Dollar set for first monthly gain of 2025; yen choppy after BOJ
At the conclusion of its two-day policy meeting, the BOJ kept short-term interest rates steady at 0.5% in a unanimous vote. It upgraded its inflation forecasts for all three years through fiscal 2027 and said risks to the price outlook were "roughly balanced." The yen initially rallied, as traders priced in a stronger chance of a rate rise later this year, before reversing course to trade roughly unchanged on the day.
In the broader market, the dollar traded around two-month highs after Federal Reserve Chair Jerome Powell on Wednesday indicated he was in no rush to lower rates and offered little insight on when they might fall again.
The greenback was also on track for its first monthly gain for the year, bolstered by a hawkish Fed and US economic resilience, with uncertainty over US President Donald Trump's chaotic tariffs easing after an array of trade deals.
The euro has been one of the biggest casualties of the dollar's ascent this month, as investors have rushed to unwind bets laid on earlier this year on the premise that the European market may offer better opportunities.
"There were signs that the rotation trade that we saw in the early part of the year of pulling assets out of the US was over... this (upward) direction in the dollar was necessary," Rabobank strategist Jane Foley said.
The euro was last up 0.4% at $1.1445, having hit a seven-week low on Wednesday. Still, it remained on track to lose nearly 3% this month.— Reuters
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Times of Oman
8 hours ago
- Times of Oman
Trump warns of "substantially raising tariff paid by India" over Russian oil import
Washington DC: US President Donald Trump on Monday said that the United States will "substantially raise" the tariff paid by India for buying "massive amounts of Russian Oil", stating that much of the oil purchased from Moscow is being sold in the open market "for big profits". Trump's announcement, made on his social media platform Truth Social, came days after he announced a 25 per cent reciprocal tariff on India and an unspecified penalty for importing oil from Russia. "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don't care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!!" the US President said in the post. India has defended its sovereign right to conduct energy policy based on national interest. The government has clarified that India's energy purchases are guided by market dynamics and national interests. "You are aware of our broad approach to energy sourcing requirements, that we look at what is available in the market and the prevailing global situation. We are not aware of any specifics," MEA Spokesperson Randhir Jaiswal said last week, answering queries on Trump's announcement of a penalty for purchasing Russian oil. Answering another query, Jaiswal said India's relations with any country are based on their own merit and shouldn't be viewed through the lens of third countries. "Our ties with any country stand on their merit and should not be seen from the prism of a third country. As far as India-Russia relations are concerned, we have a steady and time-tested partnership," he added. Answering a query on Friday, Trump indicated that if India stops buying Russian, it will be a good step. "I understand that India is no longer going to be buying oil from Russia. That's what I heard, I don't know if that's right or not. That is a good step. We will see what happens..." said Trump. Trump announced the imposition of 25 per cent tariffs on Indian goods and a penalty for importing Russian oil in the last week of July, even as there were hopes of an interim India-US trade that would have otherwise helped avoid elevated tariffs. There are apprehensions that global crude prices could jump to USD 200 a barrel if India were to stop buying Russian oil, which will severely harm consumers.
Observer
20 hours ago
- Observer
China's small workshops are hurting. Tariffs are only one reason
GUANGZHOU, China — It was 96 degrees in the shade with high humidity and not a breath of wind on Tuesday afternoon in a factory district in Guangzhou, the home base of China's garment manufacturing. The sewing workshops that were operating in one neighborhood were sweltering. But roughly half of the hundreds of factories were dark, with their doors closed and none of their usual bustle. Around the area, bright red signs on walls and poles indicated industrial buildings were available for sale or rent. After exchanging escalating tariffs and export restrictions in the spring, China and the Trump administration moved closer last week to another ceasefire to continue to negotiate over their myriad conflicts. But the new status quo has left high barriers between China's exporters and some of their biggest markets in the United States. Guangdong province, in southeastern China, and its capital, Guangzhou, have borne the brunt of President Donald Trump's tariffs. China's coastal export sector has been hit twice. It is paying tariffs of 30% or more on shipments to the United States — extraordinarily high by historical measures — on top of previous tariffs. And exporters to the United States no longer enjoy duty-free treatment for packages worth $800 or less. In Guangzhou, thousands of small factories near the Pearl River used to supply the cheap clothing that e-commerce giants such as Shein and Temu shipped to American homes. Streets in the city's factory districts are less crowded, while managers and workers complain that many orders have evaporated. Some workers are going door to door and to employment fairs, looking for jobs. 'They are from other factories, or their work is not so good, so they come here with nothing to do,' Lai Changxing, a worker at a factory making dress shirts and T-shirts, said while pouring himself a Coca-Cola and trying to cool off during a work break. Hu Ke, a worker at another garment factory, said orders had halved since spring. 'I've been doing this for over a decade,' he said. 'It's definitely not going well this year.' China's exports to the United States from April through June dropped 23.9% from a year earlier, according to the General Administration of Customs in China. Exports of Chinese goods to developing countries have been rising, sometimes for transshipment onward to the United States. But Trump's tariffs appear to have worsened long-term trends that have already been eroding China's light industry export sector, as the country shifts toward higher-value industries including electric cars and solar panels. At the same time, the storefront factories in Guangzhou face rising costs that are difficult to avoid. Workers are demanding that air conditioning be installed near the rows of sewing machines and fabric-cutting tables. Until three years ago, few factory owners bothered with air conditioning, said Li Aoran, the manager of a workshop that makes pajamas, pants, and dresses. But as China has grown more affluent, workers have become less willing to endure extreme heat for long hours toiling under rows of fluorescent lights. 'Now that people's living standards have improved, there are higher expectations for better working conditions,' Li said. He paid $3,000 last year to install three large air conditioners for his clothing workshop. His electricity bill has increased $1,000 a month, adding about 5% to his overall costs, he said. Then his orders plummeted this spring when Trump began limiting access to the American market. So Li, like many factory managers, has slashed his payroll. He had nearly 50 workers at the end of last year, and now employs 20. Much of the labor force in factories like Li's is made up of migrant workers who often travel long distances from their hometowns to Guangzhou for work. Li and other managers hired a lot fewer workers this spring after the Lunar New Year holidays, shrinking their workforces mainly through attrition in a sector where laborers often change jobs every three months. Even as some factories are still hiring, broad changes in expectations about pay are adding to costs. Unskilled workers, who are often younger and doing difficult jobs like ironing finished shirts, are demanding higher wages — at least $1,100 a month, said Yang Daoyong, the manager of a shirt factory. But skilled sewing machine operators, who are typically older and have few other options, are accepting a slight decline in pay, to about $1,400 a month, he said. Decades of rapid housing construction have resulted in low rents, typically a couple of hundred dollars a month, making it possible for workers to survive on these paychecks while also having enough left over to send to their families. Their paychecks, which include considerable overtime, are still a big change from a quarter-century ago, when wages were often around $100 a month. Falling prices for finished garments are the biggest challenge for manufacturers, as a glut of production has driven down prices. Yang said he had lowered the wholesale price for each shirt to $1.40 from $1.67 a year ago. His overall costs keep rising, though, so he tries to sell more shirts at ever-thinner profit margins, he said. 'The domestic market is like a rat race,' Yang added. The fading of China's sweatshop sector mirrors a rapid shift in the country's labor force, which is shrinking and becoming better educated. The number of young people turning 18 each year has dropped to fewer than 16 million, from 25.5 million two decades ago. A further decline is coming: The annual number of births has fallen below 10 million in each of the past three years. At the same time, China has rapidly expanded its university system. Two-thirds of the young men and women who turned 18 last year enrolled in a university or college, up from only a fifth in 2005. Unemployment in China has been a deeper problem among recent college graduates, many of whom have had to take jobs as delivery drivers in big cities. Unemployment is less visible among the dwindling ranks of middle-aged workers who still toil in Guangzhou's sewing workshops. Countries such as Vietnam have been quick to absorb many of the low-wage jobs now fading away in China. All of this has workers and managers alike hoping that trade relations with the United States will stabilize soon. 'I hope the situation will improve and our business will be better,' Li said. This article originally appeared in
Observer
a day ago
- Observer
Stock market IPOs up in the US and down in Europe
Worldwide, there were 539 stock market flotations in the first six months of the year, but despite Ireland's economy being generally strong within the European Union – particularly in terms of GDP per capita which is second only to Luxembourg – none of them in Ireland, even though new incentives were introduced in Budget 2025. The global IPOs raised $61.4 billion, a 17 per cent increase in value year-on-year, according to a new report by EY. It says that while there were no new listings in Ireland, investor sentiment remains positive. 'While Ireland has not seen IPO activity so far this year, the fundamentals remain strong. Investor sentiment is holding firm, and the pipeline of potential listings is healthy,' said Fergal McAleavey, a corporate finance partner at EY Ireland. 'Continued market stability will be key to unlocking that potential. America is leading the way in the number of flotations, with 109 so far this year, its best first-half performance since the peak in 2021. EY's Global IPO Trends report notes that cross-border listings are at a record high in the US, with almost two-thirds coming in from foreign countries. Companies from China and Singapore are 'leading the charge'. 'The US market's appeal stems from its deep capital pools, broader investor base and strong liquidity,' the report says. 'International issuers particularly value access to investors with an appetite for profitable, growth-oriented companies.' Europe, by contrast, experienced a notable slowdown in IPOs, with most of the big markets pausing following the turmoil set off by US president Donald Trump's announcement of reciprocal tariffs in April. The continent recorded just 50 IPOs, a 15 per cent drop year-on-year. Sweden was the only exception, with the Asker Health Group's IPO valuing at about 2.3 billion euros. China accounted for one in three of the global IPOs by value, surpassing the US in that category. India was the second most popular, with 108. The Irish Government introduced two measures in Budget 2025 to encourage investment, including a corporation tax deduction for expenditure incurred in listing shares of a company on any stock in the European Economic Area. McAleavey said this would be a 'nice benefit' for anyone who had decided to list, but not enough on its own to persuade them to do so. He said the attraction of the US, over Europe (which includes Ireland) was in its high level of liquidity, helped by a strong retail market, which resulted in companies being valued fairly. He pointed out that Irish companies can now raise hundreds of millions from private equity funds, which has made that route more attractive. A spokesman for Euronext, which runs the Irish stock exchange, said the introduction of a tax relief for IPO expenses was a welcome development, especially for smaller companies that would be the target for its new 'Access' market. 'Given market conditions, although we have a pipeline of potential IPO candidates, IPO activity is muted globally but we expect to see some activity when market conditions improve,' he said. Euronext has put forward a number of proposals for this year's budget, including a stamp duty exemption on the trading of shares in companies with a market valuation of less than one billion euros, and to increase the life-time limit for the Capital Gains Tax (CGT) entrepreneur relief by a further one million euros to two million euros. It is also proposing the creation of an incentivised savings and investment account scheme for Ireland, and an Irish Equity Market Growth Fund to provide equity finance to companies listed or intending to list, on Irish markets. (The writer is our foreign correspondent based in the UK)
