US Business

The Indian rupee fell to more than 80 per US dollar for the first time on record Tuesday, as the greenback extended its rally and foreign capital outflows intensified.

The rupee hit 80.0600 against the greenback soon after trading started, compared with the previous close of 79.9775, Bloomberg data showed.

High inflation and rising interest rates in the United States coupled with fears of an impending recession in the world’s biggest economy have fuelled a broad dollar rally in recent weeks as investors turn increasingly risk-averse.

Tighter US monetary policy has exacerbated outflows from emerging markets such as India, where foreign investors have withdrawn a net $30.8 billion in debt and equity this year.

Data released last week showed that US consumer price inflation hit a fresh four-decade high in June, exceeding market forecasts and stoking expectations of another large Federal Reserve rate hike next week.

In a written statement to the Indian parliament on Monday, finance minister Nirmala Sitharaman attributed the rupee’s sharp fall to external reasons.

“Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US dollar,” she said.

At the same time, the Indian currency has strengthened against the British pound, the Japanese yen and the euro in 2022 so far, Sitharaman added.

But higher crude prices have resulted in a deteriorating trade balance in a country that imports 80 percent of its oil.

India’s merchandise trade deficit widened to a record $26.18 billion in June, official data showed last week, largely because of higher crude and coal import prices.

In its monthly economic review, the Ministry of Finance said costlier imports could widen the current account deficit and cause the rupee to depreciate further.

“The near-term outlook for the rupee will continue to be weak as it tracks developments on the oil and gas front in international markets,” forex market expert K Harihar told AFP.

“The weakness will persist until trade deficit numbers come down or capital inflows counter it,” he said, adding that the rupee could fall to 81 per US dollar without an agreement between Europe and Russia on gas supply.

The rupee’s move followed Russia’s Gazprom telling Europe late Monday that it cannot guarantee gas supplies following maintenance work on its Nord Stream pipeline.

Consumer price inflation in India, the world’s sixth-largest economy, cooled off slightly to 7.01 percent in June after hitting an eight-year high of 7.79 percent in April.

But price rises have persisted well above the central bank’s two-to-six percent target range despite consecutive interest rate hikes in May and June.

The central bank has also sold more than $34 billion of its foreign currency reserves in an effort to stabilise the rupee.

India’s benchmark Sensex index opened lower, but recovered to trade 0.17 percent higher on Tuesday morning.

Scandinavian airline SAS and the unions representing their pilots said Tuesday that they had reached an agreement, ending a two-week strike that has cost the ailing airline between $9 and $12 million a day.

The agreement ending the strike after 15 days was confirmed by both the company and the unions after a negotiation session ran through Monday and into the early hours of Tuesday.

“I am pleased to report that we now have come to an agreement with all four pilot unions for SAS Scandinavia and the strike has ended,” chief executive Anko van der Werff said in a statement.

“Finally, we can resume normal operations and fly our customers on their much longed-for summer holidays. I deeply regret that so many of our passengers have been impacted by this strike,” he added.

A new agreement, covering the next five and half years, means that “flights operated by SAS Scandinavia will resume according to their regular traffic program as soon as possible”, the company said.

“SAS pilots have taken responsibility to sign a new agreement with SAS and the strike will cease,” the Swedish Air Line Pilots Association (SPF) said in a separate statement, adding that it had been “an extraordinary and very demanding negotiation.”

Pilots have been striking since July 4, when nearly 1,000 of them walked off the job after talks broke down. 

They were protesting against salary cuts demanded by management as part of a restructuring plan aimed at ensuring the survival of the company, and the firm’s decision not to re-hire pilots laid off during the Covid-19 pandemic. 

– Survival at stake –

Under the new deal, 450 pilots will be re-hired.

One day after the strike began SAS announced it was filing for Chapter 11 bankruptcy protection in the United States, and van der Werff last week warned that the prolonged strike was putting the Chapter 11 process in jeopardy and, “ultimately, the survival of the company at stake”.

When the stoppage was in its tenth day, SAS said it had already cost roughly 1 to 1.3 billion Swedish kronor ($94 million to $123 million, or 94 million to 123 million euros), with more than 2,500 flights cancelled.

The CEO also said the strike also had “a severe impact on our possibilities to succeed with SAS Forward”, the cost-saving programme launched by the ailing company in February. 

While the airline said it could meet its obligations in the near term it warned cash reserves “will erode very quickly in the face of a continuing pilot strike”.

SAS, which employs nearly 7,000 people, mainly in Denmark, Norway and Sweden, is also seeking to raise about 9.5 billion kronor in fresh capital.

“We now get on with the important work of progressing our transformation plan SAS FORWARD and building a strong and competitive SAS for generations to come,” van der Werff said Tuesday.

The summer is shaping up to be difficult overall for European airlines and airports, who are faced with staff shortages that are affecting air traffic. 

After widespread job losses linked to Covid-19, airlines and airports are struggling to recruit new staff in many countries.

Most stocks fell Tuesday after a Wall Street sell-off fuelled by fresh recession worries following a report that Apple planned to ease back on spending due to uncertainty over the economic outlook.

The drop across most markets in Asia also came as oil held a Monday surge caused by fading expectations that Joe Biden had convinced Saudi Arabia to pump more to ease a supply crisis and temper prices.

The losses among equities ate into Monday’s gains, which came after a forecast-beating US retail sales report suggested consumers — the key driver of growth — remained resilient despite decade-high inflation and rising interest rates.

And analysts warned that with the earnings season just getting under way, there could be more pain ahead for investors as firms report falling profits or warn about the outlook.

In a sign of concern among big-cap firms about an economic slowdown or recession, Bloomberg News said tech titan Apple was pulling back on hiring and some investments. 

The news follows similar belt-tightening moves by other Silicon Valley giants including Alphabet, Amazon and Facebook parent Meta.

“With Apple putting up their hand and acknowledging they have too many staff, it is a clear sign of caution from the mega-cap heavyweight giants amid an uncertain time,” said SPI Asset Management’s Stephen Innes.

“Investors are hoping for a ‘kitchen-sink’ quarter where corporates flush out all the bad news at once — but I am not sure that will happen, and I think this makes it difficult to put an absolute bottom on the equity selloff.”

The report led to a reversal on Wall Street, with all three main indexes ending in negative territory, having enjoyed most of the day well up.

And Asia struggled Tuesday.

Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington and Manila all fell, though Tokyo rose as investors there returned from a long weekend to play catch-up with Monday’s regional rally.

Innes added that markets were likely to face pressure for some time as central banks continue to lift borrowing costs to fight inflation, risking an economic downturn.

“The probability of recession is dominating US discussions, as inflation might have peaked in June while the Fed still has a couple of massive hikes ahead before possibly pausing,” he said.

“We always hear that the rate hikes are in the price, but they are always a shock when the market actualises the reality, especially when they are of the jumbo variety.”

While some are predicting inflation may have reached its peak, oil prices — the key driver of soaring prices — continues to hold its strength, despite recent losses.

Both main contracts rocketed more than five percent Monday on expectations that Riyadh will not open up the taps further, with Biden’s plea seeming to have fallen on deaf ears.

Traders are also keeping a nervous eye on Europe, where a 10-day maintenance shutdown of the Nord Stream 1 pipeline from Russia is due to come to an end.

Many fear Vladimir Putin will keep it shut down in retaliation for sanctions imposed on Moscow for its invasion of Ukraine. That would deal another blow to the already creaking eurozone economy and could send crude prices soaring.

Supply fears are trumping worries about a demand hit in China from another possible lockdown in Shanghai as officials struggle to contain another Covid-19 outbreak.

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 26,977.37 (break)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 20,701.98

Shanghai – Composite: DOWN 0.2 percent at 3,270.56

Euro/dollar: DOWN at $1.0140 from $1.0146 on Monday

Pound/dollar: DOWN at $1.1940 from $1.1950 

Euro/pound: DOWN at 84.84 pence from 84.88 pence

Dollar/yen: UP at 138.24 yen from 138.13 yen

West Texas Intermediate: DOWN 0.2 percent at $102.45 per barrel

Brent North Sea crude: DOWN 0.2 percent at $106.02 per barrel

New York – Dow: DOWN 0.7 percent at 31,072.61 (close)

London – FTSE 100: UP 0.9 percent at 7,223.24 (close)

Britain’s Farnborough airshow flew into view Monday under a sweltering heatwave, as US planemaker Boeing basked in the glow of the first gigantic order in global aviation’s first get-together since Covid.

Visitors flocked to air-conditioned chalets and exhibition halls to escape the intense heat on the first day of one of the world’s biggest civil and defence shows, while queues snaked for ice cream vans under dizzying air displays.

Tens of thousands of visitors are expected at this year’s event, which coincides with Britain’s first-ever “extreme heat” red alert that has been declared for both Monday and Tuesday, when temperatures set to soar further.

“People who come to visit are really happy to visit. Some of the stays are a little longer than they would normally be because it’s pretty relaxing inside,” said John Paul Frasier, adviser for Canadian manufacturer De Havilland Aircraft, speaking to AFP inside its business chalet.

“It’s pretty challenging and we know that tomorrow is going to be a little bit warmer.”

The business terraces were meanwhile deserted as some plucky visitors — clad in hats, shorts and sunglasses — headed to the tarmac to watch the commercial and military jets soar across the skies.

– Beads of sweat –

“It the hottest I’ve seen, we just have to power through,” said Aaron Rutter, vice president of sales at Lisi Aerospace, with beads of sweat dropping from his forehead as he watched Boeing’s new 777X jumbo jet make a series of twists and turns across the sky.

“There a few crazy (ones) of us out there. It’s all relative,” added Rutter, who hails from Arizona and kept his black jacket on.

This is the first Farnborough since 2018 because the 2020 edition was cancelled as the Covid health emergency ravaged the aviation sector.

Boeing fired the first shot on Monday in its traditional orders battle with European rival Airbus, clinching a $13.5-billion deal for 100 MAX planes from Delta Airlines in a huge vote of confidence for the crisis-hit jet — and for the industry’s broader recovery from Covid.

Delta lodged its first-ever order for medium-haul MAX 10 aircraft, with options for 30 more of the fuel-efficient planes as it seeks to replace its ageing fleet and cut emissions.

The blockbuster deal marks a huge turnaround for the MAX jet which had suffered two deadly crashes in 2018 and 2019.

– Decarbonisation –

Delta, which has 222 Airbus aircraft due for delivery, was until now the only large US airline that had not yet ordered MAX jets.

The MAX 10 is the largest version of Boeing’s new generation of single-aisle aircraft, and competes with the commercially-successful Airbus A321.

Delta boss Ed Bastian added that the aircraft would help it improve fuel efficiency and secure a “more sustainable future for air travel”.

The news comes as airlines worldwide seek to replace ageing fleets with fuel-efficient planes that emit less carbon dioxide.

Airbus and a number of major airlines signed letters of intent to explore the possibility of capturing CO2 emissions from the air and storing them underground.

Boeing revealed also that Japanese airline ANA had agreed to purchase 20 of its smaller MAX 8 jets — worth $2.4 billion — plus two 777-8 freight planes.

– ‘Handing over controls’ –

Outgoing British Prime Minister Boris Johnson opened the prestigious five-day event as the aviation sector plots its post-Covid recovery.

The event coincides with fast-moving political turmoil in Britain after Johnson’s recent announcement that he is stepping down as Conservative party leader, sparking a divisive contest to replace him also as prime minister.

“This government believes in aviation and its power to bring jobs and growth to the entire country,” Johnson said Monday in opening remarks, before alluding to his exit from Downing Street.

“After three years in the cockpit… I am now handing over the controls seamlessly to someone else. I don’t know who,” he added, sparking laughter from delegates.

Uber will offer several million dollars in compensation to tens of thousands of passengers with disabilities who were charged extra fees, US prosecutors said Monday.

The case brought by the US Department of Justice centered on disabled passengers allegedly being made to pay wait charges because they needed extra time to board vehicles.

Under the settlement, Uber will issue credits to more than 65,000 eligible riders that are worth double the amount of wait time fees they were ever charged, which could potentially amount to millions of dollars.

The ride-share company also agreed to pay over $1.7 million to riders who complained to Uber about the fees, and $500,000 to other impacted people.

“People with disabilities should not be made to feel like second-class citizens or punished because of their disability, which is exactly what Uber’s wait time fee policy did,” said assistant attorney general Kristen Clarke.

Uber said it was “pleased” by the settlement.

“Prior to this matter being filed we made changes so that any rider who shares that they have a disability would have wait time fees waived automatically,” the company said.

Uber charges a fee if a driver has to wait more than two minutes to pick up any passenger, but the Department of Justice said applying those fees to riders with disabilities amounts to unlawful discrimination.

Under the terms of a two-year agreement, Uber will continue to waive wait time fees for riders who need more time to board because of disabilities, and ensure refunds are easily available in event such fees are wrongly charged, prosecutors said.