Mykola Siutkin’s Post

https://lnkd.in/dtWbTdsP Argentina's reserves fall to 17-year low after US$2.6-billion payment to IMF Argentina's Central Bank reserves drop to 2006 levels, raising currency devaluation concerns amid high inflation and an upcoming recession. Argentina’s Central Bank reserves fell Monday to the lowest level since 2006 after the government made a payment to the International Monetary Fund to avoid falling into arrears.  Total gross reserves dropped to US$24 billion after the government paid the IMF US$2.6 billion by tapping its currency swap line with China and a bridge loan from a Latin American development bank. Economy Minister Sergio Massa said Monday morning in an announcement that Argentina wasn’t using any of its own money to pay the IMF. With inflation over 150 percent, historically low and negative reserves minus -10 billions dollars are stoking market concerns about an abrupt currency devaluation of Argentina’s official exchange rate around the crucial Aug. 13 primary election. The government maintains strict controls on the peso.  Massa is also the ruling party’s main presidential candidate and faces a tough election bid against the worsening economic backdrop. His Peronist bloc lost a gubernatorial election Sunday in a province it had governed for 20 years. Argentina is also expected to be in recession by the end of the third quarter this year, according to the Central Bank’s most recent monthly survey.  A declaration of DEFAULT is what's comes next in Argentina.

Hungary's headline inflation at 7.9% YoY in Nov, marking the lowest rate since January last year. Despite surpassing analyst expectations, the National Bank of Hungary continues its monetary policy easing. Learn more about the economic outlook: https://lnkd.in/dCHvDCyC #Hungary #Inflation #EconomicAnalysis

Inflation dilemma By Mansoor Ahmad There are many issues that need to be addressed. These are linked to the formal approval of the $6-8 billion program that Pakistan is seeking. Coalition partners are not on the same page regarding ways to address these issues. The IMF will closely watch the privatization of PIA by the end of June. The privatization has already been delayed. The monetary policy of the central bank will also come under IMF scrutiny. Finance Minister Muhammad Aurang­zeb has stated that the process of privatizing PIA will be finalized by the end of June or early July, with Islamabad airport potentially following suit shortly after. The finance minister categorically declared that the government has no business being in business, while explaining the government’s plan to divest from state-owned enterprises (SOEs). This shows that the minister is well aware that the IMF would not be satisfied by the privatization of PIA only, and progress on privatization would be shown to the IMF before the release of each quarterly tranche of the new program. The Peoples Party, the second largest coalition partner, opposes the privatization of many state-owned enterprises, including PIA. The State Bank of Pakistan has been holding its policy rate at 22 percent for almost a year to contain inflation. Inflation has started easing in the past two months, yet the bank maintained a high policy rate. The decline in inflation has been slow because of periodic increases in power and energy rates. The next monetary committee meeting is next Monday. This time, almost all experts expect the central bank to decrease the policy rate by 100 basis points. This small adjustment might be acceptable to the IMF, but the business and industry sectors would be disappointed. The unfortunate reality in Pakistan is that inflation in the country is not based on general monetary policy principles. Usually, inflation goes up during high growth because of brisk economic activities, and the central bank jumps in to increase the monetary policy rate to tame inflation. In Pakistan, inflation got out of control during an acute recession when generally demand and prices went down. Prevailing inflation is because of high government borrowing, a huge decline in rupee devaluation, regular increases in power and energy rates, and high rates of all import-based products. Interestingly, the IMF has not asked the government to reduce the share of provinces in the NFC award. Instead, it has asked the federal government to strengthen the delivery mechanisms in the provinces. Obviously, the IMF believes that provinces, through local governments, could serve better at the grassroots level. But the federal government is not satisfied with its share in the NFC and wants the provinces' shares to be curtailed. However, there is strong resistance to this proposal from most of the provinces. In fact, under the constitution, the share o... https://lnkd.in/ekZTyhn5

The inflation rate stayed above target at 27.4% in August, data showed on Friday, as reforms set out as conditions for an International Monetary Fund (IMF) loan complicate the task of keeping price pressures and declines in its rupee currency in check. The South Asian nation is embarking on a tricky path to economic recovery under a caretaker government after a $3 billion loan programme, approved by the IMF in July, averted a sovereign debt default. Reforms linked to the bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fuelled annual inflation, which rose to a record 38.0% in May. Interest rates have also risen, and the rupee hit all-time lows. Last month the currency fell 6.2%.

Turkey has befuddled the international community by its staunch refusal to raise interest rates, even as inflation in the nation crossed 80% in Q4 of last year. Yet with the lira devaluing by the day and confidence in the economy sinking, President Erdoğan has signaled the nation will finally commit to raising rates. We dive in 👇 https://lnkd.in/eUxBu-jp

While #US inflation has come down, it is not continuing the expected downward trajectory. How has this sticky #inflation affected the #USDollar? Click below for Humphrey Percy’s analysis on this and more in today’s Daily Brief.

MARKET WATCH: 22 APRIL 2024 The Rand is fairing slightly better this morning, though we'll have to wait and see if the currency will retain its footing. The SARB's Monetary Policy Review is due tomorrow, with our MoM and YoY PPI to be released later this week. While the Eurozone's government debt to GDP ratio dropped to its lowest level since 2019 at the end of 2023, some nations in the bloc are still struggling to return to pre-Covid levels. The highest ratios were observed in Greece (161,9%) while some nations like the Netherlands (46,5%) are below the 60% mark. Natural gas futures are still struggling as a result of Middle Eastern tensions. Among the different commodities Uranium is soaring with a YoY increase of 71,4% and record highs above $100/pound earlier this year. 🇿🇦↔🌍↔🇳🇿 If you're a South African living abroad and want to finalise your tax affairs in SA, leave your details at https://lnkd.in/dSjhiqQb and we'll help you with all aspects of your tax emigration.

General Inflation figure in March 2024 reflected 20.7% thereby bringing the interest rates in a positive regime with gap of 1.3% to consider any cut in policy rate. However, during April 2024, the federal government has increased the petrol price and another round of increases in the prices of gas and electricity is also expected, which would further stoke inflation on forward looking basis. The policy rates were increased not just in Pakistan but in many other economies to counter rising inflation, major central banks raised policy interest rates. As a result, financing costs increased and credit availability is generally tight, resulting in difficulties for firms/companies refinancing their debt, rising corporate bankruptcies, and subdued business and residential investment in several economies. The commercial real estate sector, including office markets, is under especially strong pressure in some economies, with rising defaults and lower investment and valuations, reflecting the combined effects of higher borrowing costs and the shift toward remote work since the pandemic. Looking around the globe at present, inflation is projected to start declining toward targets and longer-term inflation expectations remaining anchored, policy rates of central banks in major advanced economies are generally expected to start declining in the second half of 2024. The fall in global inflation is being driven by a drop in so-called core inflation — or prices of goods excluding volatile food and energy prices — helped along by elevated interest rates, weakening job markets, and relief from higher energy prices. It is important to note this forecast, however, was made prior to Iran’s attack on Israel. Thereby any escalation in conflict in the Middle East could change the trajectory. All in all as for Pakistan, keeping in view the factors like: Ø YoY decline in Pakistan inflation with world heading in the same direction as well. Ø Guidelines to follow in respect of positive interest rate trajectory in view of examples to be taken from Siri-Lankan economy where IMF has a greater say.. Ø Considering Pakistan has adhered to all terms of IMF and now with an elected government is hopefully entering into another IMF program having double the size from what it was last time.. One could safely assume the regulator can consider some nominal cut in the coming meeting of MPC to start the momentum for fiscal year 2024-2025. Cheers 😊

Local currency (LCY) government bond yields in the Philippines rose for most tenors between 1 March and 31 May due to the United States Federal Reserve's delay in its monetary policy easing and an uptick in domestic inflation. Year-on-year inflation continued to rise from 3.7% in March to 3.8% in April and 3.9% in May, prompting the Bangko Sentral ng Pilipinas to keep its overnight reverse repurchase rate steady at a 17-year high of 6.50% in its 16 May policy meeting. https://lnkd.in/gXzKbHrm

As per news doing the rounds, the IMF has asked Pakistan for an interest rate hike in order to reduce the gap between the rate of inflation and prevailing interest rates. The measure is in line with the IMF’s other conditionalites that aim to curb demand in the economy and reduce the fiscal deficit. However, the SBP already hiked rates back in January, and any further increase will add to inflationary pressures. #economy #pakistan #interestrates