This article is an onsite version of our Disrupted Times newsletter. Register here to get the newsletter straight to your inbox three times a week
good evening
The widening gap in interest rate policy around the world has caused turmoil in Asian currency markets. The yen plunged to its lowest level in 24 years against the dollar as hedge funds in Europe and the US resumed bets on the continuation of the Bank of Japan’s ultra-accommodative monetary policy.
The Japanese currency fell to ¥144 against the dollar, its weakest level since August 1998. The sell-off started yesterday and continued today, dropping a fifth in value this year, despite a change in tone from the Japanese government. which threatened to intervene if the value of the currency fell further.
The storm had been building in recent weeks, as the deteriorating economic outlook for the US economy prompted Federal Reserve officials to point to multiple aggressive rate hikes in the US in the coming months. It may even have been exacerbated by the Japanese government’s decision to lift Covid travel restrictions, fueling yen outflows from Japanese tourists visiting other countries.
South Korea’s government also spoke loudly today to halt a run on the country’s currency, which fell for the fifth consecutive session, reaching its lowest level since the 2009 global financial crisis. The cause of this was a combination from the aggressive monetary tightening of the US Federal Reserve and the widening trade deficits of South Korea.
Interest rates will be in the news again tomorrow, when the European Central Bank’s board of directors that sets interest rates meets to decide how much monetary policy should be tightened for the eurozone. Members are generally expected to reach a 0.75 percentage point increase this week, which equals the highest increase in the central bank’s 24-year life.
You see a snapshot of an interactive image. This is most likely due to you being offline or having JavaScript disabled in your browser.
Concerns arise. A strong hike in ECB interest rates may fail to stem market tensions, given the various economic factors affecting Europe other than inflation, notes Tony Barber, editor of the European FT commentary.
Interest rates are also in the news in the UK and new Prime Minister Liz Truss is poised for a policy clash with the Bank of England’s monetary policy committee, according to FT economics editor Chris Giles.
An early indication of this came today when the chief economist of the BoE told a selected Treasury committee that plans by Truss to freeze energy bills for households and businesses would likely force the central bank to raise interest rates, despite curbing inflation. in the next months.
Latest news
Visit our live blog for current news updates
Need to know: the economy
Chinese exports fell significantly short of expectations in August, as foreign demand leveled off and the wave of Covid-19 lockdowns across the country disrupted domestic production and logistics. The numbers were doubly disappointing as trade had been one of the few economic bright spots for the world’s second largest economy.
Latest for UK and Europe
Europes metal industry bosses have warned of an “existential threat” to the industry’s future if the EU does not intervene with emergency measures. An aluminum smelter in Slovakia and a zinc plant in the Netherlands have already indefinitely halted production amid the threat of more closures, according to Eurometaux, the non-ferrous metals trade association.
The long-resilient UK housing market is showing signs of slowing down as interest rates rise and inflation bites. London home builder Berkeley Group said this week it is taking a more cautious approach to buying land with the expectation that a real estate decline will intensify.
The largest home builder in the country Barratt Developments still expects house prices to rise, but more moderately, according to today’s financial statements. FT columnist Helen Thomas is more pessimistic, warning that with the era of floor interest rates and government support for buyers over the housing market, the housing market is now on shaky ground.
Worldwide last
CaliforniaGovernor Gavin Newsom has warned businesses and households to prepare for a second wave of power outages in two years amid the record-breaking heat wave in the US state. The California grid operator placed the state on the highest alert setting, prompting San Francisco-based Pacific Gas and Electric to alert approximately 525,000 customers to prepare for potential power outages.
Argentina wants to help alleviate global food and energy shortages by increasing oil and gas production and boosting the country’s grain exports, Economy Minister Sergio Massa told FT’s Michael Stott. The comments, made on the first day of a visit to the US, will be welcomed by the White House, which needs friendly nations to remedy the food shortages created by Russia’s invasion of Ukraine. Argentina, for all its economic and political problems, is a natural resource powerhouse.
Need to know: business
Spain’s largest oil company Repsol has taken an innovative path to help lower carbon levels by selling a 25 percent stake in its exploration and production operations to fund investments in renewable energy. Repsol said the deal, which values its upstream operations at about $19 billion, would “crystallize value” in the division while also freeing up capital for larger investments in greener forms of energy.
revolution took cost savings to a new level by bringing in graduate jobs just days before the successful candidates were due to join the financial technology company. Fintechs have had to make significant budget cuts to counter the effects of the economic downturn and interest rate hikes, with investors now much less willing to fund nonprofit growth. At least Revolut tenants received a work laptop before being told their offer had been withdrawn.
Ocado Retail has hired Hannah Gibson as its new chief executive as the pandemic-driven online grocery boom fades, an added challenge as she seeks to realize the company’s growth ambitions amid a cost of living crisis as consumers tighten their belts .
Elon Musk has added World War III to his list of excuses to pull out of his $44 billion takeover of Twitter. The claim was made in texts between the billionaire entrepreneur and his bankers revealed during a court hearing.
The world of work
One of the bright spots of 2022 was the labor market, which is still vibrant for job seekers. How long that will last is uncertain; however, according to the FT’s report on Masters in Management degree programs, there is good evidence that business school graduates will be in demand for some time to come.
Getting the most out of hybrid employees, balancing time spent in the office with working from home, is today’s biggest management challenge, according to Stefan Stern, author of “How to Be a Better Leader” and visiting professor at Bayes Business School. City, University of London.
Covid cases and vaccinations
Total number of worldwide cases: 599.5mn
Total Doses Administered: 12.6 billion euros
Get the latest global photo with our vaccine tracker
What good news . . .
We live in remarkable times for medical breakthroughs, as the rapid development of Covid vaccines has proven, and this is true for endangered species as well as for humans. Lucas, a prominent member of the San Diego Zoo’s African Penguin Colony, has been given a new lease of life with a pair of orthopedic boots to reduce a degenerative foot condition known as bumblefoot.
Lucas, the African Penguin, shows off his new shoes to his caretakers © San Diego Zoo
Thanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here receive future numbers. And share your feedback with us at disruptedtimes@ft.com. Thank you