Global Economy LIVE: Yen falls 146 against dollar, UK economy shrinks 0.3% in August

The International Monetary Fund (IMF) downgraded its outlook for the global economy next year based on the effects of the war in Ukraine. “In short, the worst is yet to come, and for many people 2023 will feel like a recession,” IMF Chief Economist Pierre-Olivier Gourinchas stated.

Sterling has recovered strongly today, after sliding last night. The pound rose 1% to $1.1097 a few minutes ago, and is now trading at $1.1062, up 0.9%.

On Wednesday, the industry chamber PHDCCI said that there are expecting the Indian economy to grow at 6% to 7% during the current financial year.

According to the new president of the chamber Saket Dalmia, the production has bounced back and the demand in the country is rising too. He added, "We are focusing on export of 75 products to 75 potential countries in 75 months which will help India achieve a trade target of USD 750 billion by 2027."

This comes a day after the International Monetary Fund (IMF) cut India’s economic growth forecast to 6.8% in 2022. Furthermore, the Reserve Bank of India (RBI) has also reduced the economic growth projection for FY23 to 7% from 7.2%. 

On Wednesday, the British pound whipsawed amid mixed signals from the BoE about the emergency bond-buying package. 

The currency initially fell when the central bank reiterated that it would end its emergency bond-buying programme as scheduled on Friday, but more or less rebounded later.  

However, The Financial Times citing anonymous sources said that the BoE has privately told its bankers that they might extend the Friday deadline depending on the market conditions. 

Following this report, the British pound rose to $1.106 from $1.0922 during Asia’s morning trade. 

A series of rate increases by the Reserve Bank of India this year to combat rising inflation will help boost banks' net interest margins, but the gain will be limited since funding costs will grow more quickly than loan rates, said Moody's Investors Service.

Despite the fact that India's economic development may decrease, Moody's said in a note that it had a better growth outlook than its competitors.

According to the ratings agency, losses on banks' holdings of government securities would also limit their profitability if yields increased.

Since its first unexpected mid-meeting rate increase in May, the RBI has increased rates by a total of 190 basis points, and additional increases are likely in the works, reports Reuters.

Oil futures recouped some losses on Wednesday after dropping by 2 per cent in the previous session, supported by supply worries stemming from OPEC+ production cuts, although a stronger dollar weighed on market sentiment. Brent crude futures were down 2 cents, or 0.02 per cent, to $94.27 a barrel by 0727 GMT after hitting a session low of $93.33 a barrel.

Latest key figures as per AFP are as follows:

Pound/dollar: Up at $1.1004 from $1.0972 Tuesday (October 11)

Dollar/yen: Up at 146.16 yen from 145.83 yen on Tuesday (October 11)

Euro/dollar: Up at $0.9727 from $0.9709

Bank of Korea (BOK) raised interest rates by 50 basis points or 3 per cent as the authorities witness rising inflation in the country, caused by surging US dollars. This recent hike brought total hike rate to 250 points. 

Tokyo stocks ended flat on Wednesday. 

The benchmark Nikkei 225 index inched down 0.02 percent, or 4.42 points, to end at 26,396.83, while the broader Topix index slipped 0.12 percent, or 2.24 points, to 1,869.00.

The official figures released on Wednesday showed that the British economy shrank in August after sluggish growth the previous month. 

Gross domestic product shrank by 0.3 per cent in August after a downwardly-revised expansion of 0.1 per cent in July, the Office for National Statistics said in a statement. 

An attorney for investors suing Credit Suisse told a jury in US court that chats between traders prove the world's largest banks colluded to fix prices in the foreign exchange market between 2007 and 2013. 

Watch this report: 

Russia's energy exports seem to be helping the country survive Western sanctions brought on by the onslaught against Ukraine. This comes after claims that the Russian economy may face multiple long-term challenges. 

Moscow claims that employment is almost at capacity and that inflation is decreasing, defying the worst predictions of many financial experts. 

Holiday spending during China's Golden Week has plunged to its lowest level in seven years, as broad Covid curbs discouraged people from travelling or spending. 

Watch this report: 

In the early trade on Wednesday, the rupee depreciated 14 paise to 82.35 against the US dollar as a result of the US dollar's strengthening and persistent outflows of foreign funds. 

On Wednesday (October 12), as traders prepared for US inflation data and its impacts, the dollar reached a new 24-year high versus the yen, moving above levels that had triggered intervention by Japanese officials last month. 

In Asian trading, the dollar gained 0.3% to 146.30 yen after reaching a high of 146.35, which has not been reached since August 1998. 

Japanese officials staged their first yen-buying intervention since 1998 on Sept. 22, when the yen tumbled to as low as 145.90 per dollar.