The International Monetary Fund (IMF) has decided to let Kristalina Georgieva remain as head of the fund. After reviewing the accusations that she improperly influenced a World Bank report in favour of China, the lender’s board reaffirmed its full confidence in her. U.S. Treasury Secretary Janet Yellen told on Monday that WilmerHale’s report into World Bank data-rigging allegations against the Georgieva “raised legitimate issues and concerns”, but a lack of direct evidence meant a leadership change was unwarranted.
Our blog will track developments in the energy markets as oil continues its climb about $80 a barrel. Futures on Brent crude, the global oil benchmark, rose 1.5% to $83.65 a barrel, their highest settle value in three years. In India, some states experienced electricity blackouts because of coal shortages, while in China the government ordered miners to ramp up coal production as power prices surged.
According to a government report on Monday, cited by Reuters, volatility in the prices of crude oil, edible oils and metal products pose concerns for India’s economy, though inflation is expected to ease in coming months.
Later today, the Union government is expected to release September consumer price inflation, and August Industrial production data. – John Xavier
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Rupee slips to 75.42 against US dollar
The Indian rupee fell 6 paise to 75.42 against the US dollar in opening trade on greenback strength in the overseas market coupled with firm crude oil prices.
The rupee opened on a weak note at 75.41, before further falling to 75.42, a decline of 6 paise from the last close. On Monday, the rupee dropped 37 paise to at a 15-month low of 75.36 against the US dollar. Besides, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03% to 94.34.
Embattled Evergrande’s unit to make EVs next year
China’s Evergrande unit aims to start producing electric vehicles (EV) early next year. The New Energy Vehicle (NEV) is building a car plant in the coastal city of Tianjin, and according to the management, the plant will mass produce next year.
NEV is linked to developer Evergrande Group, which is struggling to manage its over $300 billion debt.
U.S. 2-year Treasury yield hits 18-month high
U.S. 2-year Treasury yield jumped to an 18-month high after investors sold U.S. debt in anticipation that rising energy prices would fuel inflation. This could further add pressure on the U.S. Federal Reserve to raise interest rates.
The yield rose 3.6 basis points to 0.3560%, and touched its highest since late March 2020, when the Fed lowered its benchmark rate to almost zero.
Bonds are also under pressure globally. 10-year Australian government bond yield rose almost 50 bps over the same period and, 10-year Japanese yield surged 5.5 bps.
IMF backs Kristalina Georgieva
The International Monetary Fund (IMF) expressed full confidence in its Managing Director Kristalina Georgieva in response to allegations that she pressured World Bank staff to alter data in favour of China.
The fund’s 24-member executive board noted that the law firm WilmerHale did not conclusively demonstrate that Georgieva played an improper role as for CEO of the World Bank.
The law firm in its report alleged that Georgieva and other senior officials applied “undue pressure” on bank’s staff to boost China’s ranking in the Doing Business 2018 report.
Oil falls amid global energy crisis
Oil prices fall for the first time in four days after weeks of gains even as global energy crisis pushes up demand. Brent crude fell 0.3%, to $83.39 a barrel while U.S. oil fell 0.4%, to $80.19 a barrel.
Power prices have risen to records amid energy crisis in India, China, the United States, and parts of Europe in the last few weeks. Major industrial regions in China are witnessing power shortages, leading to an increase of over 10% in prices of thermal coal futures.
Asian markets open|Sensex update
The Indian benchmark indices opened in red today amid weak global cues. The Sensex opened 0.19% lower at 60018.70, and the Nifty opened 11.70 points lower at 17934.30.
Asian shares fell in early trade as global energy crunch fuelled inflation fears and clouded investor sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9%, Australia was down 0.29% and Japan’s Nikkei slid 1.03%. China’s blue chip CSI 300 Index fell 0.75%, and Hong Kong’s Hang Seng Index opened 1.35% lower.
China Evergrande group missed paying all of its offshore bondholders by Monday deadline which could weigh on investor sentiment. The company’s troubles have sent shockwaves across global markets.
—- Edited by John Xavier
(With inputs from Reuters, PTI and other news agencies.)