US and EU firms warn of "enormous" consequences if data pact talks fail

The two largest American and European trade groups have warned of "enormous"consequences for thousands of businesses and millions of users if Brussels and Washington fail to wrap up talks on a data transfer pact by the end of the month. 

PHOTO: REUTERS

JAN 18, 20166:12 AM

[WASHINGTON] The two largest American and European trade groups have warned of "enormous"consequences for thousands of businesses and millions of users if Brussels and Washington fail to wrap up talks on a data transfer pact by the end of the month.

The United States and Washington accelerated negotiations on a new framework enabling firms to easily transfer personal data across the Atlantic after the previous one was struck down by a top EU court last year on concerns about US snooping.

Under European Union data protection law, companies cannot transfer EU citizens' personal data to countries outside the bloc deemed to have insufficient privacy safeguards, of which the United States is one.

Since the EU's highest court ruled on Oct 6 that the 15-year-old Safe Harbour framework, used by over 4,000 firms to transfer Europeans' data to the United States, did not adequately protect the data because US national security requirements trumped privacy safeguards, firms on both sides of the Atlantic have been in legal limbo.

In a letter, seen by Reuters, to US President Barack Obama, European Commission President Jean-Claude Juncker and the 28 European heads of state, four business associations warned of the dire economic impact if data flows between the two blocs were disrupted. "This issue must be resolved immediately or the consequences could be enormous for the thousands of businesses and millions of users impacted," the letter from US Chamber of Commerce, BusinessEurope, DigitalEurope and the Information Technology Industry Council says. The groups also ask for a transition period to comply with any revised data transfer framework, especially for those small and medium-sized businesses that relied entirely on Safe Harbour.

European Union data protection authorities gave Brussels and Washington until the end of January to forge a new pact and businesses the same deadline to set up alternative legal channels to transfer personal data across the Atlantic, such as binding corporate rules within multinationals or model clauses.

While a political agreement may be possible in that time, ironing out the legal details will take longer, according to a person familiar with the talks.

However the business groups warn that all data transfer mechanisms are in jeopardy as a result of the EU ruling, something echoed by lawyers, and that could impact nearly all financial transactions between the two largest economies in the world. "We therefore urge your leadership to ensure a durable legal framework for transatlantic data flows in the future," the letter says.

EU privacy regulators are due to meet on Feb 2 to decide if they should start taking enforcement action against companies if they come to the conclusion that all transfer mechanisms fall foul of EU law and there is no new framework in place.

Revelations two years ago of mass US surveillance programmes where American authorities collected private information directly from big tech firms like Apple, Facebook and Google riled Europe and set the stage for the European Court of Justice ruling.

REUTERS

    
 

US, Iran leaders hail nuke deal but US imposes new sanctions

Iranian President Hassan Rouhani attends a news conference in Tehran, Iran on Jan 17, 2016. 

PHOTO: REUTERS

JAN 18, 20166:05 AM

[TEHRAN] The US and Iranian presidents on Sunday hailed the implementation of Tehran's nuclear deal as historic, but new American sanctions threatened fresh tensions.

The UN's atomic watchdog confirmed in Vienna late on Saturday that Iran had complied with its obligations under last summer's accord, leading the United States and the European Union to lift sanctions.

Iran's President Hassan Rouhani, a moderate whose 2013 election victory helped launch a huge diplomatic effort toward the deal struck on July 14 in Vienna, said the implementation was a crucial moment for his country.

"We Iranians have reached out to the world... have opened a new chapter in the relations of Iran with the world," the official IRNA news agency quoted him as saying.

In Washington, President Barack Obama said engagement with Iran had provided a "unique opportunity".

But Mr Obama also noted that "profound differences" with Tehran remained over its "destabilising activities".

In a sign of those differences, Washington announced it had decided to target the Islamic republic's ballistic missile programme with new measures.

Five Iranian nationals and a network of companies based in the United Arab Emirates and China were added to an American blacklist, the US Treasury Department announced.

The White House had threatened to impose the measures last month but withdrew them after Mr Rouhani hit out at both their timing and intent. Missiles were not part of the nuclear agreement.

Asked before the new sanctions were announced how Iran would react to fresh measures against it, Mr Rouhani on Sunday had said: "Any action will be met by a reaction." The new sanctions came after four Iranian-Americans, including Washington Post reporter Jason Rezaian, left Tehran following their release in a prisoner swap with the United States.

The prisoner swap involved Rezaian, Christian pastor Saeed Abedini, former US Marine Amir Hekmati and a fourth man, Nosratollah Khosravi-Roodsari.

Iranian state television said they departed on a special plane to Bern in Switzerland but US officials told American media that Khosravi-Roodsari was not on board.

The Swiss foreign ministry confirmed that three US prisoners released by Tehran were due in the country.

Washington Post publisher Frederick Ryan said in a statement: "We are relieved that this 545-day nightmare for Jason and his family is finally over." Under the exchange, Washington said it had granted clemency to seven Iranians, six of whom were dual US-Iranian citizens, and dropped charges against 14 more.

Mr Obama welcomed the Americans' release, saying: "When Americans are freed, that's something we can all celebrate." For a decade the sanctions, imposed in condemnation of Iran's disputed nuclear programme, had crippled the country's economy.

Mr Rouhani, who has promised that 2016 will be a "year of prosperity" for Iranians, told lawmakers on Sunday that following the lifting of sanctions Iran would seek foreign investment of US$30-US$50 billion annually, to dramatically spur growth to eight percent.

Iran can now increase its oil exports, long the lifeblood of its economy though Mr Rouhani has moved away from relying on crude. The nuclear deal will also open up business in the 79-million-strong country.

US Secretary of State John Kerry said Sunday that the United States was to repay Iran a US$400 million debt and US$1.3 billion in interest dating to the Islamic revolution.

The repayment, arranged after an international legal tribunal, is separate from the tens of billions of dollars that Iran can now access after the end of nuclear sanctions.

The Vienna agreement was nailed down after two years of rollercoaster negotiations following Mr Rouhani's election.

It drew a line under a standoff dating back to 2002 marked by failed diplomatic initiatives, ever-tighter sanctions, defiant nuclear expansion by Iran and threats of military action.

International Atomic Energy Agency chief Yukiya Amano was also due in Tehran on Sunday for talks on the UN watchdog's enhanced inspections to ensure Iran's continued compliance with the deal.

The steps taken so far by Tehran extend to at least a year - from a few months previously - how long Iran would need to make one nuclear bomb's worth of fissile material.

They include slashing by two-thirds its uranium centrifuges, reducing its stockpile of uranium - enough before the deal for several bombs - and removing the core of the Arak reactor which could have given Iran weapons-grade plutonium.

Iran has always denied wanting nuclear weapons, saying its activities are exclusively for peaceful purposes including power generation and medical research.

Critics, including Mr Obama's Republican opponents, have poured scorn on the deal, saying it fails to do enough to ensure Iran will never acquire the bomb.

Israel, widely assumed to be the Middle East's only nuclear-armed state and Iran's arch-foe, has repeatedly slammed the agreement.

Prime Minister Benjamin Netanyahu said Iran had not given up its hope of obtaining a nuclear weapon.

"Israel's policy has been and will remain exactly what has been followed: to not allow Iran to acquire nuclear weapons," Mr Netanyahu told cabinet on Sunday.

AFP

    
 

China to raise offshore yuan reserve requirements for some banks-sources

China's central bank is preparing to raise the reserve requirement ratio for yuan deposits placed in yuan clearing banks from Jan 25 in its latest bid to stem speculation in the currency, according to three sources who have seen the document outlining the change. 

PHOTO: BLOOMBERG

JAN 17, 20166:03 PM

[BEIJING] China's central bank is preparing to raise the reserve requirement ratio for yuan deposits placed in yuan clearing banks from Jan 25 in its latest bid to stem speculation in the currency, according to three sources who have seen the document outlining the change.

The People's Bank of China, which had established the reserve requirement ratio (RRR) for offshore yuan participating banks in 2014, will return the rate to a normal level, the sources said, without specifying what that level would be. It had been set at zero.

The change will also apply to correspondent banks.

Market participants suspect the planned reserve increase is intended to soak up additional liquidity in the offshore yuan, or CNH, market as the PBOC tries to stem speculation of further depreciation in the currency.

In early January, the offshore yuan fell to its lowest since trading began in 2010 - and well below levels traded inside China - on fears that Beijing was planning a sharp depreciation in its currency to help boost its cooling economy.

The PBOC has managed to prop the offshore yuan back up in recent weeks through state banks operating in Hong Kong, which have started hoovering up the currency and hoarding it, thus tightening supply. But it weakened sharply again on Friday.

CNH funding costs "are set to rise" as a large volume of offshore yuan is actually being deposited back into China, explained an international investment banker who declined to be identified. "The expectation of yuan devaluation has led to massive remittance of yuan," said China Industrial Bank's chief economist Lu Zhengwei. "Raising the RRR will increase of the cost of arbitrage," Mr Lu said, referring to the gap between the onshore and offshore exchange rates which the PBOC has been struggling to close. "Domestic banks conducting exchanges offshore and remitting yuan to China will be further controlled," Mr Lu said, "pushing up the cost of offshore yuan funding." Requests to China's central bank for comment went unanswered on Sunday.

Offshore clearing banks located in Hong Kong and Macao, which already maintain deposits with central bank branches in Zhuhai and Shenzhen, will be required to maintain reserves there, according to the sources.

Other yuan clearing banks will be required to maintain the reserves onshore at accounts held by parent institutions.

The People's Bank of China has been under increasing pressure from policy advisers to let the currency fall quickly and sharply, after spending billions of dollars buying yuan over recent months to defend the exchange rate.

China's foreign exchange regulator also has ordered banks in some of the country's major import and export centres to limit purchase of US dollars this month.

China suspended forex business for some foreign banks, including Deutsche, DBS and Standard Chartered at the end of last year.

REUTERS

    
 

29 killed, including 10 foreigners, in Al-Qaeda attack on Burkina hotel

JAN 17, 201611:48 AM

[OUAGADOUGOU] At least 29 people, including 10 foreigners, were killed in an Al-Qaeda attack on a top hotel in Burkina Faso, an unprecedented strike in the capital illustrating the expanding reach of regional jihadists.

The hours-long drama saw Burkinabe troops, backed by French special forces, battle militants - including two women fighters - who stormed the four-star Splendid Hotel, which is popular with foreigners and United Nations staff, and took more than a hundred people hostage.

Burkina Faso declared three days of national mourning following the attack, which mirrored another Al-Qaeda attack on a luxury hotel in neighbouring Mali where 20 people were killed, mostly foreigners.

"The Burkinabe nation is in shock," President Roch Marc Christian Kabore, who took office just last month, said in a radio and television address.

"For the first time in its history, our country has fallen victim to a series of barbaric terrorist attacks," he said, adding that the people of Burkina would nevertheless "emerge victorious".

The attack began around 7:45 pm on Friday when an unknown number of attackers stormed the 147-room Splendid Hotel in the heart of Ouagadougou.

An AFP reporter saw three gunmen wearing turbans firing on Avenue Kwame Nkrumah, one of the city's main thoroughfares. Another witness reported seeing four assailants.

The hotel and its surrounding area turned into a battleground as Burkina Faso troops, backed by French forces based in the city under a regional counterterrorism initiative, launched an attempt to retake the hotel around 2:00 am.

A total of 29 people were killed in the attack on the hotel and a nearby restaurant, including six Canadians and two French and two Swiss nationals.

Interior Minister Simon Compaore said the bodies of three "very young" jihadists had been identified, all of them men. A security source said earlier that at least four attackers had been killed, two of them women.

Al-Qaeda in the Islamic Maghreb (AQIM) has claimed the attack on behalf of an affiliate, saying the strike on the former French colony was in "revenge against France and the disbelieving West", according to a statement carried by US-based monitoring group SITE.

AQIM said the gunmen were from the Al-Murabitoun group of notorious Algerian extremist Mokhtar Belmokhtar.

The attack will heighten concerns that jihadist groups are casting their net wider in search of targets in west Africa, two months after the hotel siege in Mali.

The US, which has a small military contingent in Burkina Faso, meanwhile said it supported French forces in the operation to retake the Splendid Hotel.

Several guests managed to escape from the hotel through side entrances, including labour minister Clement Sawadogo, who emerged unscathed.

"It was horrible... there was blood everywhere. They were firing at people at close range," Yannick Sawadogo, one of those who escaped, told AFP.

"They were walking around people and firing at people who were not dead." The scene was cordoned off by yellow police tape on Saturday, while officials carried off corpses in blue plastic bags.

Campaore told AFP that 10 bodies were discovered on the terrace of the Cappucino restaurant, which lies next to the hotel.

French President Francois Hollande led international condemnation of what he described as an "odious and cowardly attack".

Also on Saturday, the Burkina government said that two Australians were kidnapped Friday in the northern Baraboule region, near the border with Niger and Mali.

Malian militant group Ansar Dine told AFP the couple were being held by jihadists from the Al-Qaeda-linked "Emirate of the Sahara".

Australia said it was aware of the reports, but did not give further details.

The attack in Ouagadougou was unprecedented in Burkina Faso and comes as people were enjoying a return to stability after the November elections which ended a shaky transitional period since veteran leader Blaise Compaore's 2014 ouster, including a failed coup.

"The elections went off well," said Cynthia Ohayon, a security analyst with the International Crisis Group. "That makes the country a symbol of progress, which is what those people want to destroy." Al-Murabitoun had already begun to move into the impoverished country of around 17 million. In April last year, the group claimed the abduction of the Romanian security chief of a mine in the country's north.

AFP

    
 

Nuclear sanctions lifted as Iran, US agree on prisoner swap

JAN 17, 201611:41 AM

[WASHINGTON] Iran emerged from years of economic isolation on Saturday when world powers lifted crippling sanctions against the Islamic Republic in return for Tehran complying with a deal to curb its nuclear ambitions.

In a dramatic move scheduled to coincide with the scrapping of the sanctions, Tehran also announced the release of five Americans including Washington Post reporter Jason Rezaian as part of a prisoner swap with the United States.

Together, the lifting of sanctions and the prisoner deal considerably reduce the hostility between Tehran and Washington that has shaped the Middle East since Iran's Islamic Revolution of 1979.

Tens of billions of dollars worth of Iranian assets will now be unfrozen and global companies that have been barred from doing business there will be able to exploit a market hungry for everything from automobiles to airplane parts.

The UN nuclear watchdog ruled on Saturday that Iran had abided by an agreement last year with six world powers to curtail its nuclear programme, triggering the end of sanctions. "Iran has carried out all measures required under the (July deal) to enable Implementation Day (of the deal) to occur," the Vienna-based International Atomic Energy Agency said in a statement.

Within minutes, the United States formally lifted banking, steel, shipping and other sanctions on Iran, a major oil producer which has been virtually shut out of international markets for the past five years.

The European Union also began the process of lifting sanctions and Iran's transport minister said Tehran plans to buy 114 civil aircraft from European aircraft maker Airbus.

The end of sanctions means more money and prestige for Shi'ite Muslim Iran as it becomes deeply embroiled in the sectarian conflicts of the Middle East, notably in the Syrian civil war where its allies are facing Sunni Muslim rebels.

America's thaw with Iran is viewed with deep suspicion by US Republicans as well as American allies in the Middle East, including Israel and Saudi Arabia. US-Iranian suspicion still remains deeply entrenched.

Washington maintains separate, less comprehensive sanctions on Iran over its missile programme. For its part, Iran detained 10 US Navy sailors on two boats in the Gulf a week ago, although they were released the next day.

In an unusual move, President Barack Obama pardoned three Iranian-Americans charged for violating sanctions against Iran, a lawyer for one of the men said, while prosecutors moved to drop charges against four Iranians outside the United States.

Iran agreed to free five Americans including Rezaian and Saeed Abedini, an Iranian-American Christian pastor sentenced to eight years in prison in 2013 on charges of undermining Iran's national security.

But a US official said four of the Americans had not yet left Iran due to ongoing logistical issues. The fifth prisoner, Matthew Trevithick, has left the country after 40 days in prison. Trevithick, a student and journalist, had travelled and worked in conflict-torn nations including Syria, Mali and Afghanistan.

The prisoner deal was the culmination of months of diplomatic contacts, secret talks and legal manoeuvring which came close to falling apart because of a threat by Washington in December to impose fresh sanctions on Iran for recent ballistic missile tests.

The detente with Iran is opposed by all of the Republican candidates vying to succeed Obama as president in an election in November.

Republican front-runner Donald Trump said at a campaign event that he was happy Americans were being freed, "but I will tell you it's a disgrace that they were there for so long." Ted Cruz, a conservative senator from Texas and one of the leading Republicans, tweeted in support of Abedini's release:"Praise God! Surely bad parts of Obama's latest deal, but prayers of thanksgiving that Pastor Saeed is coming home." Democratic presidential hopeful Hillary Clinton took credit for helping to start the sanctions pressure on Iran during her 2009-2013 tenure as Obama's secretary of state. "These are important steps that make the United States, our allies, and the entire world safer. I congratulate President Obama and his team, and I'm proud of the role I played to get this process started," she said in a statement.

Ms Clinton also urged new sanctions on Tehran over its ballistic missile testing program.

Iran's return to an already glutted oil market is one of the factors contributing to a global rout in oil prices, which fell below US$30 a barrel this week for the first time in 12 years.

Tehran says it could boost exports by 500,000 barrels per day within weeks.

The end of sanctions marks a crowning achievement for Iranian President Hassan Rouhani, a pragmatic cleric elected in 2013 in a landslide on a promise to reduce Iran's international isolation.

The economic measures, mostly imposed in the last five years, had cut off the country of 80 million people from the global financial system, slashed Iran's exports and imposed severe economic hardship on ordinary Iranians.

Rouhani was granted the authority to negotiate the deal by Supreme Leader Ayatollah Ali Khamenei, an arch-conservative in power since 1989.

Iran denies its nuclear programme was aimed at obtaining an atomic bomb.

Rouhani congratulated the Iranian nation on Saturday after the news that sanctions were to be lifted. "Thank God for this blessing and bow to the greatness of the patient nation of Iran. Congrats on this glorious victory,"Rouhani tweeted in English.

Iranian Foreign Minister Javad Zarif has argued, including in a New York Times op-ed column last week, that Iran wants to help the global fight against Sunni Muslim militants like Islamic State and al Qaeda. "It's now time for all - especially Muslim nations - to join hands and rid the world of violent extremism. Iran is ready,"Zarif tweeted on Saturday.

REUTERS

    
 

Banks give back China investment quotas as clients bypass the middlemen

JAN 17, 201611:33 AM

[HONG KONG] Global banks have started to hand back investment quotas used to buy Chinese stocks and bonds because alternative channels for investment in China and the sliding yuan are making this once lucrative business unprofitable.

While China's move to open up its capital markets and allow its currency to trade more freely has created opportunities for global banks, these developments are also threatening to kill off niches where they have acted as middlemen to give previously excluded foreign investors backdoor access to the mainland.

Several banks, including Barclays, Commerzbank , Norway's SEB and the Netherlands' ING , handed back just over US$800 million in quota granted by Chinese authorities under the Qualified Foreign Institutional Investor (QFII) scheme between April and September 2015, public data shows.

Other banks are considering following suit, according to individuals familiar with the discussions.

The move does not reflect a waning appetite for investment in China, however, despite its slowing economy; overall quotas for QFII have quadrupled to about $81 billion since 2010.

But banks' share of the quotas, which they repackage into derivatives such as p-notes and sell on to investors who don't have access to Chinese markets, a practice known as quota renting, has dwindled to just 14 per cent from 37 per cent over that period.

That means more foreign investors such as asset managers and index funds, the biggest users of such products, have access to China through QFII or new alternative avenues for investment such as the Hong Kong Shanghai Stock Connect scheme and the more flexible yuan-denominated RQFII - so fewer need the banks as go-between. "Renting quota allocations is a dying business due to the access available through Stock Connect," said Brendan Ahern, chief investment officer of New York-headquartered KraneShares, which runs an exchange-traded fund for mainland shares.

Because banks had the best access to China stocks, they were able to charge as much as 200 basis points on these synthetic products up until just over a year ago, according to investors, but this figure has plummeted to around 20 basis points in recent months as funds have gained direct access to China stocks through Stock Connect and their own quotas.

Things are expected to get worse when the Shenzhen stock market joins the Connect scheme sometime this year. "The cost of warrants or p-notes to access China have come down in line with Stock Connect costs, and with Shenzhen coming online that is going to challenge the economics of that business even more," said David MacKenzie, Asian equities product manager at investment management firm Schroders.

Public data and regulatory filings show that some of the biggest China index funds, including BlackRock's US$5 billion FTSE A50 China Index ETF, are increasingly using their own newly granted QFII quotas and Stock Connect in place of synthetic products.

Barclays and Commerzbank declined to comment. A spokeswoman for SEB said the bank handed back its quota because it was more efficient to use Stock Connect wherever possible. ING did not respond to requests for comment.

For banks, declining client demand has been compounded by the depreciation of the yuan, which has lost about 5 per cent against the dollar since August. This is because QFII is denominated in dollars, which are exchanged onshore for yuan and then back into dollars when holders want to sell up.

In the past, banks generally benefited from the appreciation of the Chinese currency, but are now exposed to currency risk amid expectations the yuan will decline further.

In a bid to help cover the currency costs, some banks are now renting out QFII free of charge to big clients, according to two people with knowledge of the banks' businesses.

Some of the biggest providers of synthetic China access products, including HSBC, UBS, Credit Suisse, Citi and Macquarie, declined to comment for this article.

Handing back quota might once have put Beijing's nose out of joint, but the government looks unlikely to raise strenuous objections under the changed circumstances. "The Chinese authorities understand the issues, so banks don't need to worry so much about offending the authorities,"said Keith Pogson, senior financial services partner at EY in Hong Kong.

REUTERS

    
 

Benefits of cheap oil will come, but not soon

JAN 17, 201611:12 AM

[WASINGTON] With petroleum investment and the manufacturing sector sagging and the stock market in free fall, many Americans are wondering when they will begin to see the benefits of cheap oil.

Crude oil prices have tumbled by 70 per cent since mid-2014, dropping this year below US$30 a barrel, a price unimaginable as recently as 18 months ago, when they were at US$110 a barrel.

The technological breakthroughs of hydraulic fracturing - or fracking - have revolutionized the market for black gold, making the United States the world's leading petroleum exporter.

So why do things feel so bleak to many Americans? It may be just a question of timing, some economists say.

"On a net basis, the decline of oil prices is or will be positive for the US economy," said Angel Ubide, a senior fellow at the Peterson Institute for International Economics.

Because the negative impact is "faster and more concentrated in time," people are already feeling it, Ubide told AFP.

"If we look at it in two or three years' time, we'll be able to conclude that the decline in oil prices on net was positive. But we need some time for that." Steve Murphy of Capital Economics sounded a note of caution, however, saying much will depend on how long oil prices remain low.

"The magnitude and duration of the slump in oil prices has far exceeded what we originally expected, and the longer it persists, the harder it is to argue that decline will ever be a net positive for the US economy," he said.

"Lower prices should have boosted real economic growth in the US. Instead, the hit to domestic investment has been unrelenting, while households still haven't spent any of their savings." US financial authorities, starting with Fed chair Janet Yellen, insist that lower gasoline prices should free consumers' purchasing power. Premium gas at the pump is now below US$2 a gallon on average (0.48 euros a liter), a seven-year low.

And yet few signs of impact on consumer spending seem to have materialized, even if the American consumer remains the locomotive of today's modest levels of US growth.

Retail sales rose only 2.1 per cent in 2015, according to official figures published Friday, down from a yearly average of 5.1 per cent from 2010 to 2014.

Mr Murphy said Americans have saved US$115 billion thanks to cheap gas over the past 18 months, but rather than spending it, "Personal saving has increased by US$120 billion, suggesting that households have saved every last dime from lower pump prices." Ubide noted, however, that "once the level of savings is higher, at some point the consumer can use those savings to spend." There are, in any case, more winners than losers in the United States, according to Reza Varjavand, an economics professor at Saint Xavier University in Chicago.

"Transportation, airlines, consumers - they all win. The losers are mostly overseas." Varjavand noted that stock markets have suffered and "older people who have money in retirement accounts and pensions, they lose.

"But consumers generally win," he told AFP.

As for industry, the petroleum and manufacturing sectors are suffering.

The extractive industries - mining, coal and oil - lost nearly 130,000 jobs last year, according to the Labor Department. The number of active wells operating in the United States fell by 68 per cent during the year.

The finances of several US producer states are suffering to varying degrees.

"Alaska, North Dakota, Louisiana, Oklahoma, Texas, West Virginia and Wyoming are all states that will experience some amount of economic or fiscal fallout as a result of sustained low oil prices," said a statement from the rating service Standard & Poor's.

Low energy prices will continue to affect the inflation rate, though Yellen has said for months that this will be a "transitory effect." The US central bank wants to see a steadying of inflation around 2 per cent.

"Transitory can be a long time," Ubide said ironically, adding that the impact on inflation of cheaper and cheaper oil is bound, mathematically, to lessen.

"At some point, the effect of the decline in price is going to disappear from inflation," he said.

"The lower the oil price goes, the less impact it has on inflation on an incremental basis." Some experts, including at Morgan Stanley, don't rule out the possibility of a US$20 barrel amid the continued strengthening of the greenback.

Will the savings that American households enjoy because of cheaper oil lead to an easing of wage demands?

Standard & Poor's seemed to nod in that direction when it noted that "low oil and gas prices provide an offset to still sluggish wage growth."

AFP

    
 

India's finance minister says will help bankers lend more

India's government and the country's central bank will over the next few months add to banks' ability to lend, Finance Minister Arun Jaitley said on Saturday, addressing a conference on start-up businesses.

PHOTO: REUTERS

JAN 16, 20161:36 PM

[NEW DELHI] India's government and the country's central bank will over the next few months add to banks' ability to lend, Finance Minister Arun Jaitley said on Saturday, addressing a conference on start-up businesses.

Credit growth is critical to boost India's sluggish economic growth but has remained subdued, with banks struggling with crippling bad debts and insufficient capital.

"The Reserve Bank (of India) and the government, acting in tandem, are going to add to bankers' ability to lend with vigour and in greater amounts," Mr Jaitley said.

He gave no details.

Prime Minister Narendra Modi will later on Saturday address the same New Delhi conference, and is expected to announce new policy reforms aimed at simplifying the process of starting and funding new businesses in the country.

REUTERS

    
 

Softbank CEO says will 'seriously' accelerate investments in India

Japanese telecom and media group SoftBank will "seriously" accelerate its investments in India, chief executive Masayoshi Son told a startup conference in New Delhi on Saturday. 

PHOTO: AFP

JAN 16, 20162:20 PM

[NEW DELHI] Japanese telecom and media group SoftBank will "seriously" accelerate its investments in India, chief executive Masayoshi Son told a startup conference in New Delhi on Saturday.

Softbank had previously said it would invest US$10 billion in India over 10 years.

"The time has come that the Indian economy will be big enough going forward. Mobile internet will make the domestic internet market big enough," Mr Son said. "I think we would seriously accelerate our investments in India going forward."

REUTERS

China to invest additional US$50m in AIIB: President Xi

China will invest an additional US$50 million in the Asian Infrastructure Investment Bank (AIIB), President Xi Jinping said at the bank's opening ceremony in Beijing on Saturday. 

PHOTO: AFP

JAN 16, 201611:26 AM

[BEIJING] China will invest an additional US$50 million in the Asian Infrastructure Investment Bank (AIIB), President Xi Jinping said at the bank's opening ceremony in Beijing on Saturday.

The AIIB, which is seen as a rival to Japan-led ADB and US-led World Bank, has become one of China's biggest foreign policy successes, and was set up by Beijing after it became frustrated by delayed reforms at the International Monetary Fund.

REUTERS