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Dollar drives higher, yen tumbles to 1998 lows

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© Reuters. FILE PHOTO: Japanese Yen and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration//File Photo

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By Iain Withers

LONDON (Reuters) – The safe haven dollar gained towards fresh two-decade highs versus major rival currencies on Monday, supported by fears over a global economic slowdown and bets on steep interest rate hikes by the U.S. Federal Reserve.

The yen was among a host of currencies swept lower on the day, to its lowest level versus the dollar since 1998, as the gap between Japanese and U.S. benchmark yields widened after red hot U.S. inflation data on Friday.

A sell-off across markets saw European stocks fall for a fifth straight session, while Bitcoin tumbled 9% to 18-month lows around $24,000.

The dollar index – which tracks the greenback against six major peers – gained as much as 0.5% on the day to 104.75, close to the two-decade peak of 105.01 hit in May. It was last up 0.2% at 104.63.

Central banks’ efforts to curtail runaway inflation will remain in focus this week.

The Federal Reserve and the Bank of England are expected to raise interest rates at their meetings and there is a chance the Swiss National Bank will do the same.

The Bank of Japan (BoJ) has so far resisted pressure to tighten policy, weakening the country’s currency. The policy divergence has sent the yen down more than 15% against the dollar since early March.

The yen fell as much as 0.6% on the day to 135.22 yen per dollar, its lowest since 1998. It was last broadly flat at 134.37 yen per dollar.

Japan’s top government spokesperson said on Monday that Tokyo stood ready to “respond appropriately” if needed.

“Overall the fundamental developments continue to favour further yen weakness it the near-term but market participants will be more wary of the risk of intervention and/or a hawkish shift in BoJ policy in the week ahead,” currency analysts at MUFG said in a note.

The downward pressure on the yen could encourage speculation of a return to yen weakness not seen since the Asian financial crisis in 1997, when it hit 140.00 – the last time Japan directly intervened to support the currency, the note added.

The euro, sterling and the Swiss franc all fell to around four-week lows versus the dollar on the day.

The euro slipped as much as 0.5% to $1.04560, and was last down 0.3% at $1.04775.

Sterling fell 0.8% to $1.22165, after data showed Britain’s economy unexpectedly shrank in April.

The Swiss franc dropped as much as 0.5% to 0.99230 franc per dollar.

Economy

South Korean exports dropped 14% in November, the highest in 2.5 years

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exports South Korea

South Korea’s exports fell 14 percent year-on-year to $51.91 billion in November, preliminary data from the Ministry of Commerce, Industry and Energy showed. The November drop was the biggest in 2.5 years since May 2020 and was caused both by the deteriorating global economy, which even a Google price chart showed, and a truckers’ strike in the country.

South Korea exports 2022 – reasons for the drop

Exports fell for the second month in a row. Analysts on average expected an 11% decline, according to Trading Economics. Respondents to MarketWatch predicted a 10.5% decline.

Shipments of semiconductor products overseas, the country’s top export item, fell 29.8%; petrochemicals fell 26.5% and steel exports fell 10.6%. Meanwhile, exports of automobiles jumped 31% and petroleum products 26%.

Exports to China, South Korea’s largest trading partner, fell by 25.5%, and to Asian countries – by 13.9%. Below, supplies to the USA grew by 8% and to the European Union – by 0.1%.

In January-November exports rose by 7.8% on the same period last year and reached a record $629.1 billion.

South Korean imports rose 2.7% to $59.2 billion in November, marking the 23rd consecutive month of gains, but the current rate of growth is the lowest since November 2020. Experts had predicted an increase of only 0.2%.

South Korea’s trade deficit last month was $7.01 billion, compared with a surplus of $2,973 billion a year earlier.

The negative balance was recorded for the eighth month in a row. As a result, by the end of 2022, the country may record a foreign trade deficit for the first time since the financial crisis in 2008.

Earlier we reported that the UN estimates the cost of humanitarian aid in 2023 at a record $51 billion.

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Economy

The UN estimates humanitarian aid costs in 2023 at a record $51 billion because of an impending humanitarian crisis

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Joint humanitarian operations will require a record $51.5 billion in 2023 to address urgent problems.

The UN Office for the OCHA estimates that 339 million people will need urgent aid in 2023. At the same time, OCHA called on donor countries to provide funds for assistance in 2023 to the 230 million people most in need, living in 68 countries.

Griffiths explained that aid is needed not only for people experiencing conflicts and disease outbreaks. but also for those suffering the effects of climate change, such as people in peninsular Somalia facing drought and those in Pakistan experiencing severe flooding. For the first time, the growing humanitarian crisis has brought the number of displaced people worldwide to the 100 million mark. Also worsening an already bad situation is the worldwide coronavirus pandemic, which affects the poor. Note that the general economic crisis has begun to negatively affect even the Netflix price chart.

Earlier we reported that house prices in the UK fell by 1.4% in November.

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Economy

Average house prices in the UK fell 1.4% in November

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Average house prices in the UK fell 1.4% in the previous month in November to 263,788 thousand pounds (about $319,000), according to the British mortgage company Nationwide Building Society.

The decline was recorded at the end of the second consecutive month and was the most significant in almost 2.5 years – since June 2020. Analysts on average had forecast a decline of only 0.3%, according to Trading Economics.

Are house prices in the UK going to fall even more?

Residential real estate prices in November compared to the same month last year increased by 4.4%. At the same time, experts expected a larger increase of 5.8%. The growth rate slowed down significantly compared with 7.2% in October. Because of the difficult economic situation, British investors are investing in other instruments. The Microsoft price chart, for example, is showing potential for growth, so many are interested in the U.S. stock market. 

“The market looks set to remain under pressure in the coming quarters. Inflation will remain high for some time, and interest rates are likely to continue to rise,” believes Nationwide Senior Economist Robert Gardner. – The outlook is unclear, and much will depend on how the overall economy behaves, but a relatively soft landing is still possible.”

Earlier we reported that Sanctions Circumvention was included in the EU’s list of criminal offenses.

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