EUROPE
EU formally bans Russian oil
The EU yesterday approved an embargo on Russian oil and other sanctions targeting major banks and broadcasters over Moscow’s war on Ukraine. The bloc said Russian crude oil would be phased out over six months and other refined petroleum products over eight months. It said that “a temporary exception is foreseen” for landlocked countries — such as Hungary, the Czech Republic and Slovakia —that “suffer from a specific dependence on Russian supplies and have no viable alternative options.” Bulgaria and Croatia would also get “temporary derogations” for certain kinds of oil. EU leaders said the move means that about 90 percent of Russia’s oil exports to Europe would be blocked by the end of this year. The EU imports around 25 percent of its oil from Russia.
AUTOMAKERS
City allows driverless taxis
General Motors Co’s Cruise on Thursday became the first company to secure a permit to charge for self-driving vehicle rides in San Francisco, after it overcame objections by city officials. Self-driving test vehicles with human safety drivers have become a constant sight in San Francisco, and completely driverless ones are also increasingly common. Turning them into a fledgling business in a major US city would mark a milestone in efforts toward driverless taxi service. The permit was Cruise’s final hurdle in California. Cruise said it would launch paid services within the next two weeks using up to 30 driverless Chevrolet Bolt electric vehicles. They would be limited to a geographic area that avoids downtown and operating hours of 10pm to 6am, it said.
TURKEY
Inflation highest since 1998
Inflation last month soared to the fastest since 1998 as the country came under more pressure from the rising cost of food and energy, while ultra-loose monetary policy contributed to currency weakness. Consumer prices rose an annual 73.5 percent, up from 70 percent in April, data released by the state statistics agency showed yesterday. The median forecast in a Bloomberg survey of 20 economists was 74.7 percent. Monthly inflation was almost 3 percent, compared with the median estimate of 4 percent in a separate survey. A core index that strips out the effects of volatile items such as food and energy reached 56 percent. The biggest drivers of the latest surge in inflation were food and energy, exacerbated by the global rally in commodities and the war in Ukraine. Turkey is a major importer of oil.
UNITED STATES
Rate hikes ‘reasonable’: Fed
Federal Reserve Vice Chair Lael Brainard said expectations for 0.5 percentage point increases in interest rates this month and next were reasonable, and saw no case for pausing the central bank’s tightening campaign afterward. “From where I sit today, market pricing for 50 basis points, potentially in June and July, from the data we have in hand today, seems like a reasonable path,” Brainard said on Thursday. “It’s very hard to see the case for a pause. We’ve still got a lot of work to do to get inflation down to our 2 percent target.” Her remarks were the latest from officials to reinforce the message that they are staying the course on raising rates, with Cleveland Fed President Loretta Mester later saying that the pace of increases could speed up or slow down in September, depending on what happens with inflation. The Fed last month suggested that the rapid pace of policy tightening would position officials to slow the cycle later this year.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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