US Business

The yen hit its lowest level against the dollar in two decades on Wednesday, extending recent falls as the gap widens between Japan’s ultra-loose monetary policy and US tightening.

Despite being traditionally considered a safe-haven currency, uncertainty fuelled by the war in Ukraine has not caused the yen to strengthen.

Instead, moves by the US Federal Reserve towards a more aggressive policy and the shock of rising oil prices in Japan — a major importer of fossil fuels — have pushed the currency lower, analysts say.

One dollar bought 126 yen on Wednesday afternoon, the lowest rate since 2002.

“The Japanese yen has been one of the weakest currencies anywhere in the world this year,” Dutch banking group ING said in a recent commentary.

“Driving the rally has been the perfect storm of a hawkish Federal Reserve, a dovish Bank of Japan (BoJ), and Japan’s negative terms of trade shock as a major fossil fuel importer.”

Government spokesman Hirokazu Matsuno said “the stability of exchange rates is important and we see rapid currency moves as undesirable”.

“We will monitor trends in the foreign currency market and the impact on the Japanese economy with a sense of urgency,” he added.

The yen had already lost 10 percent of its value against the dollar in 2021 after four years of steady strengthening.

The US central bank has embarked on an aggressive tightening path, pushing up American treasury yields which have strengthened the dollar against the yen.

But its moves stand in contrast to the Bank of Japan’s ultra-loose monetary policy, which will be maintained for now, bank governor Haruhiko Kuroda said earlier Wednesday.

“Given the economy and price situation, the Bank of Japan will seek to realise its two-percent inflation target… by resiliently continuing its current powerful monetary easing,” he said.

Swiss Bank UBS said a weaker yen would likely hit Japanese households’ purchasing power, and domestic-oriented small businesses who will face higher import costs.

“The government is offering fiscal supports and most likely will expand the supports. We think the (yen) purchase intervention is possible if the pace of depreciation is regarded as too fast,” it said in a note.

Tohru Sasaki, head of Japan Market Research at JPMorgan Chase Bank, told AFP that the Bank of Japan “has to do something to slow the pace of the yen’s depreciation”.

“The Japanese government can sell foreign reserve (USD) to intervene, but it is politically difficult,” he said, adding that it would be “strange” if the finance ministry did so while the Bank of Japan keeps its current easing policies.

Many Asian markets made gains Wednesday, despite losses on Wall Street and across Europe sparked by data showing red-hot US inflation.

The US consumer price index surged 8.5 percent in March compared with a year ago, the biggest jump since December 1981. The CPI climbed 1.2 percent over February’s level.

The report was the first to fully encompass the shock caused by Russia’s invasion of Ukraine and Western sanctions against Moscow, which have caused energy and food prices to spike worldwide.

Though the US Federal Reserve was poised to raise interest rates quickly to tamp down inflation pressures, the effects will not be immediate.

Tokyo shrugged off the gloom, however, with the benchmark Nikkei 225 closing almost two percent higher.

“The Nikkei index rebounded after falling more than 600 points since the start of the week,” Okasan Online Securities said in a note. 

“Growth stocks were bought back as caution about excessive monetary tightening in the US receded.”

Hong Kong closed with small gains, while shares in Seoul, Taipei and Sydney were also up. Mumbai was down.

“Yes, US inflation was hot -– it’s hottest in 40 years. But we’re getting used to these extreme headline prints now,” said Matthew Simpson, senior market analyst at City Index.

“Besides, now high levels of inflation are no longer new news, the focus is now shifting to its trajectory and how long it may take to tail off.”

The lower-than-expected rise in core CPI “was all equity markets needed, using the singular data point to price in peak inflation” in the United States, said Jeffrey Halley, senior market analyst at OANDA.

“The perpetually bullish FOMO gnomes of the equity market, desperately searching for more drinks to keep the party alive, found it in the core inflation (month on month) data for March.”

In Shanghai, where a Covid-19 outbreak has caused mass lockdowns and snarled global trade arteries, stocks closed down by just under one percent.

That came as official data showed China’s imports shrank on-year in March for the first time in nearly two years, hit by the coronavirus and weakening consumer demand.

Imports dropped 0.1 percent, according to data from China’s Customs Administration.

At the open in Europe, shares dropped.

London slipped 0.1 percent, after official data showed UK inflation had rocketed to a 30-year high in March, while Frankfurt shed 0.6 percent and Paris lost 0.2 percent.

– Crude contracts rise –

Both major crude oil contracts were back over $100 per barrel, after Russian President Vladimir Putin vowed to continue the invasion of Ukraine and China partially eased Covid-related curbs.

“Oil seems to be the primary benefactor of (the) Ukraine vs Russia conflict dragging out longer,” noted Stephen Innes of SPI Asset Management.

In currency markets, the yen hit its lowest level against the dollar in two decades, extending recent falls as the gap widens between Japan’s ultra-loose monetary policy and Fed tightening.

Despite being traditionally considered a safe-haven currency, uncertainty fuelled by the war in Ukraine has not caused the yen to strengthen.

Instead, the Fed’s moves towards a more aggressive policy and the shock of rising oil prices in Japan — a major importer of fossil fuels — have pushed the currency lower, analysts say.

One dollar bought 126 yen at around 0630 GMT on Wednesday, the lowest rate since 2002.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: UP 1.93 percent at 26,843.49 (close)

Hong Kong – Hang Seng Index: UP 0.26 percent at 21,374.37 (close)

Shanghai – Composite: DOWN 0.82 percent at 3,186.82 (close)

London – FTSE 100: DOWN 0.1 percent to 7,568.10

Brent North Sea crude: DOWN 0.05 percent at $104.59 per barrel

West Texas Intermediate: DOWN 0.26 percent at $100.34 per barrel

Euro/dollar: UP at $1.0836 from $1.0818

Pound/dollar: UP at $1.3006 from $1.2977

Euro/pound: DOWN at 83.31 pence from 83.36 pence

Dollar/yen: DOWN at 126.07 from 126.22 yen

New York – Dow: DOWN 0.3 percent at 34,220.36 (close)

— Bloomberg News contributed to this report —

Many Asian markets made gains Wednesday, despite losses on Wall Street and across Europe sparked by data showing red-hot US inflation.

The US consumer price index surged 8.5 percent in March compared with a year ago, the biggest jump since December 1981. CPI climbed 1.2 percent over February’s level.

The report was the first to fully encompass the shock caused by Russia’s invasion of Ukraine and Western sanctions against Moscow, which have caused energy and food prices to spike worldwide.

Though the US Federal Reserve was poised to raise interest rates quickly to tamp down inflation pressures, the effects will not be immediate.

Tokyo shrugged off the gloom, however, with the benchmark Nikkei 225 closing almost two percent higher.

“The Nikkei index rebounded after falling more than 600 points since the start of the week,” Okasan Online Securities said in a note. 

“Growth stocks were bought back as caution about excessive monetary tightening in the US receded.”

In afternoon trade, Hong Kong was eking out small gains. Shares in Seoul and Sydney were also up, while Mumbai was down.

“Yes, US inflation was hot -– it’s hottest in 40 years. But we’re getting used to these extreme headline prints now,” said Matthew Simpson, senior market analyst at City Index.

“Besides, now high levels of inflation are no longer new news, the focus is now shifting to its trajectory and how long it may take to tail off.”

The lower-than-expected rise in core CPI “was all equity markets needed, using the singular data point to price in peak inflation” in the United States, said Jeffrey Halley, senior market analyst at OANDA.

“The perpetually bullish FOMO gnomes of the equity market, desperately searching for more drinks to keep the party alive, found it in the core inflation (month on month) data for March.”

In Shanghai, where a Covid-19 outbreak has caused mass lockdowns and snarled global trade arteries, stocks were down by just under one percent.

That came as official data showed China’s imports shrank on-year in March for the first time in nearly two years, hit by the coronavirus and weakening consumer demand.

Imports dropped 0.1 percent, according to data from China’s Customs Administration.

– Crude contracts rise –

Both major crude oil contracts were back over $100 per barrel, after Russian President Vladimir Putin vowed to continue the invasion of Ukraine and China partially eased Covid-related curbs.

“Oil seems to be the primary benefactor of (the) Ukraine vs Russia conflict dragging out longer,” noted Stephen Innes of SPI Asset Management.

In currency markets, the yen hit its lowest level against the dollar in two decades, extending recent falls as the gap widens between Japan’s ultra-loose monetary policy and Fed tightening.

Despite being traditionally considered a safe-haven currency, uncertainty fuelled by the war in Ukraine has not caused the yen to strengthen.

Instead, the Fed’s moves towards a more aggressive policy and the shock of rising oil prices in Japan — a major importer of fossil fuels — has pushed the currency lower, analysts say.

One dollar bought 126 yen at around 0630 GMT on Wednesday, the lowest rate since 2002.

– Key figures around 0710 GMT –

Tokyo – Nikkei 225: UP 1.93 percent at 26,843.49 (close)

Hong Kong – Hang Seng Index: UP 0.25 percent at 21,373.20

Shanghai – Composite: DOWN 0.82 percent at 3,186.82

Brent North Sea crude: DOWN 0.18 percent at $104.45 per barrel

West Texas Intermediate: DOWN 0.30 percent at $100.30 per barrel

Euro/dollar: DOWN at $1.0818 from $1.0864

Pound/dollar: DOWN at $1.2977 from $1.3006

Euro/pound: UP at 83.36 pence from 83.28 pence

Dollar/yen: UP at 126.22 yen from 125.61 yen

New York – Dow: DOWN 0.3 percent at 34,220.36 (close)

— Bloomberg News contributed to this report —

The yen hit its lowest level against the dollar in two decades on Wednesday, extending recent falls as the gap widens between Japan’s ultra-loose monetary policy and Fed tightening.

Despite being traditionally considered a safe-haven currency, uncertainty fuelled by Russia’s war in Ukraine has not caused the yen to strengthen.

Instead, moves by the US Federal Reserve towards a more aggressive policy and the shock of rising oil prices in Japan — a major importer of fossil fuels — have pushed the currency lower, analysts say.

One dollar bought 126 yen at around 0630 GMT on Wednesday, the lowest rate since 2002.

“The Japanese yen has been one of the weakest currencies anywhere in the world this year,” Dutch banking group ING said in a recent commentary.

“Driving the rally has been the perfect storm of a hawkish Federal Reserve, a dovish Bank of Japan (BoJ), and Japan’s negative terms of trade shock as a major fossil fuel importer.”

The yen had already lost 10 percent of its value against the dollar in 2021 after four years of steady strengthening.

The US central bank has taken a hawkish tone as it embarks on an aggressive tightening path, pushing up American treasury yields which have strengthened the dollar against the yen.

Earlier on Wednesday, Bank of Japan governor Haruhiko Kuroda said the bank would maintain its monetary easing policies in a bid to reach its long-held two-percent inflation target.

“Given the economy and price situation, the Bank of Japan will seek to realise its two-percent inflation target… by resiliently continuing its current powerful monetary easing,” he said.

Swiss Bank UBS said a weaker yen would likely hit Japanese households’ purchasing power and domestic-oriented small businesses who will face higher import costs.

“The government is offering fiscal supports and most likely will expand the supports. We think the JPY purchase intervention is possible if the pace of depreciation is regarded as too fast,” it said in a note.

“We cannot completely deny the possibility of the BoJ adjusting policy to cope with public criticism” on the yen’s depreciation, UBS added, noting that the bank under Kuroda “has been quite flexible and pragmatic in the past”.

Prime Minister Fumio Kishida did not comment directly on the yen’s fall when asked on Tuesday, but emphasised the importance of stability in foreign exchange rates.

“I will refrain from commenting on the level of exchange rates, but their stability is important and I think rapid fluctuations are undesirable,” he said.

Britain’s annual inflation rate soared to the highest level in three decades last month as energy prices rocket, official data showed Wednesday, worsening a cost-of-living crisis.

Inflation surged to 7.0 percent in March from 6.2 percent in February, the Office for National Statistics said in a statement.

“Broad-based price rises saw annual inflation increase sharply again in March,” said ONS chief economist Grant Fitzner. 

“Amongst the largest increases were petrol costs.”

Prices of restaurant meals and hotel rooms also rose steeply last month after falling a year earlier during a pandemic lockdown in the UK.

Costs are surging worldwide as economies reopen from pandemic lockdowns and on fallout from the war in Ukraine.

US inflation rose by a huge 8.5 percent over the 12 months to March, the biggest jump in four decades, official data showed Tuesday.

Sharp price rises across the board are forcing central banks around the world to hike interest rates, curbing economic growth recovery.

European Central Bank governors meet Thursday to ponder record-high inflation in the eurozone and fresh economic uncertainty caused by the war in Ukraine, with policymakers signalling a willingness to take action sooner rather than later.

The US Federal Reserve and the Bank of England have already announced their first rate hikes to combat price pressures, leaving the ECB looking out of step.

– ‘Worrying time’ –

The Bank of England has predicted that UK annual inflation could reach double figures by the end of the year.

“We’re seeing rising costs caused by global pressures in our supply chains and energy markets which could be exacerbated further by Russian aggression in Ukraine,” Britain’s finance minister Rishi Sunak said Wednesday.

“I know this is a worrying time for many families,” added the embattled chancellor of the exchequer.

Sunak, along with Prime Minister Boris Johnson, confirmed Tuesday that they had been fined for breaching Covid-19 lockdown laws.

British cost-of-living is set to soar even higher owing to an April tax hike on UK workers and businesses and a fresh surge in domestic energy bills that kicked in this month.

“Soaring energy and fuel prices were the main drivers of the rise in (UK) inflation in March, but we are paying more for everything,” Myron Jobson, senior personal finance analyst at Interactive Investor, said following Wednesday’s data.

“Supply shortages and production bottlenecks owing to the pandemic have forced firms to raise their prices of late,” while Russia’s invasion of Ukraine “has made the outlook for inflation worse”, he added.

China’s imports shrank on-year in March for the first time in nearly two years, official data showed Wednesday, hit by coronavirus lockdowns and weakening consumer demand.

The world’s second-largest economy has stuck to a strict zero-Covid strategy as it tries to contain outbreaks fuelled by the Omicron variant in recent months.

The economic costs, however, have mounted — the waves of infections and resulting lockdowns have kept consumers at home, halted business operations and snarled supply chains.

Imports dropped 0.1 percent from a year ago, according to data from China’s Customs Administration — the first such decline since August 2020, in the early phase of the pandemic.

The figure was much lower than the forecast from a Bloomberg poll of economists, and a far cry from the 15.5 percent growth for the first two months this year.

“Some unexpected factors in the international and domestic environment have gone beyond our anticipation,” Customs Administration spokesman Li Kuiwen told reporters.

“Achieving the goal of stabilising foreign trade will require greater effort.”

China’s export growth slowed as well in March to 14.7 percent, down from 16.3 percent in the first two months.

While Li did not specify external factors, the drop in exports came during a period where Russia’s invasion of Ukraine and the shockwaves from it have hurt business sentiment and consumer confidence globally.

“The March trade data highlighted the impact of pandemic-related disruptions on economic activity and consumer spending,” said Rajiv Biswas, Asia-Pacific chief economist at S&P Global Market Intelligence.

He added that recent lockdowns in major cities such as Shanghai and Shenzhen “hit consumer spending hard”, while the temporary shutdown of manufacturing plants impacted demand for imported raw materials.

China’s balance of trade in March was $47.4 billion.

European demand for Chinese exports could be “a key risk”, Biswas said, given that “macroeconomic shocks from the Russia-Ukraine war, notably higher oil and gas prices and rising inflation pressures, are resulting in a downgraded EU GDP growth outlook in 2022”.

Customs spokesman Li said that in the first quarter, exports of mechanical and electronic products rose 9.8 percent from a year ago, with increases in solar cells, lithium batteries and automobiles.

“The largest declines in outbound shipments were of electronics, furniture and recreational products, pointing to an unwinding of pandemic-linked demand for these goods,” Julian Evans-Pritchard, senior China economist at Capital Economics.

Key iPhone maker Pegatron has halted operations at two subsidiaries in the Chinese cities of Shanghai and Kunshan, as global supply chains feel the pinch of Beijing’s strict zero-Covid measures.

The business hub of Shanghai has become the heart of China’s biggest Covid-19 outbreak since the virus surfaced more than two years ago.

The city of 25 million has remained almost entirely locked down since the start of the month.

“We have temporarily suspended work,” said Pegatron in a filing to the Taiwan Stock Exchange on Tuesday.

The Taiwanese firm said it “actively cooperates with local authorities” and would try to resume operations as soon as possible.

The suspensions apply to two of its subsidiaries, in Shanghai and nearby Kunshan city.

Stay-at-home orders and stringent testing rules have strained supply chains in and around Shanghai, home to the world’s busiest container port and a critical gateway for foreign trade.

China reported nearly 28,000 local virus cases on Wednesday, the vast majority in Shanghai.

Many factories have been forced to halt operations as virus cases have surged, while some staff have been living in their workplaces as businesses struggle to operate.

Pegatron’s suspensions mark the latest blow to Apple, which has seen disruptions at other suppliers’ assembly lines in recent months as Chinese cities struggle to curb virus outbreaks.

In March, another major supplier Foxconn halted operations in the Chinese tech hub of Shenzhen.

Foxconn has “resumed fundamental operations” in Shenzhen as of late March, the company said.

Chinese authorities have struggled to maintain the flow of goods across the country as tough virus controls slow movement.

A Transport Ministry circular issued late Tuesday barred the “blocking of road transportation” vehicles and personnel, ordering more efficient Covid-19 screening along transport routes.

Anxious about the spring farming season and food supplies, officials in virus-hit areas such as the northeastern province of Jilin have also issued travel passes to let agricultural workers return to farmland on chartered buses.

“The Chinese economy has been facing a rising risk of recession since mid-March”, Nomura analysts warned this week, citing severe disruptions to the delivery of exports, with coastal areas hit hard by controls to rein in the virus.

Asian markets mostly started Wednesday with gains, despite a day of losses on Wall Street and across Europe sparked by data showing red-hot US inflation.

Hong Kong and Shanghai bucked the trend though, posting slight losses in morning trade.

The US consumer price index surged 8.5 percent in March compared with a year ago, the biggest jump since December 1981. CPI climbed 1.2 percent over February’s level.

The report was the first to fully encompass the shock caused by Russia’s invasion of Ukraine and Western sanctions against Moscow, which have caused energy and food prices to spike worldwide.

Though the Federal Reserve was poised to raise interest rates quickly to tamp down inflation pressures, the effects will not be immediate.

But Tokyo shrugged off the gloom, with the benchmark Nikkei 225 up by about 1.5 percent.

Shares in Seoul and Sydney were also up, while Mumbai was down.

“Yes, US inflation was hot -– it’s hottest in 40 years. But we’re getting used to these extreme headline prints now, to the point that markets looked past the whopping 8.5 percent y/y print in favour of core CPI only rising 0.3 percent compared to 0.5 percent expected,” said Matthew Simpson, senior market analyst at City Index.

“Besides, now high levels of inflation are no longer new news, the focus is now shifting to its trajectory and how long it may take to tail off.”

“We’re hopeful that this is where (inflation is) going to peak,” Ann Miletti, head of active equity at Allspring Global Investments, told Bloomberg Television.

But she added that markets continued to face the threat of rising rates and the impact of Covid-19 lockdowns in China, which have snarled supply chains.

Both major crude oil contracts were back over $100 per barrel, with Brent topping $105, after Russian President Vladimir Putin vowed to continue the invasion of Ukraine and China partially eased Covid-related curbs.

“Oil seems to be the primary benefactor of Ukraine vs Russia conflict dragging out longer,” noted Stephen Innes of SPI Asset Management.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.6 percent at 26,755.05 (break)

Hong Kong – Hang Seng Index: DOWN 0.18 percent at 21,281.78

Shanghai – Composite: DOWN 0.32 percent at 3,202.98

Brent North Sea crude: UP 0.56 percent at $105.23 per barrel

West Texas Intermediate: UP 0.53 percent at $101.13 per barrel

Euro/dollar: DOWN at $1.0832 from $1.0864

Pound/dollar: UP at $1.3007 from $1.3006

Euro/pound: DOWN at 83.28 pence from 83.53 pence

Dollar/yen: UP at 125.63 yen from 125.61 yen

New York – Dow: DOWN 0.3 percent at 34,220.36 (close)

London – FTSE 100: DOWN 0.6 percent at 7,576.66 (close)

— Bloomberg News contributed to this report —

A US cryptocurrency expert was sentenced Tuesday to 63 months in prison for advising North Korea on how to create cryptocurrency services and blockchain technology to circumvent US sanctions over its nuclear program, court officials in New York said.

Virgil Griffith, 39, had pleaded guilty to conspiring to violate US law, in a bid to reduce the sentence for a crime that can carry up to 20 years behind bars. 

Prosecutor Damian Williams said “there is no question North Korea poses a national security threat to our nation, and the regime has shown time and again it will stop at nothing to ignore our laws for its own benefit. 

He said that Griffith had “admitted in court he took actions to evade sanctions, which are in place to prevent (North Korea) from building a nuclear weapon.”

In April 2019 Griffith gave a presentation in Pyongyang, the North Korean capital, on cryptocurrency and blockchain technology. He was arrested at Los Angeles airport in November the same year. 

At the conference, Griffith provided information on how North Korea could use the technology to launder money and evade sanctions, including through “smart contracts,” according to the court.

The prosecution said that after the presentation, Griffith “pursued plans to facilitate the exchange of cryptocurrency between the Democratic People’s Republic of Korea and South Korea, despite knowing that assisting with such an exchange would violate sanctions against the DPRK.”

The United States prohibits the export of goods, services or technology to North Korea without special permission from the Treasury Department’s Office of Foreign Assets Control.

In addition to 63 months in jail, Griffith will spend three years on probation. 

Griffith holds a doctorate from the California Institute of Technology and has also worked on Ethereum, a Singapore-based global platform with blockchain technology for business and financial use, which has a cryptocurrency named after it.

San Francisco police faced an unprecedented problem recently when an officer stopped a car that was driving at night with no headlights on, only to discover there was no one inside. 

The vehicle, it turned out, was a self-driving car, and the police officer’s encounter was captured on film by a passerby, who posted the footage on social media.

The clip, showing bemused officers circling the vehicle and peering through its window for several minutes, has been shared so widely that Cruise, the company that owns the vehicle, reacted on Twitter to explain what had happened.

It said the self-driving car “yielded to the police vehicle, then pulled over to the nearest safe location for the traffic stop, as intended. An officer contacted Cruise personnel and no citation was issued.”

In the footage, as the police are inspecting the parked vehicle, someone can be heard exclaiming, “There’s no one in it, it’s crazy!”

A police spokesperson said that after the police had stopped the car, a maintenance team had taken control of it.

Cruise explained that the headlights were turned off due to human error.

Founded in 2013, Cruise has developed software that allows cars to drive themselves completely autonomously. 

The US manufacturer General Motors owns the majority of shares in the company, valued at more than $30 billion thanks to investments by giants such as Microsoft, Honda and Walmart. 

Since February, Cruise has passed a key threshold in offering individuals the chance to book free trips in the streets of San Francisco in its driverless cars. 

Residents of the Californian city also regularly come across robo-taxis from Waymo, Google’s self-driving subsidiary. 

These camera-clad vehicles take passengers wherever they want, with a driver who is present but does not touch the steering wheel or the pedals.