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Higher US tariffs under President Donald Trump could accelerate a slump in the value of China’s currency, complicating recent efforts by Beijing to kickstart a rebound in its struggling economy, analysts warn.Just days after beginning his second term in the White House last week, Trump said he would impose a 10 percent levy on all Chinese products from February 1, while leaving the door open for negotiations.If implemented, the duties will likely exacerbate the yuan’s weakness, just as Chinese leaders work to shore up an economy beset with challenges including sluggish domestic consumption and a prolonged debt crisis in the property sector.Economists say this year could see the yuan fall to the lowest level against the US dollar since Beijing scrapped its fixed exchange rate two decades ago.”The combination of looming tariffs, looser monetary policy and a slower pace of rate cuts in the United States will weaken the yuan,” said Harry Murphy Cruise, an economist at Moody’s Analytics.A depreciated currency enhances the competitiveness of exporters by lowering the prices of their goods and services overseas.This could encourage Beijing to allow the yuan to decline further in order to support its foreign trade and reduce deflationary pressure at home, notes Alicia Garcia Herrero of Natixis.- ‘Catch-22’ -But a weaker yuan “could exacerbate trade tensions with the United States, hindering negotiations to bring tariffs back down”, said Murphy Cruise.He added that a “rapid drop” in its value could trigger large-scale capital outflows, similar to those that occurred in 2015 as uncertainty regarding China’s economy swirled.Above all, a major depreciation would run counter to the strategic objective of President Xi Jinping to ensure a “strong currency” and make China a “financial power”.But a stronger yuan would require sacrificing China’s currency advantage in trade — a vital lifeline for the economy at a time of sluggish domestic spending.”It is a Catch-22 situation,” wrote Garcia Herrero.For now, Beijing’s strategy is to prioritise the yuan’s stability, with the ambition of ultimately making it a major global reserve currency, analysts from Macquarie Group noted.The exchange rate could slide to 7.45 yuan per dollar by the end of 2025, from 7.24 currently, noted Murphy Cruise.While China’s central bank cannot put a full halt to the yuan’s slump, it “will likely intervene in the foreign exchange markets to ensure that the depreciation… is gradual”, he said.Surpassing the symbolic marker of 7.5 yuan per dollar could cause “panic”, sparking an even more rapid spiral, Wang Guo-Chen of the Taiwan-based Chung-Hua Institution for Economic Research told AFP.Authorities may initially orchestrate a slight devaluation in response to US tariffs, but “they will eventually pull back” he said.- ‘Tricky balance’ -The People’s Bank of China (PBoC) has recently introduced what it hopes will be hefty support for the yuan, including the issuance of six-month central bank bills in Hong Kong totalling a record 60 billion yuan.The PBoC has also recently injected tens of billions of dollars into financial circuits in order to stabilise markets and prevent activity from screeching to a halt during the Lunar New Year.But such moves may come into conflict with Beijing’s efforts elsewhere to boost an economy that is struggling to regain momentum.”It’s a very tricky balance: if domestic liquidity is increased, the currency will depreciate,” said Wang.The PBoC’s approach so far has been to alternate between liquidity injections and withdrawals, he told AFP.Beijing has pledged to continue providing major economic support for the domestic economy in 2025, boosting fiscal stimulus and encouraging consumption through measures such as subsidies for household goods.But the spectre of heightened trade tensions with the United States continues to darken the horizon.”Domestic consumption sentiment is unlikely to improve meaningfully amid trade disputes,” warned Kiyong Seong, macro strategist at Societe Generale.

Asian markets fluctuated Monday on fresh trade fears after Donald Trump’s decision to impose huge tariffs on Colombia, in retaliation for its refusal to accept deportation flights from the United States.Traders were also assessing the impact of a new, cheaper Chinese generative AI programme released last week that hit tech firms amid claims it can outperform big-name rivals such as ChatGPT. Equities enjoyed a healthy run-up last week on the hope that Trump 2.0 will take a less hardball approach to global trade as he held off imposing stiff levies on China and other partners immediately on taking office, as he warned he would.His comments that he would “rather not” hit Beijing, and a signal of openness to a trade deal added to the optimistic tone.However, news Sunday that he would hit Colombian goods with a 25 percent tariff — rising to 50 percent next week — and revoke the visas of government officials set off alarm bells.The move came after President Gustavo Petro blocked deportation flights from the United States. In response to Trump’s decision Petro announced retaliatory levies of 25 percent on imports from the United States.”Actions speak louder than words. The situation with Colombia just shows how little it takes for Trump to use tariffs as a negotiation tool,” Dane Cekov at Sparebank 1 Markets.Traders were already gearing up for a big week that will see the Federal Reserve hold its first policy meeting of the year. While it is widely expected to hold rates, investors will be keeping a close eye on its statement and comments from Federal Reserve head Jerome Powell.There is a concern that Trump’s pledges to impose tariffs and slash taxes, immigration and regulations could reignite inflation and force the central bank to pause its rate cuts or even hike them again.The move against Colombia sent the dollar up against most of its peers, piling on around one percent against the Mexican peso. Gold, a safe haven in times of uncertainty, was sitting just shy of its record high.”This pivotal week kicks off in Asia, setting the stage for a global market spectacle intensely focused on the unfolding of… Trump’s economic agenda amidst key inflation reports and anticipated Fed guidance,” said Stephen Innes at SPI Asset Management. He added that markets were bracing for “a torrent of earnings reports from companies constituting nearly 40 percent of the S&P 500’s market capitalisation”.”Their outcomes could either amplify the recent bullish surge or instigate a reevaluation of market sentiments.”All three main indexes on Wall Street fell Friday, with the S&P 500 off a record high on profit-taking and as tech firms took a hit following the launch of the DeepSeek AI programme last week.The programme’s arrival has sparked competition fears, as tech titans — including Nvidia, Meta and Alphabet — have made huge investments worth hundreds of billions of dollars into AI products.It also came on the heels of Trump’s announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States.Tech and chip firms were among the big losers in Tokyo as the Nikkei ended the morning in negative territory, with Advantest down more than eight percent and Tokyo Electron off more than four percent.SoftBank, which is a key investor in Trump’s AI project, lost more than six percent.There were also losses in Singapore, Wellington and Manila but Hong Kong and Shanghai rose.- Key figures around 0300 GMT -Tokyo – Nikkei 225: DOWN 0.6 percent at 39,699.76 (break)Hong Kong – Hang Seng Index: UP 0.5 percent at 20,167.21Shanghai – Composite: UP 0.3 percent at 3,262.62Dollar/yen: DOWN at 155.60 yen from 155.93 yen on FridayEuro/dollar: DOWN at $1.0462 from $1.0500Pound/dollar: DOWN at $1.2445 from $1.2484Euro/pound: UP at 84.08 pence from 84.06 penceWest Texas Intermediate: DOWN 1.2 percent at $73.75 per barrelBrent North Sea Crude: DOWN 1.2 percent at $77.56 per barrelNew York – Dow: DOWN 0.3 percent at 44,424.25 (close)London – FTSE 100: DOWN 0.7 percent at 8,502.35 (close)

Cars speeding along a smooth, black-coloured street in Nepal’s Pokhara are also driving over heaps of discarded plastic, transformed into an ingredient in road construction.Nepal’s urban areas generate about 5,000 tonnes of solid waste per day, according to the World Bank, of which 13 percent is plastic waste dumped in landfills.While high-value plastics, like bottles, are absorbed by the recycling industry, low-value plastics — such as multi-layered packaging — pose a significant challenge because they don’t fit into a single recycling category.For a group of young Nepali entrepreneurs, the vast accumulation of this low-value plastic waste presented an opportunity.”A plastic road can use even low-value plastics,” said Bimal Bastola, founder of Green Road Waste Management, the organisation leading the initiative in Nepal.”We saw scope for such plastics to be utilised as a raw material, partially substituting bitumen in road construction.”  Discarded packages of noodles, biscuits and other snacks move along a conveyor belt at their trash-sorting centre.The divided plastic is then put into machines to be shredded into fine pieces.Since the early 2000s, neighbouring India has been leading the world in building a network of plastic roads, even making the usage of plastic waste mandatory in roads near large cities in 2015.A growing number of countries are experimenting with it, including nearby Bhutan and Bangladesh.In traditional road construction, bitumen is the binding material, a tarry oil product mixed directly with hot aggregates before paving a road. The plastic road method, however, first coats the aggregates with shredded plastic before adding bitumen.”This method reduces the need for fresh raw materials, lowers costs, prevents water infiltration and increases road lifespan,” Bastola said.Studies show that roads paved with plastic waste can be twice as durable as normal roads.- ‘Scale up’ -Globally, only nine percent of plastic waste is recycled, while 19 percent is incinerated, and nearly half ends up in controlled landfills, according to the Organisation for Economic Cooperation and Development (OECD). Left unchecked, the production of synthetic polymers — the building blocks of plastics -— is expected to reach about 1.2 billion tonnes annually by 2060.The plastic that accumulates in the environment is non-biodegradable, takes hundreds of years to decompose and breaks down into tiny microscopic particles.And while Nepal banned single-use plastic bags thinner than 40 microns, that ban is not strictly implemented. For Bastola, increasing plastic road construction is key to making the recycling of low-value plastics economically viable.His organisation says about two tonnes of shredded plastic is used to build a kilometre of road.So far, the organisation has completed about 10 projects totalling a little over 1.5 kilometres (one mile).”It is happening at a small scale, we need to scale up,” Bastola said. “We have to make government-level projects and we are trying to work closely with the department of roads.”A pilot project is planned this year in the capital Kathmandu at a major intersection.”Nepal is keen on testing this technology through pilot projects,” said Arjun Nepal, an engineer with the Kathmandu road department.”But to take it forward, we need government-led standards to ensure quality.”The World Bank says life cycle analyses of plastic roads are limited and it is still not clear what environmental impacts — if any — recycled plastics may have when used in road construction. “While initial anecdotes and pilot studies show promise, further research is needed to measure emissions during production, evaluate microplastic release over time and determine how these roads behave once they are decommissioned,” said Valerie Hickey, global director of the World Bank’s climate change group.Despite these concerns, environmentalist Bhushan Tuladhar said that plastic roads present an important opportunity for Nepal.”It is a low-hanging fruit to address two problems simultaneously — the need for strong roads and the management of plastic waste — for a developing country like Nepal,” he said.

Wall Street stocks retreated Friday as the market’s latest rally lost steam, while the yen pushed higher after the Bank of Japan lifted interest rates.After a flattish open, major US indices tumbled into the red. The S&P 500 finished down 0.3 percent after closing at a record high on Thursday.”This is normal consolidation or profit taking after a big 2-week rally,” said Adam Sarhan of 50 Park Investment.Wall Street stocks have gained in recent sessions following benign US inflation data, strong earnings from banks and the new presidency of Donald Trump in Washington.Markets have thus far welcomed his growth-oriented agenda and largely shrugged off his threats of tariffs.Sarhan said the market was poised for a pause given the heavy calendar next week, which includes a Federal Reserve monetary policy decision and earnings from tech giants and other big companies.In Europe, both London and Frankfurt stocks hit fresh record highs before turning lower. Paris ended the day with a gain, led by luxury stocks after British fashion house Burberry showed signs of recovery.In Japan, Tokyo’s stock market dropped and the yen rallied after the Bank of Japan lifted borrowing costs to their highest level since 2008 and flagged further increases in the pipeline. Even as other central banks have raised borrowing costs in recent years — and started cutting again in 2024 — the BoJ has remained an outlier.But it concluded last March that Japan’s “lost decades” of economic stagnation and static or falling prices were over, finally lifting rates above zero.In other Asian trading, Hong Kong gained nearly two percent and Shanghai also advanced following Trump’s latest comments with regard to China.In an interview broadcast Thursday night, Trump said he would “rather not” impose tariffs on China and signaled openness at negotiating a trade deal with Beijing. “We have one very big power over China, and that’s tariffs, and they don’t want them, and I’d rather not have to use it,” Trump told Fox News. “But it’s a tremendous power over China.””Clearly these are off-the-cuff remarks but it has left the overnight market feeling like there’s a scenario where China escapes the worst of the tariff regime,” said Jim Reid, managing director at Deutsche Bank.Trump’s remarks earlier Thursday before the World Economic Forum in Davos calling for lower interest rates added to pressure on the dollar. – Key figures around 2140 GMT -New York – Dow: DOWN 0.3 percent at 44,424.25 (close)New York – S&P 500: DOWN 0.3 percent at 6,101.24 (close)New York – Nasdaq Composite: DOWN 0.5 percent at 19,954.30 (close)London – FTSE 100: DOWN 0.7 percent at 8,502.35 (close)Paris – CAC 40: UP 0.4 percent at 7,927.62 (close)Frankfurt – DAX: DOWN 0.1 percent at 21,394.93 (close)Tokyo – Nikkei 225: DOWN 0.1 percent at 39,931.98 (close)Hong Kong – Hang Seng Index: UP 1.9 percent at 20,066.19 (close)Shanghai – Composite: UP 0.7 percent at 3,252.63 (close)Dollar/yen: DOWN at 155.93 yen from 156.05 yen on ThursdayEuro/dollar: UP at $1.0500 from $1.0415Pound/dollar: UP at $1.2484 from $1.2353Euro/pound: DOWN at 84.06 pence from 84.31 penceWest Texas Intermediate: UP 0.1 percent at $74.66 per barrelBrent North Sea Crude: UP 0.3 percent at $78.50 per barrelburs-jmb/st

Global stocks diverged on Friday as investors weighed corporate earnings, economic data and President Donald Trump’s policies.Meanwhile the US dollar lost more than one percent against the euro and pound following the US president’s comments about not wanting to impose tariffs on China and calling for lower interest rates.The S&P 500 edged higher to set another record but all of Wall Street’s indices slid into the red after a US consumer sentiment survey came in lower than expected.”It is fair to say that there is a festering sense that the market may be due for a consolidation period given the scope of recent gains,” said Briefing.com analyst Patrick O’Hare, pointing to a six percent gain by the S&P 500 since the beginning of last week and a similar rise in the Nasdaq.”Those are big moves in front of a big week next week that will feature earnings reports from Apple, Meta Platforms, Microsoft, Tesla and Amazon.com” as well as an interest rate meeting by the US Federal Reserve and the release of the Fed’s preferred inflation gauge, he added.Wall Street’s major indices were still poised to end the week with solid gains, thanks in no small part to comments and actions by Trump since his return to the White House on Monday.In Asian trading, Hong Kong gained nearly two percent and Shanghai also advanced following Trump’s more friendly comments with regard to China.In a speech via video link Thursday at the World Economic Forum in Davos, Trump pushed for lower interest rates and said he would cut taxes for companies investing in the United States while imposing tariffs on those who do not.He also said in a separate interview that he would “rather not” impose tariffs on China and signalled openness at negotiating a trade deal with Beijing. “Clearly these are off-the-cuff remarks but it has left the overnight market feeling like there’s a scenario where China escapes the worst of the tariff regime,” said Jim Reid, managing director at Deutsche Bank.The comments also saw the greenback take a hit.”President Trump’s wish to see lower interest rates led to a drop and one-month low in the US dollar,” said Axel Rudolph at online trading platform IG.”This benefitted the gold price which rallied to within a whisker of its all-time high,” he added.In Japan, Tokyo’s stock market dropped and the yen rallied after the Bank of Japan lifted borrowing costs to their highest level since 2008 and flagged further increases in the pipeline. Moody’s Analytics said “the weak yen is a key reason” for the hike, along with a run of forecast-beating inflation reports.The yen has come under pressure against the dollar in recent months after the US Federal Reserve dialled back its expectations for rate cuts this year, and amid concerns that Trump’s policies would reignite inflation.In Europe, both London and Frankfurt stocks hit fresh record highs before turning lower. Paris ended the day with a gain, led by luxury stocks after British fashion house Burberry showed signs of recovery.- Key figures around 1630 GMT -New York – Dow: DOWN 0.1 percent at 44,511.43 pointsNew York – S&P 500: FLAT at 6,120.11New York – Nasdaq Composite: FLAT at 20,052.63London – FTSE 100: DOWN 0.7 percent at 8,502.35 (close)Paris – CAC 40: UP 0.4 percent at 7,927.62 (close)Frankfurt – DAX: DOWN less than 0.1 percent at 21,394.93 (close)Tokyo – Nikkei 225: DOWN 0.1 percent at 39,931.98 (close)Hong Kong – Hang Seng Index: UP 1.9 percent at 20,066.19 (close)Shanghai – Composite: UP 0.7 percent at 3,252.63 (close)Dollar/yen: DOWN at 155.61 yen from 156.03 yen on ThursdayEuro/dollar: UP at $1.0514 from $1.0415Pound/dollar: UP at $1.2490 from $1.2352Euro/pound: down at 84.20 pence from 84.31 penceWest Texas Intermediate: DOWN 0.2 percent at $74.46 per barrelBrent North Sea Crude: FLAT at $78.29 per barrelburs-rl/gv

Global stock markets rose Friday after a record day on Wall Street in response to US President Donald Trump’s tax-cut pledge and his more friendly comments with regard to China.In a speech via video link at the World Economic Forum in Davos, Trump pushed for lower interest rates and said he would cut taxes for companies investing in the United States while imposing tariffs on those who do not.He also said in a separate interview that he would “rather not” impose tariffs on China and signalled openness at negotiating a trade deal with Beijing. “Clearly these are off-the-cuff remarks but it has left the overnight market feeling like there’s a scenario where China escapes the worst of the tariff regime,” said Jim Reid, managing director at Deutsche Bank. That spurred Chinese equities to rally, with Hong Kong gaining nearly two percent and Shanghai also advancing.In Europe, Frankfurt and Paris stock markets both gained after data showed that business activity in the eurozone bounced back in January after a two-month contraction.The release of the closely watched data throughout Europe “brought a significant degree of optimism, coming as global leaders discuss the hopelessness of the region in Davos”, said Joshua Mahony, chief market analyst at Scope Markets. But London stocks fell after data showed an increase in job cuts despite business activity coming out stronger than expected. In company news, British fashion house Burberry showed signs of recovery despite posting a further decline in sales, sending its shares soaring 15 percent. In the wake of the results, Paris’s luxury sector led gains with Gucci-owner Kering surging eight percent and LVMH up three percent on hopes of a China-led recovery. In Japan, Tokyo’s stock market dropped and the yen briefly rallied after the Bank of Japan lifted borrowing costs to their highest level since 2008 and flagged further increases in the pipeline. Moody’s Analytics said “the weak yen is a key reason” for the hike, along with a run of forecast-beating inflation reports.The yen has come under pressure against the dollar in recent months after the US Federal Reserve dialled back its expectations for rate cuts this year, and amid concerns that Trump’s policies would reignite inflation.Oil prices recovered some of Thursday’s losses that followed Trump’s call to Saudi Arabia and OPEC to lower prices, with a recent build in US stockpiles adding to the weakness.- Key figures around 1100 GMT -London – FTSE 100: DOWN 0.3 percent at 8,537.31 pointsParis – CAC 40: UP 1.0 percent at 7,969.75Frankfurt – DAX: UP 0.4 percent at 21,485.70Tokyo – Nikkei 225: DOWN 0.1 percent at 39,931.98 (close)Hong Kong – Hang Seng Index: UP 1.9 percent at 20,066.19 (close)Shanghai – Composite: UP 0.7 percent at 3,252.63 (close)New York – Dow: UP 0.9 percent at 44,565.07 (close)Dollar/yen: DOWN at 155.98 yen from 156.03 yen on ThursdayEuro/dollar: UP at $1.0492 from $1.0415Pound/dollar: UP at $1.2430 from $1.2352Euro/pound: UP at 84.41 pence from 84.31 penceWest Texas Intermediate: UP 0.5 percent at $75.01 per barrelBrent North Sea Crude: UP 0.5 percent at $78.71 per barrel

British fashion house Burberry announced Friday a further decline in sales, hit by weak demand in China, but the troubled group is showing signs of recovery under new leadership. Revenue dropped seven percent to £659 million ($871 million) in the company’s third quarter, covering the three months to late December, from the period a year earlier, Burberry said. The group famed for its trench coats noted, however, that it was more likely to avoid a full-year operating loss after the sales decline was less severe than forecast by analysts.The news sent shares in Burberry — known also for its trademark red, camel and black check design — soaring by around 15 percent in morning deals on London’s FTSE 250 index.Burberry exited London’s top-tier FTSE 100 index in September after 15 years, with analysts citing strategic mistakes and weak demand from China.Chief executive Joshua Schulman, appointed in July, swiftly launched a turnaround plan focused on cutting costs and selling more outerwear. “We recognise that it is still very early in our transformation and there remains much to do,” Schulman said in a statement.The Asia-Pacific region saw Burberry’s largest decline in sales during its third quarter, with turnover in mainland China dropping seven percent.China is the world’s biggest spender in the luxury sector, accounting for half of global sales.But as the country’s post-pandemic recovery falters, consumption has flagged, sending jitters across the globe.Burberry’s latest sales decline in the world’s second-biggest economy was partially offset by an uplift in revenue from the Americas, it said.Burberry had posted a net loss of £74 million for its first half, after reporting a profit for the same period a year earlier.”Recent months have seen a sharp turnaround in performance, hinting at a much-needed comeback,” Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said after the trading update.”But there’s still a long way to go… Building back brand desirability requires a lot of investment, even more patience,” he said.

Markets rose Friday after a record day on Wall Street in response to Donald Trump’s tax-cut pledge, while the yen strengthened after a widely expected interest rate hike by the Bank of Japan.In a much-anticipated speech via video link at the Davos World Forum in Switzerland, Trump pushed for lower interest rates and said he would cut taxes for companies investing in the United States while imposing tariffs on those who do not.He also called on Saudi Arabia and OPEC to lower oil prices, adding that “when the oil comes down, it’ll bring down prices” and in turn bring interest rates down. His comments come after he said on the campaign trail that he would slash taxes, regulations and immigration while hitting key trading partners with tariffs.That fuelled worries among some economists that he could reignite inflation and cause the Federal Reserve to pause its recent run of rate cuts, or even increase them.US traders appeared to welcome the speech, with the S&P 500 hitting a record high, while the Dow and Nasdaq also advanced.Asia mostly followed suit, with Hong Kong, Shanghai, Sydney, Seoul, Mumbai and Bangkok all up, though Tokyo, Singapore, Wellington, Jakarta and Manila slipped. London and Frankfurt rose again after hitting fresh record highs Thursday, while Paris also advanced.Markets have enjoyed a broadly positive start to Trump’s second term amid relief that while he has warned about imposing big tariffs on key partners, he has so far been less abrasive than his first four years.Matt Burdett and Adam Sparkman at Thornburg Investment Management said that could be due to circumstances.”Eight years ago, Trump’s aggressive trade policies were implemented against a backdrop of low inflation and low rates, creating room for bold actions,” they said in a commentary. “Today, elevated price levels are a key concern for voters and policymakers alike. Given this reality, we question if Trump’s tariff posturing may now be aimed more at pressuring China and other foreign countries into negotiating favourable trade terms for the US.”- Japan hikes rates -The Bank of Japan on Friday lifted borrowing costs to their highest level since 2008 in a well-telegraphed move, with data showing another jump in inflation last month that reinforced expectations for further tightening.”Japan’s economic activity and prices have been developing generally in line with the Bank’s outlook, and the likelihood of realising the outlook has been rising,” the bank said in a statement.The yen briefly rallied to as strong as 154.85 per dollar after officials flagged more increases were likely in the pipeline as inflation remains elevated and officials slowly withdraw stimulus that has kept monetary policy at ultra-loose levels for years.Moody’s Analytics said “the weak yen is a key reason” for the hike, along with a run of forecast-beating inflation prints.BoJ chief Kazuo Ueda told a news conference that the pace and timing of future hikes was yet to be determined.”We would like to make a decision after we have studied the impact of this rate hike,” he said.The yen has come under pressure against the dollar in recent months after the Fed dialled back its expectations for rate cuts this year and the concerns over Trump’s impact on inflation.The BoJ decision comes ahead of the Fed’s meeting next week, which will be closely watched for its views on the outlook under the new president.Oil prices were barely moved after Thursday’s losses that followed Trump’s call to Riyadh and OPEC, with a recent build in US stockpiles adding to the weakness.- Key figures around 0815 GMT -Tokyo – Nikkei 225: DOWN 0.1 percent at 39,931.98 (close)Hong Kong – Hang Seng Index: UP 1.9 percent at 20,066.19 (close)Shanghai – Composite: UP 0.7 percent at 3,252.63 (close)London – FTSE 100: UP 0.2 percent at 8,585.56Dollar/yen: DOWN at 155.39 yen from 156.03 yen on ThursdayEuro/dollar: UP at $1.0461 from $1.0415Pound/dollar: UP at $1.2385 from $1.2352Euro/pound: UP at 84.46 pence from 84.31 penceWest Texas Intermediate: DOWN 0.1 percent at $74.57 per barrelBrent North Sea Crude: FLAT at $78.28 per barrelNew York – Dow: UP 0.9 percent at 44,565.07 (close)

The Bank of Japan increased interest rates on Friday to their highest in 17 years and signalled more hikes to come, sending the yen higher against the dollar.The well-flagged 25-basis-point rise to 0.5 percent comes as data indicates the Japanese economy is developing in line with BoJ expectations and follows another bumper inflation reading.The move, which leaves borrowing costs at the highest since 2008, was also underpinned by “steadily” rising wages and financial markets being “stable on the whole”, the BoJ said in a statement.”Japan’s economic activity and prices have been developing generally in line with the Bank’s outlook, and the likelihood of realising the outlook has been rising,” it said.If its outlook is met, “the bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation”, it added.BoJ chief Kazuo Ueda told a news conference that the pace and timing of future hikes was yet to be determined.”We would like to make a decision after we have studied the impact of this rate hike,” he said.The hawkish comments sent the yen up as much as 0.7 percent against the dollar to 154.84 yen.Even as other central banks have raised borrowing costs in recent years — and started cutting again in 2024 —  the BoJ has remained an outlier.But it concluded last March that Japan’s “lost decades” of economic stagnation and static or falling prices were over, finally lifting rates above zero.That increase was followed by another in July that caught investors off guard and sparked turmoil in global equity and currency markets.This time Ueda prepared markets for an increase — some 75 percent of economists expected one — and the reaction was more muted on Friday.- Trump tariffs -“With no market turbulence after (US President Donald) Trump’s inauguration,” conditions for the BoJ to hike its policy rate have been met, Ko Nakayama, chief economist of Okasan Securities Research, said before the announcement.”Raising just 25 basis points to 0.5 percent won’t cool the economy.”There are, however, concerns among Japanese companies that Trump could impose huge tariffs on imports from key trading partners, which many economists warn could drive up inflation.Japan’s economic growth slowed in the July-September quarter, partly because of one of the fiercest typhoons in decades and warnings of a major earthquake, which did not materialise.”The Bank of Japan is dialling back monetary policy support despite the poor run of economic data. The weak yen is a key reason,” Moody’s Analytics said in a note.Data released Friday showed that headline Japanese inflation hit 3.6 percent in December, or 3.0 percent adjusted for food prices, up from 2.7 percent in November.The core reading remained above the BoJ’s two-percent inflation target, which it has surpassed every month since April 2022.The BoJ on Friday also raised its inflation forecast for fiscal 2024 — running to March 31, 2025 — to 2.7 percent from 2.5 percent previously.For fiscal 2025 it now expects inflation of 2.4 percent and 2.0 percent in 2026 — both up from 1.9 percent previously forecast.Marcel Thieliant at Capital Economics said inflation was set to remain above the BoJ’s objective “for a while yet”.As a result “we’re sticking to our forecast that the policy rate will reach an above-consensus 1.25 percent by the end of next year”, Thieliant said before Friday’s announcement.kh-nf-jug-stu/dan

The Bank of Japan hiked interest rates on Friday to their highest level in 17 years and signalled more were in the pipeline despite fears of turmoil under US President Donald Trump.The well-flagged 25-basis-point increase to 0.5 percent comes as economic data indicates the world’s fourth-biggest economy was developing in line with the policymakers’ expectations and follows another bumper reading on inflation.The move, which leaves borrowing costs at the highest since 2008, was underpinned by healthy underlying inflation, firms “steadily” raising wages and financial markets being “stable on the whole”, the BoJ said in a statement.”Japan’s economic activity and prices have been developing generally in line with the Bank’s outlook, and the likelihood of realising the outlook has been rising,” it said.If its outlook is met, “the bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation”, it added.The news, and expectations for more hikes in the future, saw the yen strengthen to 155.20 per dollar — from 156.3 earlier — having weakened in recent months following Trump’s election and bets the Federal Reserve will slow down its interest rate cut campaign this year.Even as other central banks have raised borrowing costs in recent years, the BoJ has remained an outlier, maintaining an ultra-loose stance in an attempt to spark growth and inflation.But it concluded last March that Japan’s “lost decades” of economic stagnation and static or falling prices were over, finally lifting rates above zero, where they had been for more than a decade in a bid to kickstart inflation and growth.The March increase — which was the first since 2007 — was followed by another in July that caught investors off guard and sparked turmoil in global equity and currency markets.This time, BoJ chief Kazuo Ueda prepared markets for an increase — some 75 percent of economists expected one — and the reaction was more muted on Friday.- Trump tariffs -“With no market turbulence after Trump’s inauguration,” conditions for the BoJ to hike its policy rate have been met, Ko Nakayama, chief economist of Okasan Securities Research, said before the announcement.”Raising just 25 basis points to 0.5 percent won’t cool the economy,” he said before the decision was announced.There are, however, concerns among Japanese companies that Trump could throw a spanner into the works by imposing huge tariffs on imports from key trading partners, which many economists warn could drive up inflation.Japan’s economic growth slowed in the July-September quarter, partly because of one of the fiercest typhoons in decades and warnings of a major earthquake, which did not materialise.”The Bank of Japan is dialling back monetary policy support despite the poor run of economic data. The weak yen is a key reason,” Moody’s Analytics said in a note.Data released Friday showed that headline Japanese inflation hit 3.6 percent in December, or 3.0 percent adjusted for food prices, up from 2.7 percent in November.The core reading remained above the BoJ’s two-percent inflation target, which it has surpassed every month since April 2022.The BoJ on Friday also raised its inflation forecast for fiscal 2024 — running to March 31, 2025 — to 2.7 percent from 2.5 percent previously.For fiscal 2025 it now expects inflation of 2.4 percent and 2.0 percent in 2026 — both up from 1.9 percent previously forecast.Marcel Thieliant at Capital Economics said inflation was set to remain above the BoJ’s objective “for a while yet”.As a result “we’re sticking to our forecast that the policy rate will reach an above-consensus 1.25 percent by the end of next year”, Thieliant said before Friday’s announcement.kh-nf-jug-stu/dan