Trump Rattles Emerging Markets With Threat of China Tariffs




  • In Business
  • 2019-06-16 20:00:00Z
  • By Bloomberg

(Bloomberg) -- Emerging-market currencies halted a three-week advance on heightened tensions in the Persian Gulf and doubts about a trade deal after President Donald Trump threatened to raise tariffs on China again. Stocks moved in the opposite direction, extending gains for a third week amid bets of easing monetary policy in both developed and emerging economies in response to lower-than-expected growth.

The following is a roundup of emerging-markets news and highlights for the week ending June 14.

Highlights:

President Donald Trump threatened to raise tariffs on Chinese goods again if President Xi Jinping doesn't meet with him at the Group-of-20 summit in Japan at the end of JuneLater in the week, Trump said he's personally holding up a trade deal with China and that he won't complete the agreement unless Beijing returns to terms negotiated earlier in the yearHis economic adviser Larry Kudlow said Trump is still waiting for a response from Xi about meeting to restart trade talksOn Friday, Trump said "it doesn't matter" if Xi agrees to meet with him later this month to restart negotiations because the U.S. is collecting billions of dollars in tariffs on goods from the countryThe U.S. blamed Iran for attacks on two oil tankers near the entrance to the Persian Gulf as fears rise that high-stakes diplomatic efforts won't avert a military confrontation between the U.S. and IranAmerican officials released images they said show that Iran was involved in the attack Trump slammed the Federal Reserve for high interest rates in a tweet, complaining the euro and other currencies were "devalued" against the dollarU.S. stores and factories reported a pickup in activity last month, suggesting the economy is humming along without an urgent need for the Federal Reserve to cut interest rates, spurring a rally in the dollarChina's chief trade negotiator said that the "external pressures" the nation is facing now can help it open up the economy to the outside worldIndustrial output growth slowed to the weakest pace since 2002, highlighting the headwinds that the economy is facingImports tumbled in May and a surprise rise in exports wasn't enough to dispel concerns that the economic dispute with the U.S. will intensify and damage the global economyInflationary pressures in the economy continued rising in May as supply shocks pushed up food costs. The consumer price index rose 2.7% last month from a year ago, while factory prices gained 0.6%Trump upped his criticism of Germany on Wednesday as he threatened sanctions over Angela Merkel's continued support for a gas pipeline from RussiaRussia's central bank shifted solidly to monetary easing, saying its first interest rate cut in more than a year on Friday could be followed by two more in 2019, as inflation slows and growth sputtersBank Indonesia will likely join other central banks in easing monetary policy to counter a global economic slowdown, Finance Minister Sri Mulyani Indrawati said

Asia:

China extended its gold-buying spree, adding to reserves for a sixth straight month. Foreign-currency holdings resumed rising in May, countering outflow concerns amid a stronger dollarThe country will ease restrictions on how local governments can spend money raised through sales of so-called special bondsSouth Korea said its economic growth faces prolonged downside risks as uncertainty surrounding external conditions grow more than expectedThe Bank of Korea will closely monitor external uncertainties including China-U.S. trade tensions and the semiconductor cycle, responding "appropriately" to economic changes, Governor Lee Ju-yeol saidCentral government debt increased 5.5 trillion won ($4.6 billion) to 675.8 trillion won in April from March, the finance ministry saidThe stock exchange is reviewing high-frequency trades made by Citadel Securities via Bank of America Corp. on the nation's tech-heavy Kosdaq market, months after local investors filed petitions against such transactionsIndonesia's inflation accelerated in May to the fastest pace since April last year, with the core inflation rate climbing to its highest level in almost two yearsIndia's inflation remained below the central bank's target for the 10th straight month. Consumer prices rose 3.05% in May from a year earlierChina has taken initial steps to address issues related to trade imbalance with India and will take further measures to encourage imports from the country, Indian Foreign Secretary Vijay Gokhale saidThe Philippines Bureau of the Treasury is likely to offer less than 300 billion pesos ($5.8 billion) worth of debt in the third quarter on slower-than-planned spending in the first half, Treasurer Rosalia de Leon said Exports unexpectedly increased in April from a year earlier and the Southeast Asian country posted a smaller-than-expected trade deficit during the monthCurrent account deficit widened to $1.2 billion in the first quarter of the year from about $300 million a year ago as the trade gap swelledMalaysia's foreign reserves fell to $102.3 billion as of May 31 from $102.8 billion as of May 15Foreign ownership of Malaysian government and corporate bonds and bills fell 2.3% on the month to 175.9 billion ringgit ($42 billion) in May, the lowest since December 2011Taiwan's exports decreased 4.8% in May from the year earlier versus the estimate of a 3.5% decline

EMEA:

Turkey left interest rates unchanged for the ninth month as the central bank moves closer to resuming cuts amid a slowdown in price-growth President Recep Tayyip Erdogan accused the U.S. of arming Kurdish militants in Syria as part of an effort to topple his government, elevating tensions already strained over a Turkish missile deal with RussiaOfficial comments appeared to confirm the purchase of the missile-defense system Current-account gap in April narrowed to almost a quarter of the deficit a year earlier, as a decline in the lira and weak consumer demand curbed importsMoody's Investors Service lowered the nation's long-term issuer rating to B1 from Ba3, on par with Jordan, Greece, and UzbekistanSouth African President Cyril Ramaphosa has until June 21 to answer anti-graft ombudsman questions after being implicated in a probe into a donation his campaign received from a company linked to a bribes scandalPlatinum producers are preparing for significant wage demands as workers eye windfall earnings from a rally in metal pricesBusinesses expect trade conditions over the next six months to improve from last month's record low, while remaining negativeBusiness confidence stayed locked at the lowest level in two years in the second quarter as a slump in economic output raises the risk of a second recession in successive yearsUkraine sold its first international, benchmark-sized bond offering since October, joining a handful of eastern European nations looking to benefit from falling borrowing costsThe country is considering entering a new program with the IMF at the end of 2019Lithuania and Croatia are both offering euro bonds, marking the beginning of a run of sovereign deals from central and eastern EuropeRussia ordered the release of an investigative journalist whose arrest on drug charges triggered a wave of protests about pressure on the media, in a rare Kremlin reversal in the face of mounting public opposition Egypt's inflation accelerated even before expected fuel subsidy cuts go into effect, raising the likelihood that the central bank will take more time before reducing interest rates again Nigeria's central bank said it made no change to its naira policies, after a revision on its website led some analysts to speculate that it was ending a system of multiple exchange ratesNamibia held its benchmark interest rate at the lowest since August 2017 as the Monetary Policy Committee sees the economy remaining weak this yearGhanaian consumer-price growth decelerated for the first time in four months in May Tanzania's central bank cut the minimum capital requirement for lenders to 7% from 8% as it seeks to increase credit extended to the private sector and boost economic activityA missile fired by Iranian-backed Yemeni rebels hit a Saudi airport on Wednesday, wounding 26 people and ratcheting up regional tensions just as international efforts to avert escalation get underwaySaudi Vice Minister of Defense Khalid bin Salman said the targeting of Abha Airport by Houthi militia is "a continuation of their immoral and criminal behavior that is in line with the malign behavior of their patrons" Now that Saudi Aramco has revealed itself as the world's most profitable company, it's preparing to host its first earnings call in August to discuss half-yearly results Iranian Supreme Leader Ayatollah Ali Khamenei told visiting Japanese Prime Minister Shinzo Abe that his country would not return to the negotiating table as it has no confidence the U.S. would stand by its commitments

Latin America:

Argentina's President Mauricio Macri chose Senator Miguel Angel Pichetto, an opposition leader, as his running mate in October's vote, potentially broadening his appeal and boosting his chances of re-electionInflation cooled in May for a second straight month amid a stable currency and new price control measures by the governmentCentral Bank president Guido Sandleris said tight monetary policy is needed due to the Presidential election uncertainty and trade warBrazil's rapporteur of the pension reform presented changes to the original bill proposed by Jair Bolsonaro's government that would end up producing savings of 913.4 billion reais ($237 billion) over 10 yearsSavings could reach 1.1 trillion reais in the same period if it includes a provision to allow resources from a fund managed by the government known as FAT to finance payment of pensionsEconomy Minister Paulo Guedes criticized lawmakers' changes to his pension overhaul proposal, accusing them of giving in to public servants' pressureBolsonaro fired his government secretary, a moderate general who repeatedly clashed with the president's most radical supporters, including one of his sonsJustice Minister Sergio Moro is facing growing calls to step down after the publication of messages he allegedly exchanged with prosecutors of the so-called Carwash task forceA key gauge of Brazil's economic activity fell for the fourth straight month in April reflecting growing headwinds including slower global growth and uncertainty over domestic reformsRetail sales fell more than expected in April as the central bank faces pressure to cut borrowing costs to buttress increasingly weak demandMexico shouldn't start cutting interest rates while threats by Trump to slap tariffs on the nation's goods persist, deputy central bank governor Jonathan Heath saidTrump said that if Mexico doesn't cut migration to the U.S. under a deal the two countries reached earlier this month, they'll enter "phase two," which he described as "a much tougher phase"Mexico has started deploying National Guard troops at its border with Guatemala as it increases the staff in the area to handle migrants' requests, Foreign Affairs Minister Marcelo Ebrard saidPeru took advantage of near-record low borrowing costs to sell its first U.S. dollar bonds since 2015The central bank held borrowing costs unchanged at their lowest level in over eight years as global trade tensions curb copper exports and the country's growth outlook deterioratesGovernment intends to start a tender offer to buy back 2023 PEN local notes known as soberanos, and Euro notes due 2026 and 2030, according to SEC filingPresident Martin Vizcarra's popular support surged after he won a confidence vote in Congress over measures designed to stamp out political corruptionColombia's 2018 tax reform will boost economic growth by more than one full percentage point, and return the country to the growth rates it hasn't seen since the oil and mining boom ended five years ago, according to Finance Minister Alberto Carrasquilla

--With assistance from Colleen Goko, Selcuk Gokoluk and Philip Sanders.

To contact Bloomberg News staff for this story: Yumi Teso in Bangkok at yteso1@bloomberg.net;Netty Ismail in Dubai at nismail3@bloomberg.net;Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net

To contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net, Karl Lester M. Yap

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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