jerome Powell played down rising price pressures. [



The dollar index, which measures the greenback against six rivals, was treadig water at 91.772. It was at 92.408 at the end of last week, the highest since April 9.



Against the Japanese yen, the dollar climbed to a 15-month high of 111.11. It was last slightly weaker at 110.76.



The Bank of England is expected to acknowledge the strength of inflationary pressures in recent data when it meets later in the day.



&#8220;We do not expect the statement to push back against expectations that interest rates could start to move higher in the second half of next year,&#8221; ANZ economists said.



The British pound was steady at $1.3959.



Flash U.S. manufacturing PMI climbed to a record high in June, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices for both businesses and consumers.



Early PMI data showed that euro zone business growth accelerated at its fastest pace in 15 years in June on the easing of more lockdown measures and the unleashing of pent-up demand.



Oil prices hovered near two years high after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.



Brent crude futures was rose 16 cents at $75.35 a barrel and U.S. crude jumped 15 cents to $73.23 per barrel.



Spot gold prices dipped to $1,776.2 an ounce.



(Reporting by Swati Pandey; editing by Richard Pullin)

Asian shares tread water, markets eye U.S. inflation signals

<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah-820x547.jpg" alt="" class="wp-image-407711" width="694" height="463" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/antoinette-Seyah.jpg 1024w" sizes="auto, (max-width: 694px) 100vw, 694px" /><figcaption>Deputy Managing Director of the IMF Antoinette Sayeh Photo via Flickr</figcaption></figure>



The board of the International Monetary Fund said on Wednesday it allowed the immediate disbursement of a further $407 million to Kenya after completing its first reviews of two agreements approved in April.



&#8220;The Kenyan authorities continue to demonstrate strong commitment to their fiscal reform agenda during this unprecedented global shock,&#8221; said Antoinette Sayeh, deputy managing director of the IMF.



She said Kenya&#8217;s performance under the arrangements has been &#8220;broadly satisfactory&#8221; and &#8220;sets the basis for a return to durable and inclusive growth.&#8221;



The board approved in April two new 38-month financing arrangements for Kenya valued at $2.34 billion.



(Reporting by Rodrigo Campos Editing by Chris Reese)

antoinette Seyah

IMF board approves further $407 mln disbursement for Kenya

LONDON, June 23 (Reuters) &#8211; The Bank for International Settlements has given its full backing to the development of central bank digital currencies (CBDCs), saying they are needed to modernise finance and ensure &#8216;Big Tech&#8217; does not take control of money.



Dubbed the central bank to the world&#8217;s central banks, the BIS, which is coordinating many of their discussions on digital currencies, set out recommendations on Wednesday on how a CBDC such as a digital dollar, euro, yen or yuan should look.



As part of its upcoming annual report it estimated that at least 56 central banks and monetary authorities, representing around a fifth of the world&#8217;s population, are now looking at digital currencies as commerce shifts online.



&#8220;The train has left the station,&#8221; said Benoit Coeure of the BIS, referring to the move towards central bank digital currencies and its support. &#8220;It is not that we are getting carried away, we are just looking around&#8221;.



The push comes as physical cash use falls globally and authorities look to fend off the threat to their money-printing powers from bitcoin and efforts from &#8216;Big Tech&#8217; such as the Facebook-backed Diem, formerly Libra.



Without CBDCs, digital money would become increasingly dominated by big tech firms, Coeure warned, as they would leverage enormous social media user bases.



&#8220;That is a place where you don&#8217;t want to be, where governments don&#8217;t want to be,&#8221; Coeure said, describing it as a loss of control of sovereign money.



Some countries are already well down the track.



The Bahamas became the first to launch a general purpose CBDC, known as the Sand Dollar, in October. China has a number of ongoing trials and Switzerland and the Bank of France have announced Europe&#8217;s first cross-border experiment.



Coeure&#8217;s BIS colleague Hyun Song Shin said authorities will have to decide whether citizens need digital IDs to use CBDCs or go down a token-based route that many cryptocurrencies use to keep transactions more anonymous.



In the view of the BIS, the ID system would be the &#8220;better way to go&#8221; Shin and Coeure said. One reason being that it would prevent people using digital currencies from countries other than their own such as the safe-haven dollar.



Most experts think fully functioning digital dollars or euros are still at least two years away, but setting global rules around CBDCs is a highly political and heating up.



&#8220;The new trade wars are technology wars,&#8221; Coeure said, stressing CBDCs should not be part of that.



(Reporting by Marc Jones; Editing by Alexander Smith)

30575705500_0f660ad388_k

Central bank digital currencies get full BIS backing

June 23 (Reuters) &#8211; Emerging markets stocks jumped 1% on Wednesday after U.S. Federal Reserve Chairman Jerome Powell calmed concerns over policy tightening, while a surge in inflation in South Africa lifted the rand on hawkish central bank expectations.



MSCI&#8217;s index of EM shares was set for its best session in three weeks after Powell sounded dovish in his testimony to Congress, saying inflation would not be the only determinant in interest rates decisions.



&#8220;It was enough to let markets move back into their happy place,&#8221; said Jeffery Halley, a senior market analyst at Oanda.



After a strong session in Asia, Russian shares moved 0.5% closer to all-times highs and South African stocks were on course for their best session this month.



Still, the broader EM stocks index is down more than 1% in June after two straight monthly gains as a hawkish turn by the Fed last week led to hefty losses. Higher U.S. interest rates lessen the appeal for riskier emerging markets assets.



HAWKISH CHEER FOR RAND



Currencies in Turkey, Russia and South Africa firmed between 0.6% and 0.7% as the dollar pulled further away from over two-month highs.



South Africa&#8217;s rand rose up to 0.9% to hit session highs after data showed headline inflation in May soared to a 30-month high of 5.2%, as expected but above the mid-point of the central bank&#8217;s target range of 3%-6%.



&#8220;Back in May, the (central bank) assessed the risks to its inflation outlook as to the upside. Today&#8217;s data shows this risk has realised, emboldening expectations that the central bank could join other EM banks in steadily lifting rates,&#8221; said Simon Harvey, FX analyst at Monex Europe.



&#8220;Depending on the progression of inflation and the health situation in South Africa over the coming months, I think we&#8217;re talking about 25-50bps this year … likely at either or both of the meetings in September and November.&#8221;



Turkey&#8217;s lira cheered central bank governor Sahap Kavcioglu&#8217;s announcement late on Tuesday that the country was in talks to secure currency swap agreements with four countries and was close to a deal with two of them.



This comes after it increased its existing swap facility with China to $6 billion this month, and tripled its currency-swap agreement with Qatar to $15 billion last year.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh</a> 



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Aditya Soni)

Shares cheer dovish Powell; South African rand up on inflation surge

SINGAPORE, June 23 (Reuters) &#8211; Stocks found a footing and swinging bond markets calmed down on Wednesday, with testimony from U.S. Federal Reserve chair Jerome Powell providing investors with reassurance that the central bank has an eye on inflation but is not hastening to hike rates.



The rates-sensitive Nasdaq index closed at a record high on Tuesday, while tech stocks were bid in Asia &#8211; notably in Taiwan where chipmakers helped the benchmark index rise 1%. MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan rose 0.4%. Japan&#8217;s Nikkei rose 0.3%.



The Fed had knocked stocks and boosted the dollar last week with a surprise projection for rate hikes as soon as 2023.



However overnight Powell reiterated the Fed&#8217;s goal of a broad labour market recovery and said fear of inflation alone would not be enough to prompt rate rises.



&#8220;We will wait for evidence of actual inflation or other imbalances,&#8221; Powell said in a hearing before a U.S. House of Representatives panel.



AMP Capital&#8217;s chief economist Shane Oliver put it this way in a note to clients on Wednesday: &#8220;This is all a long way off as even the first hike is a while away.&#8221;



Powell&#8217;s comments helped the yield on benchmark 10-year U.S. Treasuries lower and put the brakes on a rising U.S. dollar. The 10-year Treasury yield fell to 1.4666% on Tuesday and stayed there early in the Asia session.



The U.S. dollar lost a little ground overnight, but it remains near multi-month highs after the Fed&#8217;s change in tone cleared out a heap of short positions.



The greenback was firm against most majors on Wednesday and last traded 0.1% higher at $1.1928 per euro and was close to its highest for the year at 110.78 yen.



&#8220;Dollar bears, surfing a wave of easy Fed policy, are running out of time,&#8221; Societe Generale analysts said in a note.



&#8220;If the U.S. can escape the clutches of the zero-rate bound, it will earn itself a significantly stronger dollar.&#8221;



SEPTEMBER SHOWDOWN



Several other Fed speakers are due to appear later on Wednesday and their comments may add to a growing sense among traders that September&#8217;s Fed meeting may bring the announcement of the beginning of the end of stimulus later in the year.



&#8220;Short of something going very wrong, taper around the turn of the year seems like a high probability event at this point,&#8221; said RBC Capital Markets&#8217; chief U.S. economist Tom Porcelli.



Also on the horizon are speeches from Reserve Bank of Australia Assistant Governor Luci Ellis &#8211; the first from a central banker since stellar jobs data this month &#8211; and from European Central Bank President Christine Lagarde.



Preliminary Purchasing Managers&#8217; Index figures, which showed a slowing in Japan in June, are also due in Europe and the United States and will be watched as markets try to get a sense of the breadth of the economic strength behind rising prices.



&#8220;It&#8217;s not a surprise we do see elements of inflation creeping in when the economy is doing well &#8211; its not all negative 1970s-style stagflation,&#8221; said Hugh Dive, chief investment officer at Atlas Funds Management in Sydney.



Elsewhere, cryptocurrencies were licking their wounds after heavy selling drove bitcoin to its lowest since early January &#8211; although it has since recovered back above $30,000.



In commodity markets, reopening confidence helped oil prices hover near multiyear peaks even as producers discuss output increases.



Brent crude futures were last up 0.5% to $75.22 a barrel, while U.S. crude futures rose 0.4% to $73.16 a barrel.



Gold, which pays no income and has been hammered by rises in the U.S. dollar and in Treasury yields, steadied at $1,780 an ounce.



(Reporting by Tom Westbrook in Singapore; Editing by Stephen Coates)

Economy

Best Q2 in 7 years for EM currencies

Asia shares slip as fears over Delta virus variant grow, U.S. data eyed

SMME Business confidence improving in South Africa – Mastercard Index

Asian shares strike cautious tone as COVID-19 cases spike

South Africa’s rand weakens as government tightens COVID-19 restrictions

S.Africa, Mozambique state energy firms to increase shareholding in gas pipeline

Oil declines but on track for fifth weekly gain on strong demand

Gold gains on dollar dip, while focus turns to inflation

Global shares near record on U.S. infrastructure bill

Four Facts about Soaring Consumer Food Prices

Karpowership refused environmental approvals for South Africa projects

Most expensive African cities

Asian shares tread water, markets eye U.S. inflation signals

IMF board approves further $407 mln disbursement for Kenya

Central bank digital currencies get full BIS backing

Shares cheer dovish Powell; South African rand up on inflation surge

Tech leads tentative rally as Powell soothes markets

News Tips

Advertise With Us

Economy

Best Q2 in 7 years for EM currencies

Asia shares slip as fears over Delta virus variant grow, U.S. data eyed

SMME Business confidence improving in South Africa – Mastercard Index

Asian shares strike cautious tone as COVID-19 cases spike

South Africa’s rand weakens as government tightens COVID-19 restrictions

S.Africa, Mozambique state energy firms to increase shareholding in gas pipeline

Oil declines but on track for fifth weekly gain on strong demand

Gold gains on dollar dip, while focus turns to inflation

Global shares near record on U.S. infrastructure bill

Four Facts about Soaring Consumer Food Prices

Karpowership refused environmental approvals for South Africa projects

Most expensive African cities

Asian shares tread water, markets eye U.S. inflation signals

IMF board approves further $407 mln disbursement for Kenya

Central bank digital currencies get full BIS backing

Shares cheer dovish Powell; South African rand up on inflation surge

Tech leads tentative rally as Powell soothes markets

News Tips

Advertise With Us

Newsletters