Export Pessimism – Louth Online http://louthonline.com/ Thu, 24 Nov 2022 05:44:22 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png Export Pessimism – Louth Online http://louthonline.com/ 32 32 Prima in association with Sri Lanka Cricket nurtures young cricket talent in Sri Lanka – The Island http://louthonline.com/prima-in-association-with-sri-lanka-cricket-nurtures-young-cricket-talent-in-sri-lanka-the-island/ Thu, 24 Nov 2022 02:48:40 +0000 http://louthonline.com/prima-in-association-with-sri-lanka-cricket-nurtures-young-cricket-talent-in-sri-lanka-the-island/

The increased capacity allows the company to explore new markets beyond the 50 countries it currently serves

Nestlé Lanka invested more rupees. 6.6 billion in Sri Lanka over the past five years

by Sanath Nanayakkare

Nestlé Lanka yesterday reaffirmed its commitment to Sri Lanka by investing more than Rs. 2 billion in its state-of-the-art factory in Kurunegala by constructing a new vacuum belt dryer (VBD).

Aimed at increasing the capacity of its malted foods manufacturing plant, this investment would further strengthen the company’s efforts to have a positive impact on Sri Lanka and its people.

The new VBD will increase the production capacity of two of its biggest brands – Nestlé Nestomalt and Milo, allowing the Company to explore the possibility of expanding its exports to several new markets, beyond the 50 countries it serves. currently.

Nestlé Lanka’s Kurunegala factory manufactures over 90% of Nestlé products sold in the country, using strict quality controls. The 115-year-old business ‘Good food, Good life’ has become an integral part of the lives of Sri Lankans and contributes to the livelihoods of over 25,000 Sri Lankan milk and coconut farmers and producers and provides direct employment to over 800 people. Over the past five years, the company has consistently invested in the country, amounting to over Rs. 6.6 billion.

The first of its kind in the local food and beverage industry, the Swiss-designed vacuum belt dryer adopts the latest technology and helps the company offer more of its popular brands – Nestlé Nestomalt and Nestlé Milo enriched with iron and vitamin D.

An event was held yesterday at the Nestlé Lanka factory in Kurunegala to mark the inauguration of this project, by laying the first stone of the building which will house the new VBD.

The event was attended by the Minister of Industries and Plantations, Dr. Ramesh Pathirana; the Swiss Ambassador to Sri Lanka and the Maldives, Dominik Furgler; MP Anura Priyadarshanayapa and Board of Investments Chief Executive Renuka Weerakone, as well as officials from Nestlé Lanka.

Addressing the gathering, the chief guest, Minister of Industries and Plantations, Dr. Ramesh Pathirana said, “Economic prosperity is driven by investments that not only improve the capacity but also improve the quality of people’s lives. Therefore, I consider it an honor to be present at this event today as one of Sri Lanka’s leading companies announces an investment worth over Rs. 2 billion. I am also happy to note that this investment would ultimately increase the company’s export potential, as foreign exchange is currently essential for economic growth.

MP Anura Priyadarshanayapa said, “As a company with deep roots in the country for 115 long years, Nestlé Lanka has always invested in Sri Lanka with determination. The confidence the company has placed in the potential of the country is truly inspiring. I look forward to seeing the positive ripple effect this investment will bring to our communities and the economy in the years to come.

“We are currently facing several economic volatilities, both short and long term, and the role played by capital investments is essential in supporting economic recovery and growth. Therefore, we appreciate Nestlé Lanka’s efforts to strengthen its investments in Sri Lanka, as they echo a positive message about the country’s potential, encouraging new investments,” said Renuka Weerakone, Managing Director, Board of Investments Sri Lanka. Lanka.

Jason Avanceña, Chief Executive of Nestlé Lanka, said: “Although this is a difficult time for all of us in Sri Lanka, we wholeheartedly believe in the country’s resilience, potential and future. We reaffirm our commitment to Sri Lanka, and we will continue to invest in our facilities and bring state-of-the-art technology designed in Switzerland to meet the different needs of our consumers in Sri Lanka. On behalf of Nestlé Lanka, it gives me great pride to announce this investment and the expansion of our malt foods category. This investment demonstrates our unwavering commitment to the country and cements our deep roots with Sri Lankans for over 115 years. We hope to make a positive contribution to our consumers and communities through this investment, by increasing the production capacity of two of our biggest brands – Nestlé Nestomalt and Milo. We are also happy to share with you that this investment would also allow us to explore the possibility of expanding our exports to several new markets, beyond the 50 countries we currently serve, helping us to contribute to the generation of inflows. currencies.

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Can their stock price continue? http://louthonline.com/can-their-stock-price-continue/ Thu, 17 Nov 2022 23:30:00 +0000 http://louthonline.com/can-their-stock-price-continue/

Farm – Airbnb

Growth stocks have been hit hard this year by soaring inflation and rising interest rates, but there seems to be a silver lining.

Investor pessimism bottomed out a few months ago and seems to be reversing.

And US inflation data for October, at 7.7%, was also lower than analysts had expected.

This data has bolstered confidence that the US central bank will slow its rate hikes and that inflation can be brought under control next year.

For Temasek Holdings, its portfolio of growth stocks is also experiencing a breath of fresh air.

The investment firm has seen several of its growth companies rebound strongly from their lows and post encouraging financial numbers.

Here are five that could see their stock prices rise further.

Tencent Holdings Ltd (HKSE: 0700)

Tencent is a Chinese technology company founded in 1998 that provides games, digital content, advertising and other financial technology (fintech) services to its customers.

Shares of the fintech company rebounded nearly 50% from their 52-week low of HK$198.60.

Tencent has just announced its latest results for the third quarter of fiscal 2022 (3Q2022).

Total revenue fell 2% year-on-year to RMB 140.1 billion, while operating profit fell 3% year-on-year to RMB 51.6 billion.

However, net profit edged up 1% year-on-year to RMB 39.9 billion.

International games revenue increased 3% year-on-year to RMB 11.7 billion since the launch of Tower of Fantasy, helped by an expanded games portfolio at Miniclip, but was offset by lower revenue from its flagship PUBG Mobile.

Domestic gaming revenue, however, fell 7% year-on-year due to fewer paying users.

The company also saw a slight 2.8% year-over-year decline in value-added services subscriptions to 228.7 million.

In addition, Tencent will also distribute most of its stake in a food delivery business. Meituan (HKSE: 3690) as a cash dividend.

Visa (NYSE:V)

Visa is a financial services company that facilitates the electronic transfer of funds through its network of co-branded debit and credit cards.

Shares of the financial company rebounded 20% from their low of US$174.60.

Visa announced a strong earnings package for its fiscal year 2022 (fiscal year 2022) ending September 30, 2022.

Revenue jumped 22% year-on-year to $29.3 billion, driven by continued strength in consumer payments coupled with a recovery in travel spending as borders reopened.

Net income climbed 21% year-on-year to $15 billion.

Total payment volume jumped 15% year-on-year, with transactions processed growing 17% year-on-year for fiscal 2022.

The company continued to generate strong free cash flow of $17.9 billion, up 23.1% year-on-year from $14.5 billion a year ago.

Visa ended the third quarter of fiscal 2022 with four billion credit and debit cards in circulation.

PayPal (NASDAQ: PYPL)

PayPal is also a fintech company that operates a platform to support online money transfers between merchants and customers.

Shares of PayPal have rebounded 28.8% to US$87.04 since hitting a 52-week low of US$67.58.

The company released a satisfying set of results for 3Q2022.

Revenue rose 11% year-on-year to $6.85 billion, with earnings per share rising to $1.15 from $0.92 a year ago.

Total payment volume also increased 9% year-on-year to $337 billion.

More importantly, free cash flow climbed 37% year-over-year to $1.8 billion.

PayPal plans to add a total of eight to 10 million new net active accounts in fiscal 2022 and is working with Apple (NASDAQ: AAPL) to improve its offerings.

Airbnb (NASDAQ:ABNB)

Airbnb operates a platform for guests to book short-term stays and acts as a broker between host and guest, charging a fee for each transaction.

Its platform currently has over four million hosts.

Airbnb’s stock price rebounded from its 52-week low at US$86.71 and is trading around 20% higher.

The accommodation booking platform saw its revenue increase 29% year-on-year to $2.9 billion, boosted by strong travel demand.

Net income jumped 46% year-on-year to $1.2 billion.

The number of reservations increased 25% year-on-year to 99.7 million, with the gross value of reservations improving 31% year-on-year to $15.6 billion.

Management plans to introduce a new, easy way for millions of people to host their homes on the Airbnb platform this week and will announce more details soon.

Meituan (HKSE: 3690)

Meituan is a food delivery and shopping platform that offers a range of products and services, including entertainment and travel.

Shares of the company have jumped 56.8% since hitting a 52-week low at HK$103.50.

Meituan reported a 16.4% year-on-year increase in revenue to RMB 50.9 billion for the second quarter of 2022.

However, it incurred a net loss of RMB 1.1 billion, which was 66.7% less than the previous year’s 3.3 billion RMB.

How do you decide if a growth stock is worth your money? There’s no shortage of stock ideas today, but is one stock in particular right for you? Learn more in our latest FREE report, How to find the best US growth stocks for your portfolio. Click HERE to download the report for free now!

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Disclaimer: Royston Yang owns shares of Apple, Visa and PayPal.

The post These 5 growth stocks held by Temasek have rebounded: can their stock price continue? appeared first on The Smart Investor.

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bne IntelliNews – PANNIER: Russia will be the elephant in the box for re-elected Tokayev of Kazakhstan http://louthonline.com/bne-intellinews-pannier-russia-will-be-the-elephant-in-the-box-for-re-elected-tokayev-of-kazakhstan/ Thu, 17 Nov 2022 13:46:59 +0000 http://louthonline.com/bne-intellinews-pannier-russia-will-be-the-elephant-in-the-box-for-re-elected-tokayev-of-kazakhstan/

It goes without saying that President Kassym-Jomart Tokayev will be re-elected in the November 20 snap presidential election in Kazakhstan this weekend. So let’s move on to the many challenges he will face as he begins a new term. A pressing issue that cannot be put away for another day is the readjustment of Kazakhstan’s foreign policy to respond to the changing realities caused by Russia’s war against Ukraine. You could say it’s the elephant in the input tray.

For more than three decades, Kazakhstan has proven adept at balancing relations between its giant neighbors – Russia, with which Kazakhstan shares a border of 7,000 kilometers, and China, with which Kazakhstan shares a border of 1 780 kilometers. The country has also managed to maintain good relations with Western countries. The European Union, for example, is Kazakhstan’s biggest trading partner and the biggest foreign investor in the country.

As Russia’s fortunes wane, Kazakhstan needs to make some changes in its foreign relations while keeping in mind that Russia is down, but not out.

Dealing with Russia will be Tokayev’s main issue in overhauling Kazakhstan’s foreign policy. Kazakh-Russian relations are already strained.

In January, the Russian-led Collective Security Treaty Organization (CSTO) sent some 2,500 troops, mostly Russian soldiers, to Kazakhstan at Tokayev’s request when the biggest protests the country had ever seen turned violent in several major cities, while there was simultaneously an apparent coup attempt against Tokayev. Many believed that Tokayev and Kazakhstan were indebted to Russia.

This did not turn out to be the case.

Russian President Vladimir Putin announced on February 21 that Moscow recognized the independence of the Russian-occupied eastern regions of Ukraine, Donetsk and Lugansk. The next day, Kazakh Foreign Minister Mukhtar Tleuberdi said, in response to a question from the press, that Kazakhstan would not even consider recognizing the independence of the two regions.

This has been Kazakhstan’s position and has been repeated by Tokayev on several occasions, including at the St. Petersburg Economic Forum in June when, with Putin seated next to him, Tokayev called the Donetsk and Luhansk administrations ” quasi-governments”.

Officially neutral

Officially, Kazakhstan is neutral regarding Russia’s invasion of Ukraine, but threatening comments by Russian officials and media representatives regarding the seizure of Kazakh territory have worried many in post-Soviet Kazakhstan. .

Russian TV producer Tigran Keosayan called Kazakhstan “ingrateful” in April and warned Kazakhstan to “watch Ukraine carefully, think seriously.”

Following Tokayev’s comments in St. Petersburg, State Duma Deputy Konstantin Zatulin said: “If we have friendship, cooperation and partnership, then there are no territorial issues. Otherwise, anything is possible. As in the case of Ukraine.

As relations between Kazakhstan and Russia are strained, Tokayev realizes that the two countries are linked in many ways. The power grid in northern Kazakhstan, for example, is connected to the power grid across the border in southern Siberia, and the Russian military, weakened and less intimidating than it once was, remains a valued ally for Kazakhstan in a neighborhood where Afghanistan and dozens of Islamic militant groups lie to the south, and books in China routinely include maps showing part or all of Kazakhstan (and other parts of Central Asia and Russia) as part of the historical Chinese lands.

There is also the Russian Black Sea port of Novorossiysk. Around 80% of Kazakhstan’s oil exports pass through the Caspian Pipeline Consortium (CPC) infrastructure to Novorossiysk where it is loaded onto tankers, many of which then transport the oil to European countries. The CCP began operations in 2001 and operations continued smoothly until the Kazakh authorities showed that they did not support Russia’s war in Ukraine.

In late March, Novorossiysk port authorities announced the suspension of loading Kazakh oil onto tankers due to apparent storm damage to two of the port’s three loading docks. Operations have been halted twice since then.

Kazakhstan is looking for new export routes for its oil, but it will take time – one of the main difficulties is the lack of tankers available to cross the Caspian Sea – and a lot of work to find other ways to export the amount of Kazakh oil that usually shipped through Novorossiysk. This is another issue that obliges Kazakhstan to keep its relations with Russia as friendly as possible.

While Tokayev said that Kazakhstan respects the sovereignty and territorial integrity of all countries in accordance with the positions of the United Nations, a thinly veiled reference to the situation in Ukraine, and that Kazakhstan has sent humanitarian aid to Ukraine, Tokayev also kept close contact with the Russian government.

Tokayev met Putin in May at a CSTO summit in Moscow, in June in St. Petersburg, in August in Sochi, when Tokayev said there was no reason to be pessimistic about relations Kazakh-Russians, in Samarkand, Uzbekistan, in September on the sidelines of a Shanghai Cooperation Organization (SCO) Summit, and again during a series of summits in Kazakhstan (VI Conference on Interaction and confidence-building measures in Asia, the Council of Heads of the Commonwealth of Independent States (CIS) and the Russia-Central Asia summit) in October.

Kazakhstan has existed for more than 30 years with concerns about Russian irredentist sentiment, but now it appears that Russia will emerge from its Ukrainian debacle a weakened country and that Kazakhstan will deal with its northern neighbor on an equal footing in a near future.

Support from China

This is also partly due to support from China. After several months of Kazakh concerns over Russia’s comments on reclaiming part or all of Kazakhstan, Chinese President Xi Jinping has made his first foreign visit since the COVID pandemic began in Kazakhstan, in September, en route to the SCO summit in Uzbekistan. Xi commented on the need for respect for sovereignty and territorial integrity, which was interpreted as a message to Russia that China would not look kindly on any attempt to claim land from Kazakhstan.

China has invested billions of dollars in infrastructure development in Kazakhstan, which Beijing now sees as part of the multicontinental Belt and Road Initiative (BRI). Overland routes from China to Europe and the Middle East begin with entering Kazakh territory. New railway routes crossing Kazakhstan from China to Mannheim, Germany and another linking China to Azerbaijan have started operating since April.

Kazakh-Chinese trade turnover in the first half of 2022 was around $11.26 billion, up 36% year-on-year.

Thus, Xi’s apparent assurances of Kazakhstan’s territorial integrity when he arrived in Astana in September also reflects Beijing’s own interests in retaining a valuable partner and important link for the BRI.

As promising as relations with China are for the Tokayev administration, some Kazakh citizens feel growing resentment of China’s role and influence in Kazakhstan. There were protests in 2019-20 against plans to build 55 new factories by Chinese companies in Kazakhstan, and numerous protests took place in May 2016 when rumors spread that proposed land reforms included the possibility for Chinese citizens to buy Kazakh land.

Some in Kazakhstan are also unhappy with the government’s refusal to take a stand against Beijing’s harsh crackdown on Muslims in China’s western Xinjiang Uyghur Autonomous Region (XUAR), which borders Kazakhstan. Some of the earliest stories of China’s abuse of Muslims in Xinjiang were told by ethnic Kazakhs who fled China to Kazakhstan and these stories also fueled resentment over China’s growing economic influence in Kazakhstan.

Very active EU

The European Union has been very active in Central Asia in the second half of 2022. The High Representative of the EU for Foreign Affairs and Security Policy, Josep Borrell, was in Kazakhstan on 17 November and the President of the European Council, Charles Michel, went to Kazakhstan at the end of October. .

Kazakh officials have worked with Azerbaijan, Georgia and Turkey to expand trade corridors to Europe through the Caucasus, as well as Iran. China and the EU have supported these efforts.

But Russia, currently under EU sanctions, reluctantly accepts this development of new routes between Europe and China that avoid Russian territory. The Kremlin can’t do much about it, as much of its attention is fixed on Ukraine, but it will be a sore point in Kazakh-Russian relations.

Moreover, the EU cannot provide the kind of funding that China can provide and will not provide the kind of military and security support that Russia has long given to Kazakhstan. And the EU raises the issues of respect for human rights and commitment to democratic reform that Moscow and Beijing never raise in their relations with Kazakhstan.

There are also other countries with which Kazakhstan is rapidly developing stronger ties to compensate for the vacuums created by Russia’s diminishing role in the country, and in Central Asia in general. Many of these countries are in the Islamic world; Turkey, Iran and several Arab states. They will require a form of diplomacy different from the approaches used in relations with Russia, China and the EU, or more broadly the West.

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Pound rate against dollar hits 10-week best as dollar slips and stocks rise http://louthonline.com/pound-rate-against-dollar-hits-10-week-best-as-dollar-slips-and-stocks-rise/ Mon, 14 Nov 2022 10:35:00 +0000 http://louthonline.com/pound-rate-against-dollar-hits-10-week-best-as-dollar-slips-and-stocks-rise/

The exchange rate between the pound and the dollar (GBP/USD) jumped above 1.1700 and posted a 10-week high above 1.1770 on Friday before a limited correction.

The exchange rate between the pound and the euro (GBP/EUR) strengthened to 1.1480 before correcting to 1.1435.

Global asset prices surged after the latest inflation data from the United States.

The headline inflation rate in the United States fell to a 9-month low of 7.7% from 8.2% and below expectations of 8.0%, while the base rate fell to 6, 3% versus 6.6%.

The data reinforced optimism that inflation had peaked. In response, markets scaled back expectations for future Fed rate hikes, expecting rates to be raised to 4.5% in December from 4.75% before the data, and the peak in US rates should now be below 5.00%.

Risk appetite rebounded strongly with equities soaring as the dollar posted steep losses.

The weakness in the dollar directly boosted the pound and the surge in risk appetite also provided net support for the pound.

Markets recalibrate Fed policy trajectory

The euro to dollar (EUR/USD) exchange rate jumped to 3-month highs above 1.0250 on Friday as the dollar posted steep losses.

bannerThe policies of the Federal Reserve and the trend of the dollar will be hotly debated.

According to Carol Kong, strategist at Commonwealth Bank of Australia; “A currency strategist at I think the US CPI results for October will support the case for a downward revision to the FOMC rate hike in December.”

Socgen considers the dollar to have peaked and EUR/USD to bottom with room for further gains; “Despite the energy crisis and pessimism regarding the conflict in Ukraine, inflation and growth, the bottom in EURUSD is likely behind us and midrange targets can be attacked.”

He added; “The pair should rise slightly towards projections of 1.0285 and the August high of 1.0360/1.0450, which is also the 200-DMA.”

ING does not expect dollar losses to continue; “We remain reluctant to get into the broader bearish dollar story at this time.”

The bank expects the Fed to be reluctant to take a dovish stance without stronger evidence, especially with a tight labor market.

It also considers that there is still a lack of attractive alternatives to the dollar.

Rabobank added; “The USD may be approaching the final stages of its rally, but we consider it far too early to expect the USD to change course.”

Queen’s funeral hurts September GDP

UK GDP was estimated to have shrunk by 0.6% in September, a steeper than expected decline of 0.4% for the month.

The August decline was revised to 0.1% from the 0.3% originally reported.

In this context, the contraction of GDP in the third quarter was contained to 0.2% against expectations of a fall of 0.5%.

GDP is estimated at 0.2% below February’s pre-pandemic level.

Activity in the services sector fell 0.8% for the month after falling 0.1% in August with a second straight sharp drop in consumer services output falling 1.7% after a contraction of 1.6% in August.

Industrial production increased by 0.2% on the month, with a growth of 0.4% for the construction sector, manufacturing being unchanged on the month.

ONS Director of Economic Statistics Darren Morgan said: ‘With September showing a notable decline partly due to the effects of the additional bank holiday for the Queen’s funeral, overall the economy has shrunk slightly in the third quarter.”

He added; “The quarterly decline was led by manufacturing, which saw widespread declines across most industries.”

The UK faces a prolonged recession

Resolution Foundation Research Director James Smith commented; “Slumping consumer spending caused the economy to contract in the third quarter of 2022. This put Britain on course for the fastest return to recession in nearly half a century.”

He added; “These latest figures provide a sobering backdrop to next week’s Autumn Statement. The Chancellor will need to strike a balance between putting public finances back on a sustainable footing, without further deepening the cost of living crisis. , or touch already overloaded public services.

Kitty Ussher, chief economist at the Institute of Directors, noted that the weakness was spreading; “The slowdown is now spreading across the economy with contractions in B2B sectors, such as information and technology and professional science activities, now joining existing difficulties in retail and manufacturing. “

PwC’s chief economist, Barret Kupelian, expected a prolonged downturn; “The overall dynamics of economic activity in the UK are also concerning. Inflation remains high, financial conditions are tightening at a rapid pace and there is strong potential for government spending cuts in the autumn statement of next week. These will all be significant headwinds for future growth.

According to Yael Selfin, chief economist at KPMG UK; “The current slowdown is expected to last until the end of 2023, during which time GDP is expected to decline by 1.6 percent.”

Paul Dales, chief UK economist at Capital Economics, noted the potential for brief relief for October, but added; “The fourth quarter is also the time when the brake on high inflation will be particularly important and when the cumulative effect of rising interest rates will strengthen. We believe these effects will mean that GDP will continue to decline for about a year, causing GDP to decline by about 2% from peak to trough.

Dales expects further but more limited BoE rate hikes; “None of this will stop the Chancellor from tightening fiscal policy next Thursday or stopping the Bank of England from raising rates above 3%. We still think rates may need to rise to 5 %, although tighter fiscal policy may reduce the need to raise rates quite far.

CBI Chief Economist Alpesh Paleja noted the government’s tough choices; “Weaker growth prospects and persistently high inflation will make some economic policy decisions difficult. The Autumn Statement should draw lessons from the 2010s: fiscal sustainability and higher trend growth are two immediate priorities. »

Thomas Pugh, RSM’s UK economist, added; “We expect Chancellor Hunt to impose around £50billion in tax hikes and spending cuts, which means public consumption will start to dampen GDP while the huge rise in the cost of Corporate borrowing will weigh heavily on investment.”

He added; “Furthermore, a global economic downturn means that large increases in export volumes are unlikely to continue. All of this suggests that GDP contractions are not only likely to continue, but will worsen in the first half of next year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted the global comparison; The British economy is the only one in the G7 to have seen its GDP fall quarter on quarter in the third quarter. Britain is also the only G7 economy where the quarterly GDP measure has yet to return to its fourth quarter 2019 level. What the fuck.”

Pending financial statement; ING commented; “Above all, we will seek details on how the government will make its energy support less generous from April, which is most likely to reshape the outlook for 2023.”

The government said it would move to more targeted support, but there were no further details.

ING added; “The sharp drop in wholesale gas prices could see most households paying £3,300 on average in financial year 2023, compared to £2,500 a year under the government guarantee. That would equate to around 9% of household disposable income and further dampen overall economic activity next summer. »

ING added; “The domestic situation for the pound remains uncertain at best, and we believe this puts the GBP/USD pair at risk of fairly rapid corrections if support from a weaker dollar evaporates.”

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Tokyo Electron cuts outlook on US chip export restrictions http://louthonline.com/tokyo-electron-cuts-outlook-on-us-chip-export-restrictions/ Thu, 10 Nov 2022 16:00:00 +0000 http://louthonline.com/tokyo-electron-cuts-outlook-on-us-chip-export-restrictions/

Major chip equipment supplier Tokyo Electron Ltd slashed its full-year outlook yesterday after memory chipmakers cut spending and the United States tightened restrictions on chip equipment exports. advanced chip manufacturing to China.

The company now expects annual operating profit of 546 billion yen ($3.7 billion), down 24% from its previous forecast, despite quarterly revenue growth worldwide. Its caution echoes the pessimism of its American rivals, such as Applied Materials Inc and Lam Research Corp.

Tokyo Electron would not try to take advantage of an opportunity created by U.S. restrictions on its U.S. peers, Hiroshi Kawamoto, general manager of the company’s finance unit, told a news conference.

Photo: Reuters

“We understand that US manufacturers may have difficulty doing business with Chinese customers. We will not try to fill the void they leave,” he said.

The company was operating at nearly full capacity, with lead times of several months for the delivery of equipment.

With a customer list that includes Semiconductor Manufacturing International Corp (中芯國際) and Yangtze Memory Technologies Co (長江存儲), Tokyo Electron derives around a quarter of its revenue from China, although that number includes overseas companies that there are factories.

Japan’s exports of chipmaking equipment to China have hit record highs so far this year, up more than 20 percent year-on-year in the third quarter.

“U.S. sanctions will cause Chinese manufacturers to cut capital expenditures, leading to delivery delays,” Kawamoto said.

US President Joe Biden’s administration has announced sweeping regulations to limit sales of its advanced semiconductors and chipmaking equipment to China, upending the US$550 billion globally interconnected industry.

While the move dealt a blow to China’s chip industry, it imposed tough restrictions on U.S. semiconductor equipment firms that are expected to cost them billions of dollars in revenue.

This was in addition to spending cuts announced by memory chipmakers from SK Hynix Inc to Micron Technology Inc.

The United States has signaled to its allies its desire that they follow suit on export controls to limit China’s access to critical chip technologies.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. The final decision will be at the discretion of the Taipei Times.

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Perils, pessimism and panic: American democracy in 2022 http://louthonline.com/perils-pessimism-and-panic-american-democracy-in-2022/ Tue, 08 Nov 2022 07:22:59 +0000 http://louthonline.com/perils-pessimism-and-panic-american-democracy-in-2022/

Disclaimer: Hannah Cox is a staff writer at The Daily. Cox was not involved in writing or editing this article.

Democracy is a concept that Americans have been used to since the founding of the nation. For many, democracy is an unquestionably robust form of governance that establishes fair representation for all and resists internal political fissures. For some Americans, democracy could not fall, let alone retreat.

Such optimism about democracy may be hard to come by in 2022. More than a year after the Jan. 6 insurrection that jeopardized the peaceful transfer of power to President Joe Biden’s democratically elected government, many Americans increasingly worried about the state of American democracy. . A recent Associated Press poll indicates that 52% of Americans believe that democracy does not work in the United States.

Academics and politicians are also sounding the alarm. A study conducted by the Carnegie Endowment for International Peace establishes that the United States is experiencing a phenomenon known as “democratic backsliding”. Such backsliding is, in part, fueled by extreme political radicalization manifested in violence and the questioning of free and fair elections.

Biden also warned of American Democratic backsliding in his Nov. 2 speech, citing Holocaust deniers running for various offices in the midterm elections and the attack on House Speaker Nancy Pelosi.

Understanding the history of democratic backsliding in America has become essential to determining the causes of current threats to American democracy. For Nimah Mazaheri, chair of the Department of Political Science and associate professor, this is not the first time America has seen a display of democratic backsliding.

“We can certainly look through American history and find many instances where you didn’t have any of these things we call democracy for all segments of the population,” Mazaheri said. “Things like the growing role of special interest groups in our political system…the rise of gerrymandering, the growing repression of people’s ability to engage in free protests against the government, disenfranchisement voters, … all of these things were surfacing before Donald Trump was elected.”

Echoing Mazaheri’s sentiments, sociology professor Utku Balaban said the seeds of America’s current democratic backsliding were planted before the 21st century. For Balaban, this backsliding results from a decline in Americans’ sense of belonging to a community and a simultaneous increase in social isolation.

“I don’t think this tension on issues related to democracy only started in the last decade. … [The] historical process…basically started in the early 1980s,” Balaban said. “Essentially since the 1970s, unionization rates in the United States have been declining. It was…a strong signal from the government to civil society about a new mindset. … We have just witnessed a decline in interest in public and civic organizations across the country.

From Balaban’s point of view, this democratic backsliding is rooted in the conception of American individualism.

Hannah Cox, junior and social media manager for Tufts Cooperation and Innovation in Citizenship, explained how social media fuels extremism.

“It can be very difficult to be like, ‘Wait, I’m falling down this rabbit hole, I have to go see something on the opposing side and find my own perspective,'” Cox said. “[Social media] just makes it so much… harder to have a political speech and disagree with others.

For Aidan Connors, a freshman, social media played a significant role in fueling political radicalization at the height of the COVID-19 pandemic throughout 2020.

“I think a lot of people have really been hooked on their phones during the pandemic, because… [we were] all stuck at home,” Connors said. “The thing about social media is they glorify bullying, especially in the political sense. You get praised, you get lots of comments, you get lots of likes, you get lots of positive comments just by saying things. really mean things about people who have different ideas.

In the modern age, social media has become a new medium for people to express their politically motivated aggression. Historically, political violence has been endemic throughout American history, whether during the run-up to the Civil War in the 1850s or the reactionary reaction to the Civil Rights Movement of the 1950s and 1960s.

However, the prevalence of political violence in contemporary America has shocked many policymakers. According to TIME Magazine, more than 9,600 recorded threats were made against members of Congress in 2021, which is a more than tenfold increase since 2016.

Many of these threats are perpetuated by far-right extremists, some of whom are associated with groups such as the Proud Boys and Oath Keepers. It’s a trend that Cox sees as part of the regression process.

“I wouldn’t say that [the Jan. 6 insurrection was] necessarily the outcome, but I think [it was] a step towards democratic backsliding,” Cox said.. “We are a symbol of democracy and how great democracy can be, but also [a symbol of] what threats there are to democracy when we allow people to threaten our democracy, and people in the most powerful position in the land to threaten our democracy in violent ways, nonetheless.

Some scholars see this growing political radicalization as a stepping stone to a type of authoritarianism unique to America. It’s still unclear what authoritarianism might look like in America, and whether it would ever prevail, but Mazaheri described what an American democracy with authoritarian qualities would look like if it hypothetically emerged.

“I guess we would still have the electoral system, but you would have a situation where elections are seriously contested, where the losers declare themselves winners,” Mazaheri said. “You have things like political violence emerging from supporters of losers and this kind of fear of unrest emerging. You [could also] have more of this partisan influence on the main levers of politics: a party that can [stack] the courts or to place their supporters in influential positions with regard to policy-making.

As Balaban notes, the causes of these challenges to American democracy can be observed in other countries. Although distinct in many ways, Turkey’s gradual descent into authoritarianism may provide a good example.

“What we saw in Turkey was basically very similar to [America] In the 1980s. For example, like the United States, Turkey undertook extensive market-friendly reform…then, gradually, we see the expansion of export-oriented global industrial relations to Turkey,” said Balaban. “Because Turkey is a smaller country, … the political effects of these developments … became visible much earlier than what we see in the United States. … Just looking at the Turkish experience, we see similar developments in the United States [with] growing political polarization, more income inequality and a… growing form of nationalism [and] anti-immigrant sentiments.

The midterm election result comes as pessimism persists about the future of democracy. The question remains as to what policies should be implemented to counter democratic backsliding.

In this context, a sense of urgency around the severity of this setback is a start, according to Mazaheri.

“I’m very nervous. … In some ways there are reasons to be optimistic, but there are many reasons to be pessimistic [about the future of American democracy]Mazahéri said. “A lot of people in this country have taken [democracy] for granted, but I don’t think they do now. It is something to be vigilant about in order to preserve [democracy].”

Cox not only expressed a similar urgency, but encouraged Tufts students to become more involved in politics.

“I think everyone, no matter what [they] believe, is afraid that what we believe is no longer reflected in our country,” Cox said. “I think our democracy is less and less representative of what the people want and more and more divided politically. And I think that’s scary… [but] I don’t think people are doing enough to fight this.

For Connors, Tufts students may be engaged in a variety of political activities, although not necessarily global.

“I’m not even saying you have to run your own organizing campaign, [but] if you vote in your home country, sign up for a phone bank for the person you support,” Connors said. “We live near fairly poor areas [where] lots of groups do a lot of important political and community work that you can easily get involved in. I just think there’s some money [to put] where is your mouth.

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Canadian senator wants to end widespread financial support for fossil fuels http://louthonline.com/canadian-senator-wants-to-end-widespread-financial-support-for-fossil-fuels/ Sun, 06 Nov 2022 11:48:56 +0000 http://louthonline.com/canadian-senator-wants-to-end-widespread-financial-support-for-fossil-fuels/

The United Nations climate change conference, COP27, has started in Sharm el-Sheikh, Egypt. Looking ahead to the conference, UN Secretary-General Antonio Guterres said the recent report by the Intergovernmental Panel on Climate Change revealed “a litany of broken climate promises” by governments and businesses.

“It’s a record of shame, cataloging the empty promises that put us firmly on the path to an unlivable world,” he said.

Canada is high on the list of empty promises. The government’s commitment at COP26 to reduce carbon emissions by 40-45% by 2030 – enacted by Canada’s Net Zero Emissions Accountability Act – is not only seen as an inadequate target, but it has also been heavily criticized for its lack of necessary measures to achieve its goals. commitments. Rightly so, given his lackluster record in achieving past goals.

A report commissioned by the International Institute for Sustainable Development found that high-income countries like Canada must cut oil and gas production by 74% by 2030 and end production by 2034 to sustain global warming to less than 1.5°C. And yet, Canada’s national energy regulator predicts that oil production will continue to rise until 2040 and decline only slightly thereafter.

Financing of oil production

Despite the proliferation of climate-related disasters in Canada and around the world, Prime Minister Justin Trudeau’s Liberal government has purchased – and continues to guarantee – bank financing for the Trans Mountain Pipeline. It will transport bitumen from the oil sands to the west coast.

The federal government has also approved the Bay du Nord oil development project off Newfoundland, which aims to double oil production by 2030. The Coastal GasLink pipeline in northern British Columbia is also supported by public funds.

Piping is visible atop a receiving pad that will be connected to the Coastal GasLink pipeline terminus at LNG Canada’s export terminal under construction in Kitimat, BC in September 2022.
THE CANADIAN PRESS/Darryl Dyck

Governments have turned a blind eye to the role of financial institutions that are responsible for the lion’s share of the money pumped into Canada’s fossil fuel industry.

The Big Five banks – RBC, TD, Scotiabank, BMO and CIBC – are among the top 20 lenders to fossil fuels globally and have lent or invested more than $900 million in fossil fuels since 2015 Paris Agreement.

About 20% of their directors also sit on the boards of fossil fuel companies. Sun Life and Manulife Insurance together hold close to $20 billion in investments in coal companies.

Despite touting their dubious credentials for sustainable finance, Canada’s major financial institutions have only committed to reducing the carbon intensity of their fossil fuel customers’ operations. They have yet to commit to reducing absolute emissions.

In the public sector, Export Development Canada provides oil and gas companies with substantial financing, loan guarantees and insurance.

Pension plans in Canada and Quebec hold billions of dollars in fossil fuel investments. While the Quebec plan – CDPQ – has pledged to divest from oil producers by the end of 2022, the Canada Pension Plan continues to explicitly exclude divestment.

Senator proposes real climate action

Amid this sea of ​​hypocrisy, delusion and denial — “Blah blah blah,” in the words of climate activist Greta Thunberg — there are some bright spots in Canada’s Parliament.

One resides in the Senate. Independent Quebec Senator Rosa Galvez, one of Canada’s leading pollution control experts, was a professor of environmental engineering at Laval University for more than 25 years before being appointed to the Senate in 2016 by Trudeau.

Galvez called for ambitious and consistent government intervention to address the risks that financial institutions pose to the climate and to protect financial institutions from system failures.

She has exposed conflicts of interest by bank executives who simultaneously serve on fossil fuel company boards, alleging earlier this year: “It’s just one big family…”

In March 2022, Galvez introduced Bill S-243, the climate-aligned finance law, aimed at holding governments and financial institutions to account for their actions. She presented her legislation in a keynote address to the Group of 78 conference in September.

The act:

• Hold corporate directors, officers and trustees accountable for meeting corporate climate commitments.

• Mandate corporate action plans and climate goals with annual progress reports.

• Ensure boards have the necessary climate expertise and ensure there are no conflicts of interest.

• Align existing laws for relevant government organizations with climate priorities, including requiring the federal supervisor, the Office of the Superintendent of Financial Institutions (OSFI), to impose climate goals.

Dealing with pushback

A recent report examining the carbon footprint of banks calls for the passage of the Climate Aligned Finance Act as soon as possible.

However, it faces major pushback from financial and fossil fuel companies, as well as politicians and senior government officials.

To have a chance of becoming law will require aggressive advocacy by climate-committed citizen groups and politicians at all levels of government. If successful, it would be an important step towards phasing out fossil fuel production in Canada, in line with scientific and UN warnings.

A person carrying a sign that reads code red, don't run away stands in front of a stone building with other protesters
Climate protesters gather outside the Prime Minister’s office in Ottawa to demand Justin Trudeau take action on climate in November 2021.
THE CANADIAN PRESS/Sean Kilpatrick

The Trudeau government’s climate incrementalism does not inspire optimism. The record of most provincial governments is even less inspiring. The rise of authoritarian populism accompanied by climate denial among much of the conservative base presents an even more worrying obstacle to effective action on climate change.

In the 1930s, the philosopher Antonio Gramsci wrote about “the pessimism of the intellect, the optimism of the will”, contrasting his pessimistic analysis of the present with hope for the future.

With planetary survival in jeopardy, voices like Galvez’s offer some optimism. But she will need Canadians to get on board with her proposals — and fast.

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Russia set to reroute most of its oil under new price cap – analysts http://louthonline.com/russia-set-to-reroute-most-of-its-oil-under-new-price-cap-analysts/ Tue, 01 Nov 2022 15:45:48 +0000 http://louthonline.com/russia-set-to-reroute-most-of-its-oil-under-new-price-cap-analysts/

By Noah Browning and Kavya Guduru

LONDON – New G7 and European Union sanctions on Russian oil exports will have limited impact on global flows and prices according to analysts polled by Reuters, as Russia should largely succeed in redirecting its trade eastward .

The market is expected to be deprived of a maximum of 2 million barrels per day (bpd) of Russian oil in the short term once the measures take effect on December 5, and possibly not at all – a range that does not not raise the prices much. .

The survey of 42 economists and analysts provides one of the most comprehensive insights yet into how the industry views the ambitious plan to starve Moscow of revenue, revealing uncertainty about its impact but little deep concern.

“Russian exports will find other buyers in Asia in the long term. But in the short term, the sanctions could lead to the withdrawal of around 1.5 to 2 million bpd from the market,” said Frank Schallenberger, head of commodities research at the German bank. LBBW.

Commodities trading giant Vitol sees Russian flows shrink to 1m bpd this winter despite building up its own maritime fleet, CEO Russell Hardy told the Financial Times.

Analysts at the Bank of Nova Scotia, however, found that oil export and production levels remained relatively stable despite the sanctions.

Up to 80-90% of Russian oil could still sink if Moscow seeks to flout the G7 price cap, a US Treasury official told Reuters last month, leaving 1-2 million bpd closed.

The International Energy Agency’s group of consumer countries judged this to be an “encouraging level” to meet demand.

Concerns about declining Chinese demand due to strict covid-19 policies and signs of an impending economic recession countered pessimism about Russian supply losses, analysts said.

“The implementation of Russian sanctions… will remove 1.5 million bpd of supply from the market. Russian exports remain resilient, but the fact that there are now few buyers or tankers willing to re-ship more than 3 million bpd is expected to take its toll soon,” said Societe Generale analyst Florent Pelé.

“While we think (the price cap) would be very difficult to implement, it would directionally increase the likelihood of more Russian oil remaining in the market at any price.”

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Poor S&P 500 earnings play into the hands of the Fed http://louthonline.com/poor-sp-500-earnings-play-into-the-hands-of-the-fed/ Sat, 29 Oct 2022 17:00:00 +0000 http://louthonline.com/poor-sp-500-earnings-play-into-the-hands-of-the-fed/

(Bloomberg) — Was it good or bad this week when Alphabet Inc. told investors that advertising demand that helped boost its revenue 50% in two years was starting to wane? It depends on what you mean by bad, and rarely has an argument over definitions aimed more at markets and economics.

Bloomberg’s Most Read

Obviously, it was bad for the shareholders of Google’s parent company, who saw $70 billion wiped out in one fell swoop. Tech bulls as a whole took a dip, with the Nasdaq 100 dropping 2.3% on Wednesday. And the news did not help anyone hope that the economy will avoid a recession, given the famous forward-looking aspect of the advertising market.

But these audiences are not everyone. Another is that people fear that inflation will remain beyond any means of controlling it. Among them is Jerome Powell, whose Federal Reserve is doing everything it can to rein in soaring prices.

For them, it’s safe to say that bad corporate news has started to turn into good – or at least a necessary evil – when viewed as a signal of cooling demand, which is ultimately positive for economic stability and , one day, the markets. themselves. This is a role long played by macro data points – a weak GDP print, for example, can sometimes trigger a market rally – but rarely by micro ones.

“It’s a feature, not a bug,” Art Hogan, chief market strategist at B. Riley, said over the phone. “No one ever wants to live in a world where bad news is good news, but the bad news we just got from some of the largest market cap companies in the S&P 500 was necessary. It has to be said that things are slowing down – Fed rate hikes have to work.”

As much as investors love a good earnings report, the Corporate America slot machine has disproportionately fueled the inflationary boom. A study by Josh Bivens, director of research at the Economic Policy Institute, found that with rising pricing pressures in 2021, fattening corporate profit margins accounted for more than half of the increase. Labor costs contributed less than 8% – a reversal of momentum that held from 1979 to 2019.

That investors have to pay a price for bigger global problems has been a recurring theme in 2022. The Fed’s campaign against inflation threatens the economy, sanctions on Russia sent markets into spasms. energy – few tears were cried when stocks suffered afterwards.

A similar dynamic is beginning to take hold in what was once a bastion of hope for all stocks: earnings. Nearly a quarter of companies reporting results this season missed estimates, high by historical standards, data compiled by the Wells Fargo show. The estimates themselves also reflect serious pessimism built into the assumptions. As recently as May, third-quarter earnings for S&P 500 companies were expected to rise 9.7%. The expected gain was 2.5% last week.

Convincing investors that associated moves are good for humanity is a tall order. The pain has rarely been worse for anyone who owns companies that are under-profits, with the average pain hovering north of 4% this earnings season, the worst in a decade.

At the same time, last week’s market contours, with a bit of a twist, could fit a thesis that earnings issues were seen as something other than bad news by the broader investor population. Bond yields fell over the five days, with one of the biggest slumps coming as Amazon reported, and industrials in the Dow and an equal-weight version of the S&P 500 rose sharply.

“It may be unpleasant, but the reality is that some might view it as a necessary evil,” said John Stoltzfus, chief investment strategist at Oppenheimer & Co. is why the market is going up rather than down. I think that’s it.

Microsoft Corp. posted its weakest quarterly sales growth in five years, hurt by a strong US dollar, which surged in the wake of interest rate hikes by the Federal Reserve. Alphabet said advertising growth at its Google subsidiary was being held back by inflation. Amazon.com Inc. forecast weaker sales for the holiday quarter as it faces reduced consumer spending amid economic uncertainty. And Texas Instruments Inc. — whose chips go into everything from home appliances to missiles, and which is seen as a gauge of demand across the economy — fell after its forecast fell short of market estimates. analysts.

From a business perspective, bad news isn’t good, but it can be viewed more positively from an economic perspective, says Anthony Saglimbene, global market strategist at Ameriprise, because it means the Fed has a cooling effect on the economy.

“From a profitability standpoint for S&P 500 companies, they want to navigate it as best they can,” he said in an interview at Bloomberg headquarters in New York. “It will be harder to do the more economic activity slows down.”

–With the help of Lu Wang and Isabelle Lee.

Bloomberg Businessweek’s Most Read

©2022 Bloomberg LP

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Desperate for dollars? A brief explanation of what the devaluation of the Egyptian pound means http://louthonline.com/desperate-for-dollars-a-brief-explanation-of-what-the-devaluation-of-the-egyptian-pound-means/ Fri, 28 Oct 2022 10:58:22 +0000 http://louthonline.com/desperate-for-dollars-a-brief-explanation-of-what-the-devaluation-of-the-egyptian-pound-means/


Desperate for dollars? A brief explanation of what the devaluation of the Egyptian pound means

REUTERS/Mohamed Abd El Ghany/File Photo

Egyptians woke up Thursday to more trepidation to the news, with the local currency sliding to a new all-time low, falling more than 14% against the US dollar.

The news comes after the acting governor of the Central Bank of Egypt, Hassan Abdalla, said at the Egyptian economic conference on Sunday that Egypt would develop a new monetary indicator based on a basket of several currencies as well as, possibly, on gold.

The acting director added that Egypt aims to change the culture that the Egyptian pound should only be pegged to the US dollar to reduce the effects of major currency fluctuations on investment performance.

Although he did not provide any further details, analysts pointed out that the move reflects a shift in the direction of the economy, as Egypt’s current major trading partners are China and Saudi Arabia, not United States.

Along the same lines, Prime Minister Mostafa Madbouly spoke at the same conference to refute claims that the value of the currency against the US dollar indicates the strength of the economy. He noted that a weaker currency is sometimes necessary to strengthen the economy by increasing exports and investments.

But to what extent can a devaluation be beneficial? Egyptian Streets provides a brief explanation of what the current devaluation means for the economy and society as a whole.

What has happened so far?

Since the conflict between Ukraine and Russia, Egypt has faced financial constraints that weigh on its currency due to rising commodity prices and a sharp drop in portfolio investment. In early March, portfolio outflows from Egypt were estimated at $3.0 billion (EGP 69 billion), signaling a massive reduction in foreign exchange reserves.

In response, the Monetary Policy Committee (MPC) decided to increase the CBE’s overnight deposit rate, overnight lending rate and main rate by 200 basis points to 11.25%, 12.25% and 11.75%, respectively.

As a result, the Egyptian pound has fallen to near historic lows since the 2016 devaluation, trading at EGP 19.27 to the dollar.

Investors have previously said the Egyptian pound needs further devaluation, with analysts at investment bank JPMorgan noting in March that the Egyptian pound is currently overvalued by more than 15%.

The investment bank Goldman Sachs Group Inc. has also estimated that Egypt may need to obtain an envelope of 15 billion USD (286 billion EGP) from the IMF to meet its financing needs over the next three years.

However, Egyptian Finance Minister Mohamed Maat told the conference on Sunday that “analysis of financial performance indicators over the past 42 years confirms progress” and that “debt and GDP deficit ratios are under control despite successive global crises”.

“We want to diversify sources of financing, reduce the cost of development, integrate the informal economy and increase tax revenue by 5% of GDP per year over the next four years,” the minister added.

Egypt’s partnership with its Gulf allies has helped ease its funding crisis in light of the conflict in Ukraine and the COVID-19 pandemic. In August, the Sovereign Wealth Fund of Egypt signed a draft agreement with the Public Investment Fund of Saudi Arabia to launch a new company – the Saudi Egyptian Investment Company – in Egypt to attract investment from a worth $10 billion (194 billion EGP).

What are the disadvantages of devaluation?

The devaluation caused serious economic turmoil in other countries, with examples such as Argentina, Turkey and Lebanon.

Adoption of this policy may pose a risk of price instability in the local market and lead to unofficial dollarization in parallel markets due to the desperate need for dollars and pessimism around the local currency. The rise in the price of the dollar in exchange for the local currency may also lead to an additional budget deficit as external debt payments become more expensive.

Local and international confidence in Argentina’s economy has deteriorated over the years due to its devaluation since 2018, when the government struggled to finance the economy and failed to control foreign exchange operations. on black markets. The US dollar hit new highs against the pesos, selling dollars for more than 300 pesos instead of 130 pesos at an official currency exchange.

“The only thing customers don’t want to hold are pesos. . . many are asking questions about what will happen next,” an Argentinian told the Financial Times.

One of the main risks of devaluation can be explained by the term “monetary illusion”, which is a bias in the appreciation of the real value of transactions due to frequent and unpredictable changes in the value of a currency or currency. one currency to another. When people lose a sense of the value of a currency, they misjudge the value of their accumulated wealth, which may actually have decreased rather than increased.

This bias may be more detrimental in the long run, as it affects individuals’ decisions regarding long-term financial contracts, such as buying and renting housing. In these situations, the money illusion resulting from currency devaluation can affect an individual’s perception of the true value of a particular asset.

To avoid this scenario, economists have recommended that policymakers reduce reliance on the US dollar and encourage the use of a basket of currencies.

What are the advantages of devaluation?

The benefits of devaluation largely depend on the strength of a country’s economy and the goals it aims to achieve.

For example, an economy primarily based on tourism will attract more visitors because travel will become much cheaper. The same is true for remittances, which are increasing in value, implying that more money will arrive from Egyptians living in other countries with stronger currencies.

Additionally, devaluation may cause people who produce and sell things abroad or earn money in a different currency to earn more money, which may encourage Egyptian brands to export and earn more. .

How will this affect the Egyptians?

One of the obvious setbacks of the devaluation of the Egyptian pound is that Egyptians who earn in the local currency lose their purchasing power, and due to lack of financial education, an individual’s wealth will often be overestimated.

Egyptian Prime Minister Mostafa Madbouly on Wednesday announced an increase in the minimum wage for public employees from EGP 2,700 to EGP 3,000 and the fixing of current electricity prices for households until June 2023.

Tuition fees for children studying at international schools or in other countries may also increase, which could put additional pressure on parental and household spending, and possibly increase the popularity of school loans. Exposure to such fluctuations in exchange rates may force private companies to offer compensation in the form of loans, benefits or salary increases.

Recently, the International Monetary Fund (IMF) and Egypt reached an EGP 68 billion ($3 billion) agreement, which aims to “preserve macroeconomic stability and debt sustainability, improve the resilience of the ‘Egypt to external shocks’.

However, these policies will certainly determine political legitimacy and the level of trust between citizens and government in the long term. During the closing ceremony of the Egyptian Economic Conference, President Abdel Fattah El-Sisi admitted that the country is facing difficult circumstances and that wages are not enough to meet the needs of ordinary Egyptians.

“I speak from the bottom of my heart with all of you, but salaries are not enough, and any salary below EGP 10,000 is not enough to earn a living,” he said.

Egypt receives $3 billion IMF loan, another $6 billion could follow


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