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S.Korea’s Yoon says N.Korea poses threats but door open for talks

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5/5

© Reuters. South Korean President Yoon Suk-yeol takes an oath during his inauguration in front of the National Assembly in Seoul, South Korea, May 10, 2022. Jeon Heon-Kyun /Pool via REUTERS

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By Hyonhee Shin

SEOUL (Reuters) -South Korea’s new president, Yoon Suk-yeol, said on Tuesday that North Korea’s weapons programmes pose a threat but that he is ready to provide an “audacious” economic plan if the North is committed to denuclearisation.

Yoon gave the remarks in his inauguration speech after being sworn in at a ceremony in front of parliament in Seoul. He won a tight election in March as the standard bearer of the main conservative People Power Party, less than a year after entering politics following a 26-year career as a prosecutor.

Yoon, 61, will face two major problems as he takes office: a belligerent North Korea testing new weapons and inflation threatening to undermine an economic recovery from two years of COVID-19 gloom.

He has signalled a tougher line on North Korea, warning of a preemptive strike if there is a sign of an imminent attack and vowing to strengthen the South’s deterrent capability. But his speech was seen as focused more on his willingness to reopen stalled denuclearisation talks with Pyongyang.

“While North Korea’s nuclear weapon programs are a threat not only to our security and that of Northeast Asia, the door to dialogue will remain open so that we can peacefully resolve this threat,” Yoon said.

“If North Korea genuinely embarks on a process to complete denuclearisation, we are prepared to work with the international community to present an audacious plan that will vastly strengthen North Korea’s economy and improve the quality of life for its people,” he added.

Yoon did not elaborate on his plan to re-engage or provide economic incentives to the North. But his national security adviser, Kim Sung-han, told Reuters during the election campaign that the Yoon government would devise a roadmap in early days in which Pyongyang could quickly earn sanctions relief or economic aid in exchange for denuclearisation measures.

Yoon could face a security crisis if North Korea carries out its first nuclear test in five years, as U.S. and South Korean officials warned, after it broke a 2017 moratorium on long-range missile testing in March.[nS6N2U6020]

‘TROUBLING SPEED OF ANTI-INTELLECTUALISM’

Yoon won the election on a platform of fighting corruption and creating a more level economic playing field amid deepening public frustration with inequality and housing prices, as well as simmering gender and generational rivalry.

South Korea’s inflation hit a more than 13-year high last month as Russia’s invasion of Ukraine sent commodity prices soaring, boosting expectations of more central bank interest rate rises, which could threaten growth prospects.

Yoon did not mention inflation, but cited low growth, rising unemployment and wage gaps as key economic challenges, pledging to address those by focusing on developing science, technology and innovation.

He blamed anti-intellectualism for polarised politics and deepening internal strife, saying it has threatened to undercut democracy and the people’s “sense of community and belonging.”

“The political process which has the responsibility to address and resolve these issues has failed due to a crisis in democracy, and one of the main reasons for such failure is the troubling spread of anti-intellectualism,” he said.

“When we choose to see only what we want to see and hear only what we want to hear … this is what shakes our trust in democracy.”

Yoon formally assumed his duties at midnight on Monday with a bell-tolling ceremony at Bosingak Pavilion in downtown Seoul.

The inauguration will be held on the front lawn of parliament, attended by some 40,000 people.

Some 300 foreign guests included Chinese Vice President Wang Qishan, Japanese Foreign Minister Yoshimasa Hayashi, and Douglas Emhoff, the husband of U.S. Vice President Kamala Harris.

The inauguration has been given the slogan “Again, Republic of Korea! A new country of the people” which reflects Yoon’s commitment to the people and to resolving regional, class and generational divisions and fostering unity, his team said.

After the inauguration, Yoon moved to a new office at a former defence ministry building inside a sprawling compound.

He has moved the presidential office and residence from the traditional Blue House under a plan, that is estimated will end up costing $40 million, criticised by outgoing President Moon Jae-in as rushed and a national security risk.

Economy

Dollar slips from 2-decade highs; yuan falls on weak China data

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© Reuters. FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic

By Sinéad Carew

NEW YORK (Reuters) – The U.S. dollar index was lower on Monday after hitting a 20-year peak last week, with the global economy in focus after weak economic data from China highlighted worries about the prospects for a global slowdown.

Creating a risk-off mood on Monday, China’s retail and factory activity fell sharply in April as extensive COVID-19 lockdowns confined workers and consumers to their homes. But Shanghai did set out plans for the return to more normal life from June 1.

Following the release of China’s data, Bipan Rai, North America head of FX Strategy at CIBC Capital Markets, said trading was focused on macro economic data on Monday.

“It’s important to highlight that the risks are towards a stronger dollar and primarily, that’s because if you look at the macro economic climate, the fundamentals don’t look good. From a risk-off perspective that should still support the dollar against most currencies,” Rai said.

But he said the greenback was consolidating after its recent strength and that more range-bound trading sessions were possible: “It makes sense for some period of consolidation before the next leg higher.”

Trading in the dollar may be muted partly because a lot of bad news has already been priced in but also because investors are waiting for events such as the U.S. retail sales data release and a public appearance by Fed Chair Jerome Powell both scheduled for Tuesday, according to Mazen Issa, senior FX strategist at TD Securities. [nL2N2X52F6]

Still Issa said he doesn’t “think we’re in a market where we’re going to see the dollar weaken … It’s going to take a lot to get investors out of the dollar.”

The euro was pulled from its earlier lows after European Central Bank policymaker Francois Villeroy de Galhau said the common currency’s weakness could threaten the ECB’s efforts to steer inflation towards its target.

The Australian dollar, which is highly exposed to the Chinese economy, reversed course as the day wore on and was last up against the dollar after falling as much as 0.9%.

The dollar index was last down 0.37% at 104.16, after briefly crossing the 105 level on Friday – its highest level since December 2002, after six successive weeks of gains. Weekly positioning data showed that investors had built their long dollar bets.

The euro was up 0.26% at $1.0438 but not far from last week’s low of $1.0354, its lowest level since early 2017. Analysts see $1.0340 as a crucial level of euro support.

HSBC strategists expect the euro to fall to parity against the dollar in the coming year. “Much weaker growth and much higher inflation leave the ECB facing one of the toughest policy challenges in G10 (central banks),” they said.

Crypto markets, which trade around the clock, had a quiet weekend after turmoil last week driven by TerraUSD, a so-called stablecoin, which broke its dollar peg. An affiliate of the company behind TerraUSD said it had spent the bulk of its reserves trying to defend its dollar peg and would use the remainder to try to compensate some users who had lost out.

Bitcoin was last trading at around $29,881, down more than 4%, after having dropped to $25,400 on Thursday, its lowest mark since December 2020.

Currency bid prices at 3:03PM (1903 GMT)

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Economy

Taliban dissolve Afghanistan’s Human Rights Commission, other key bodies

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© Reuters. FILE PHOTO: An Afghan woman walks on a street in Kabul, Afghanistan, May 9, 2022. REUTERS/Ali Khara/File Photo

By Mohammad Yunus Yawar

KABUL (Reuters) – Taliban authorities in Afghanistan dissolved five key departments of the former U.S.-backed government, including the country’s Human Rights Commission, deeming them unnecessary in the face of a financial crunch, an official said on Monday.

Afghanistan faces a budget deficit of 44 billion Afghanis ($501 million) this financial year, Taliban authorities said on Saturday as they announced their first annual national budget since taking over the war-torn country last August.

“Because these departments were not deemed necessary and were not included in the budget, they have been dissolved,” Innamullah Samangani, the Taliban government’s deputy spokesman, told Reuters.

Also dissolved was the High Council for National Reconciliation (HCNR), the once high-powered National Security Council, and the commission for overseeing the implementation of the Afghan constitution.

The HCNR was last headed by former Afghan President Abdullah Abdullah, and was working to negotiate a peace between the U.S.-backed government of former President Ashraf Ghani and the then-insurgent Taliban.

In August 2021, 20 years after invading Afghanistan, foreign forces withdrew from the country leading to the collapse of the government and a Taliban takeover.

Samangani said the national budget was “based on objective facts” and intended only for departments that had been active and productive.

He added that the bodies could be reactivated in the future “if needed”.

The Taliban ruled Afghanistan from 1996 to 2001 with an iron fist and implemented a harsh version of Islamic rule, including banning women from education and work. After taking over last year, the Taliban assured the world they would be more moderate.

However, they are yet to allow older girls to restart education, and have also introduced rules that mandate that women and girls wear veils and requiring them to have male relatives accompany them in public places.

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Economy

U.S. SEC chair says much to be done to protect crypto investors

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© Reuters. FILE PHOTO: Representations of virtual cryptocurrencies are placed on U.S. dollar banknotes in this illustration taken November 28, 2021. REUTERS/Dado Ruvic

2/2

By John McCrank

(Reuters) – Cryptocurrency assets are highly speculative and investors in them need more protections or they could lose trust in the markets, Gary Gensler, chair of the U.S. Securities and Exchange Commission, said on Monday.

Generally, people who buy cryptocurrencies do not get the disclosures they get when they make other asset purchases around things like whether the trading platform they are using is actually trading against them, or whether they actually own the assets they store in digital wallets, Gensler said.

“We have this basic bargain: You the investing public can make your choices about the risk you take, but there is supposed to be full and fair disclosure, and people are not supposed to lie to you,” he said at the Financial Industry Regulatory Authority’s annual conference in Washington.

His comments came after last week’s spectacular collapse of TerraUSD, a so-called stablecoin that lost its 1-to-1 dollar peg.

The token’s crash sent cryptocurrencies tumbling, a slide that resumed on Monday, as bitcoin erased the gains it had eked out over the weekend to trade under $30,000, far below its Nov. 10 record of $69,000.

While crypto markets are thought of as decentralized, the reality is that most activity occurs on a handful of trading platforms, which, along with token issuers, need to work with the SEC to improve industry rules and disclosures, Gensler said.

He pointed to basic market principles like, “anti-fraud, anti-manipulation, making sure there’s not front-running, making sure an order book is actually real and not made up.”

The SEC will continue to be “a cop on the beat,” while working with the Commodity Futures Trading Commission to ensure all cryptocurrencies are covered, Gensler said.

“There’s a lot to be done here, and in the meantime the investing public is not that well protected,” he said.

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