Menu

ukraine

Business men giving a handshake. Business concept

PM Modi Speaks To Russia’s Putin On G-20, Ukraine War

, , , ,

Prime Minister Narendra Modi had a telephone conversation on Friday with Russian President Vladimir Putin, according to the Prime Minister’s Office (PMO)

PMO in a statement said that both leaders held a talk in the context of the ongoing conflict in Ukraine.

Prime Minister Modi reiterated his call for dialogue and diplomacy as the only way forward during his meeting with Russian President Vladimir Putin.

Following up on their meeting on the sidelines of the Shanghai Cooperation Organisation (SCO) Summit in Samarkand, the two leaders discussed several aspects of their bilateral relationship, including energy cooperation, trade and investment, defence and security cooperation and other key areas.

PM Modi briefed President Putin on India’s current G-20 presidency, emphasising key priorities. He also expressed interest in both countries cooperating during India’s presidency of the SCO. They agreed to keep in touch on a regular basis, PMO said.

economy

Indian Shares Slip As Russia Mobilisation Compounds Fed Rate Worries

, , ,

Indian shares ended lower after a choppy Wednesday session, as Russia’s escalation of the conflict in Ukraine further soured the sentiment of investors already bracing for a super-sized interest rate hike by the Federal Reserve

Indian shares ended lower after a choppy Wednesday session, as Russia’s escalation of the conflict in Ukraine further soured the sentiment of investors already bracing for a super-sized interest rate hike by the Federal Reserve.

The NSE Nifty 50 index ended 0.55 per cent lower at 17,718.35, while the S&P BSE Sensex slipped 0.44 per cent to 59,456.78.

Investors fled risky assets after Vladimir Putin ordered a partial mobilisation of Russia’s military reserves and accused the West of “nuclear blackmail,” building anxiety in investors who were already on the sidelines ahead of the Fed’s decision expected later in the day.

Rate futures traders are pricing in an 81 per cent chance of a 75-basis-point (bp) hike and a 19 per cent probability of a jumbo 100 bps increase, as inflation stayed elevated. 

Meanwhile, Reuters reported that India’s government was in no hurry to tamp down inflation – now hovering near 7 per cent at an eight-year high – back to the central bank’s 4 per cent medium-term target, for fear that aggressive rate hikes could hurt economic growth.

India’s central bank is due to meet next week to decide on monetary policy.

Putin’s move caused a surge in oil prices on Wednesday, which could prove costly for India, the world’s third-largest importer of oil.

The Nifty Metal index was the worst performer among sub-indexes, dropping 2.1 per cent in its worst day in a month.

Conglomerate Adani Enterprises, which touched a record high in the previous session, lost 5.1 per cent, marking its worst session since mid-June.

Shree Cement was the biggest percentage loser on the Nifty 50 with a 5.2 per cent drop – its sharpest fall since late-February.

The Nifty fast-moving consumer goods index was the only bright spot, rising 1.2 per cent led by a near 3 per cent jump in FMCG major Britannia Industries. 

Central Bank of India rose 6.6 per cent, after jumping as much as 15 per cent in the session, following an RBI move to take the state-owned lender off its prompt corrective action list.

(Reuters)

20220111_101050

Central Bankers Must Be ‘Stubborn’ In Fighting Inflation: IMF Chief

, , , ,

Georgieva said the surprising rise in inflation was “just one snippet of the uncertainty and difficulties” the global economy faced. Both the COVID-19 pandemic and Russia’s invasion of Ukraine contributed to surging prices and a cost-of-living crisis

Central bankers must be persistent in fighting broad-based inflation, International Monetary Fund chief Kristalina Georgieva said on Wednesday, conceding that many economists were wrong when they predicted last year that inflation would ease.

“Inflation is stubborn, it is more broad-based than we thought it would be,” she said. “And what it means is … we need central bankers to be as stubborn in fighting it as inflation has demonstrably been.”

If fiscal policy and monetary policy worked well, next year might prove less painful, she said at an event with French European Central Bank policymaker Francois Villeroy de Galhau. But if fiscal policy was not targeted sufficiently, it could become the “enemy of monetary policy, fueling inflation,” she said.

Georgieva’s comments came a day after the US reported an unexpected rise in August consumer prices, with rent and food costs continuing to climb.

US Treasury Secretary Janet Yellen, in an interview with CBS News, said she believed inflation “will come down over time” due to the actions of the Federal Reserve. Yellen said the Biden administration is trying to complement the Fed’s moves.

Georgieva said the surprising rise in inflation was “just one snippet of the uncertainty and difficulties” the global economy faced. Both the COVID-19 pandemic and Russia’s invasion of Ukraine contributed to surging prices and a cost-of-living crisis.

In a blog, the IMF warned that higher oil prices were driving up all consumer prices, which could result in a wage-price spiral if these second-order effects were sustained. Central bankers should respond “firmly,” it said.

When overall inflation is already high, as it is now, wages tend to increase by more in response to an oil-price shock, the IMF said, citing a study of 39 European countries. That showed people were more likely to react to price increases when high inflation was visibly eroding living standards, it said, noting that the larger the second-round effects, the greater the risk of a sustained wage-price spiral.

“If large and sustained, oil price shocks could fuel persistent rises in inflation and inflation expectations, which should be countered by a monetary policy response,” the IMF said, noting that people tended to seek higher compensation for oil price rises.

However, even in a high-inflation environment, wages stabilised after a year rather than continuing to rise at a steady clip, it said.

“To the extent that central banks remain adequately vigilant, current high inflation could still cause higher compensation for the cost of living than usual but need not morph into a sustained increase in inflation,” the IMF said. 

(Reuters)

indian rupee

Asian stocks rise as Ukraine peace talks appear to progress

, , , , , , ,

Shanghai, Hong Kong and Sydney advanced. Tokyo declined. Oil prices advanced less than 1 per barrel.

 Asian stock markets followed Wall Street higher on Wednesday as talks on ending Russia’s war on Ukraine appeared to make progress.

Shanghai, Hong Kong and Sydney advanced. Tokyo declined. Oil prices advanced less than 1 per barrel.

That followed Russia’s announcement it would scale back military operations near Ukraine’s capital, Kyiv, and another northern city. It came as negotiators meeting in Turkey began to lay out a possible deal to end the five-week-old war.

This was a nice add-on catalyst” to a market rally already under way, Clifford Bennett of ACY Securities said in a report.

The Shanghai Composite Index rose 1.7% to 3,258.22, rebounding from the previous day’s loss after Shanghai, China’s most populous city, closed most businesses to fight coronavirus outbreaks.

The Nikkei 225 in Tokyo fell 1.1% to 27,926.57 after the government reported February retail sales declined by a bigger-than-forecast 0.8%. That left retail spending down 2% from its November peak.

The Hang Seng in Hong Kong gained 1.3% to 22,210.14 and the Kospi in Seoul added 0.2% to 2,746.20. Sydney’s S&P-ASX 200 advanced 0.7% to 7,514.50.

India’s Sensex opened up 1.1% to 58,570.98. New Zealand and Southeast Asian markets also rose.

Russian President Vladimir Putin’s Feb 24 attack on neighbouring Ukraine rattled global markets that already were on edge about higher US interest rates and a Chinese economic slowdown.

At the meeting in Turkey, Ukraine’s delegation laid out a framework under which the country would declare itself neutral and its security would be guaranteed by an array of other nations.

The Russian deputy defence minister, Alexander Fomin, said Moscow would cut back military activity near Kyiv and Chernihiv but gave no details. President Joe Biden said he wasn’t convinced that would lead to a fundamental shift in the war.

On Wall Street, the benchmark S&P 500 index rose 1.2% to 4,631.60 for its fourth straight daily gain.

The Dow Jones Industrial Average advanced 1% to 35,294.19. The Nasdaq composite added 1.8% to 14,619.64.

More than 85% of the stocks in the S&P 500 rose. Tech and communication stocks helped power the rally, along with big retail chains, automakers and other companies that rely on consumer spending. Apple rose 1.9% and Netflix added 3.5%. Ford Motor climbed 6.5% and General Motors gained 4.6%.

Benchmark U.S. crude rose 76 cents to 105.00 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, advanced 67 cents to 108.38 per barrel in London.

The dollar declined to 122.04 yen from Tuesday’s 122.91 yen. The euro rose to 1.1111 from 1.1089.

PTI

20211130_093209

India Taking Discounted Russian Oil Offer Not Violation Of Sanctions: WH

, , , , , ,

India has not supported the Russian invasion of Ukraine. New Delhi has consistently asked all stakeholders to resolve differences through dialogue. It has, however, abstained in all United Nations resolutions against Russia

India taking up Russia’s offer of discounted crude oil would not be a violation of American sanctions, the White House has said.

“Our message to any country continues to be that abide by the sanctions that we have put in place and recommended,” White House Press Secretary Jen Psaki told reporters at her daily news conference on Tuesday.

Asked about a report on the possibility that India could take up the Russian offer of discounted crude oil, Psaki said, “I don’t believe this would be violating that (sanctions).”

“But also think about where you want to stand when history books are written at this moment in time. Support for the Russian leadership is support for an invasion that obviously is having a devastating impact,” Psaki added.

India has not supported the Russian invasion of Ukraine. New Delhi has consistently asked all stakeholders to resolve differences through dialogue. It has, however, abstained in all United Nations resolutions against Russia.

Officials of the Biden administration have shown an understanding of India’s position and have told lawmakers that New Delhi has a major dependence on Russian military supplies for its national security.

However, Indian-American Congressman Dr Ami Bera expressed disappointment over reports that India is contemplating buying Russian oil at a steeply discounted rate.

“If reports are accurate and India makes this decision to buy Russian oil at a discounted price, New Delhi would be choosing to side with Vladimir Putin at a pivotal moment in history when countries across the world are united in support of the Ukrainian people and against Russia’s deadly invasion,” he said.

“As the world’s largest democracy and as a leader of the Quad, India has a responsibility to ensure its actions do not directly or indirectly support Putin and his invasion,” Bera said in a statement.

(PTI)

IPO

LIC Gets Market Regulator Nod For Mega IPO

, , , , , ,

The approval follows reports the initial share sale was set to be delayed to next financial year due to market volatility stoked by the Ukraine crisis

India’s market regulator has approved state-owned Life Insurance Corp’s (LIC) initial public offering worth about $8 billion, according to a source with direct knowledge of the matter.

The approval follows reports the initial share sale was set to be delayed to next financial year due to market volatility stoked by the Ukraine crisis.

The source could not be named as the information was not yet public.

LIC declined to comment on the approval from the Securities and Exchange Board of India (SEBI).

Reuters reported earlier, citing sources, that bankers advising LIC had pushed the government to defer the launch of the offering that is set to be the country’s biggest yet. read more

IPO approvals are valid for a period of 12 months from the date of final observation by the Securities and Exchange Board of India.

The approval was in line with the regulatory process, the source said, despite the prospect of the deal being delayed.

The Indian government has plans to sell 5% of LIC’s stake this month before the fiscal year ends on March 31. But there has been no formal announcement of the deal being delayed.

A revised timetable has not been set out for LIC yet, the source added.

The offering is seen critical to the government’s plan to raise funds for budgeted spending. If the IPO gets delayed, it will add to the growing list of planned offerings being put on hold as the war in Ukraine dampens investor appetite for risky assets. read more

Global stock markets including India have become extremely volatile after Russian President Vladimir Putin authorised what he called a “special military operation” on Ukraine.

Indian markets have declined nearly 7% so far this year after gaining about 24% in 2021.

(Reuters)

20211130_093209

Biden Announces Ban On Russian Oil Imports

, , , , ,

“We will not be part of subsidising Putin’s war,” Biden declared, calling the new action a “powerful blow” against Russia’s ability to fund the ongoing offensive

US President Joe Biden on Tuesday announced that the US will ban all Russian oil imports and warned citizens that it will bring costs at gas pumps.

“We will not be part of subsidising Putin’s war,” Biden declared, calling the new action a “powerful blow” against Russia’s ability to fund the ongoing offensive.

Secretary of State Antony Blinken on Monday had said that the US and European allies were considering banning oil imports from Russia which sent oil prices through the roof to nearly $139/barrel, reaching their highest level in nearly 13 years.

Last year America imported around 8 per cent of its oil and refined products from Russia.

Biden said the US was acting in close consultation with European allies, who are more dependent on Russian energy supplies.

However, other European countries, which rely more heavily on Russian for their energy needs, have so far shown little enthusiasm for an embargo. Germany on Monday rejected a proposal to ban Russian oil and gas.

Addressing this, Biden while announcing the ban said, “The United States produces far more oil domestically than all of Europe, all the European countries combined — in fact, we’re a net exporter of energy,” he said. “So we can take this step while others cannot, but we’re working closely with Europe and our partners to develop a long term strategy to reduce their dependence on Russian energy as well”. 

Europe relies on imports for 90 per cent of its gas and 97 per cent of its oil products. Russia supplies 40 per cent of Europe’s gas and a quarter of its oil. The US does not import Russian natural gas. 

The announcement was a stunning reversal from President Biden’s previous position on a Russian oil ban.

Last week, White House press secretary Jen Psaki told reporters the Biden Administration did not “have a strategic interest in reducing the global supply of energy” because it would raise prices for American consumers.

Even before the US ban many Western energy companies including ExxonMobil and BP moved to cut ties with the Russia and limit imports. Shell on Tuesday amid rising international criticism, pledged to halt further purchases of Russian energy supplies. 

Will the ban really hit Moscow?

Because the amount of oil the US imports from Russia is modest, Russia could potentially sell that oil elsewhere, perhaps in China or India. Still, it would probably have to sell it at a steep discount, because fewer and fewer buyers are accepting Russian oil.

Last year, roughly 8 per cent of US imports of oil and petroleum products came from Russia. Together, the imports totaled the equivalent of 245 million barrels in 2021, which was roughly 672,000 barrels of oil and petroleum products a day. But imports of Russian oil have been declining rapidly as buyers shunned the fuel.

‘Putin’s price hike’

While announcing the ban, Biden said that this will come at a cost for American citizens. “The decision today is not without cost to your home — Putin’s war is already hurting American families at the gas pump. Since Putin began his military buildup, the price of gas in America went up 75 cents. And with this action, it is going to go up further,” he said. 

“Defending freedom is going to cost us as well in the United States,” he added.

He further said that he would do “everything” he can to minimise what he called “Putin’s price hike” on American consumers.

“We’re taking steps to ensure the reliable supply of global energy,” he said, adding that he would “keep working with every tool at our disposal” to “protect American families and businesses”.

The president also issued a warning to oil and gas producers, who he cautioned against using the crisis brought on by the Russian President to take advantage of US consumers at the pump.

modi 2

Quad Leaders Agree Ukraine Experience Should Not Be Allowed In Indo-Pacific

, , , , , ,

“We’ve agreed that unilateral changes to the status quo with force like this should not be allowed in the Indo-Pacific region,” Japanese Prime Minister Fumio Kishida said, referring to Russia’s invasion

Leaders of the Quad grouping of countries – the United States, India, Australia and Japan – agreed on Thursday that what is happening to Ukraine should not be allowed to happen in the Indo-Pacific, the prime ministers of Japan and Australia said.

A virtual meeting of the four-country grouping was held at a time of increased concern about Taiwan, a self-ruled island claimed by China that has stepped up its alert level since Russia’s invasion of Ukraine, wary of Beijing taking advantage of a distracted West to move against it. read more

“We’ve agreed that unilateral changes to the status quo with force like this should not be allowed in the Indo-Pacific region,” Japanese Prime Minister Fumio Kishida said, referring to Russia’s invasion.

“We’ve also agreed this development makes it even more important to work toward realizing a free and open Indo-Pacific,” Kishida told reporters after the meeting with US President Joe Biden, Australian Prime Minister Scott Morrison and Indian Prime Minister Narendra Modi.

“We cannot allow what is happening in Ukraine now to ever happen in the Indo-Pacific,” Morrison said in a statement after the meeting.

“We are resolute in our commitment to a free and open Indo-Pacific region where smaller states do not need to live in fear of more powerful ones,” he added.

A joint Quad statement said the leaders met to “reaffirm their commitment to a free and open Indo-Pacific, in which the sovereignty and territorial integrity of all states is respected and countries are free from military, economic, and political coercion.”

The leaders, whose call followed a meeting of their foreign ministers in Australia last month, also “reaffirmed their dedication to the Quad as a mechanism to promote regional stability and prosperity.”

The statement, which added that the leaders agreed to meet in person in Tokyo “in the coming months,” made no specific mention of Taiwan, but said the leaders discussed the conflict and humanitarian crisis in Ukraine.

“They agreed to stand up a new humanitarian assistance and disaster relief mechanism which will enable the Quad to meet future humanitarian challenges in the Indo-Pacific and provide a channel for communication as they each address and respond to the crisis in Ukraine,” it said.

Biden tweeted that the meeting with the Quad leaders covered “our commitment to sovereignty and territorial integrity around the world, including in the Indo-Pacific.”

Taiwan’s representative office in Washington said it welcomed the Quad’s commitment to a free and open Indo-Pacific. “Taiwan will continue to work with all peace-loving partners in the region for prosperity and stability,” it said.

Modi “underlined that the Quad must remain focused on its core objective of promoting peace, stability and prosperity in the Indo-Pacific region,” his office said.

It said developments in Ukraine were discussed, including its humanitarian implications, and Modi “emphasised the need to return to a path of dialogue and diplomacy.”

Washington sees the Quad and its growing relations with India as essential to its efforts to push back against China, but it is in a delicate balancing act with New Delhi, given the latter’s long-standing ties with Russia.

Of the Quad countries, only India has not condemned Russia’s invasion of Ukraine. Russia is the main supplier of arms to the Indian military, and India faces the possibility of U.S. sanctions for its purchase of Russia’s S-400 air defense system.

Analysts say any moves by US Russia hawks to impose sanctions on India for working with Moscow could set back Quad cooperation.

Donald Lu, US assistant secretary of state for South Asia, told a Senate subcommittee hearing on Wednesday that Washington had been fighting a “pitched battle” with India in diplomatic channels to urge it to take a clear position opposed to Russian actions in Ukraine.

He also said it was looking “very closely” at whether to apply sanctions on India over its Russian arms deals.

(Reuters)

economy

Factory Growth Accelerated In Feb

, , , , ,

February’s reading exceeded expectations for 54.3 in a Reuters poll and was above the 50-mark that separates growth from contraction for an eighth month

India’s factory activity growth accelerated in February as the threat from a third COVID-19 wave eased, while some softening of price pressures meant demand and business expectations strengthened, a private survey showed.

However, the survey was conducted before Russia invaded Ukraine, which led to an immediate spike in oil prices. India is the world’s third-largest importer of oil so the crisis will add to inflationary pressure and hurt consumer sentiment.

The Manufacturing Purchasing Managers’ Index (INPMI=ECI), compiled by IHS Markit from Feb. 10-22, improved to 54.9 in February from 54.0 in January.

February’s reading exceeded expectations for 54.3 in a Reuters poll and was above the 50-mark that separates growth from contraction for an eighth month.

“For now, India’s manufacturing sector has weathered the storm of the Omicron variant, undoubtedly supported by the relatively high inoculation rate,” noted Shreeya Patel, an economist at IHS Markit.

Output and new orders expanded for an eighth month in a row in February, led by the consumer goods sector on favourable demand and increasing sales. Growth in international demand for Indian manufactured goods rose marginally to a three-month high.

Business expectations for the next 12 months improved and the index rose to a four-month high on hopes of a return to normality and expansion plans.

However, firms continued to shed jobs for a third month, although the pace of decline was marginal and the slowest in the sequence.

The input prices index was at a six-month low in February but showed raw material costs had risen for a 19th month, driven by higher prices of metals, cotton, chemicals and rubber. Factories passed some of those higher expenses to customers.

“There were, however, some key concerns that continued to threaten growth. Most prominently, cost pressures remained elevated as a result of shortages while delivery times lengthened once again,” added Patel.

India’s economy expanded 5.4% last quarter, slower than the previous two quarters and below 6.0% growth expected in a Reuters poll. read more

A jump in oil prices due to the Russia-Ukraine crisis is likely to have a big impact on inflation and the rupee as well as widening India’s current account deficit, slowing growth further.

The Reserve Bank of India was expected to raise rates next quarter to combat inflation, but if the crisis deepens it could change those predictions.

(Reuters)

savings

India’s Slowing Economic Recovery Faces Fresh Geopolitical Risks

, , , , ,

Gross domestic product probably expanded 9.1% in the year to March 31, the quickest pace among major economies

India’s economy is growing slower than previously forecast after the latest wave of coronavirus cases earlier this year hampered activity and as risks mount from higher prices of commodities amid Russia’s invasion of Ukraine. 

Gross domestic product probably expanded 9.1% in the year to March 31, the quickest pace among major economies. That’s slower than the 9.2% expansion seen in both the previous survey and official statistics ministry estimates last month.

The loss of momentum comes amid disruptions from waves of virus outbreaks and lingering external risks, most notably from high commodity prices that are being exacerbated by the Russia-Ukraine crisis. 

A slower pace of expansion could hurt investment and job creation, testing fiscal and monetary policies that have remained loose despite rising inflation pressures.

Poor Performance

Indian rupee was the second-worst performer in Asia last week. Asia’s third-biggest economy is facing a “drag in manufacturing output and impact of omicron variant in contact-intensive sectors,” said Sameer Narang, an economist with ICICI Bank Ltd.. “Geopolitics remains a risk.”

Higher oil prices can worsen the outlook for inflation and impact disposable incomes in a nation where private consumption accounts for some 60% of GDP. It can also widen the current-account gap and be a drag on the rupee, which last week was the second-worst performer among 11 Asian currencies tracked by Bloomberg.

Quarterly GDP data, also due Monday, is expected to show growth slowing to 5.9% in the final three months of 2021, from an 8.4% expansion in the preceding quarter. That was before the omicron variant of the coronavirus began spreading earlier this year, forcing many Indian states to impose curbs.

Prime Minister Narendra Modi’s government last week flagged that the pandemic recovery will be challenged by geopolitical risks.

“When value chains are facing challenges and threats because of these disturbances, our recovery, not just for India, but countries everywhere will be severely hampered,” Finance Minister Nirmala Sitharaman said Friday. “Hopefully, some kind of restoration of peace at the earliest will happen based on which recoveries can be sustainable”

Bloomberg

Load More