The Turkish central bank is facing growing pressure to decisively hike interest rates at a meeting Thursday to defend an ailing currency and rein in double-digit inflation.  But concerns remain over President Recep Tayyip Erdogan’s grip on monetary policy.

The Turkish lira has fallen more than 40 percent, much of it in the past few weeks, fueling rampant inflation.  

”Just to keep up with the acceleration of inflation the central bank needs to hike by more than 400 basis points,” said chief economist Inan Demir of Nomura International, “This is only to keep up with the acceleration in inflation, since last formal hike.  If we consider the prospect of a further acceleration inflation outlook, perhaps more is needed [interest rate hikes],” he added.

Demir says what has accelerated heavy lira falls are investor concerns the central bank can’t act decisively because of Erdogan, who has sweeping executive powers.  He has repeatedly voiced opposition to high-interest rates, which he claims “enslaves poor people.”

In a statement, this month the central bank declared it was ready to alter monetary policy to rein in inflation.  Financial markets interpreted the comment as the bank preparing to hike rates aggressively.  “The statement suggests we will see some action,” Demir said, “but I am not very confident the policy response will be as large as the markets need.”

This week, Finance Minister Berat Albayrak sought to talk up the Turkish economy, claiming the financial system was already “correcting itself.”  

Albayrak is the president’s son in law and widely seen as having the inside track with  Erdogan.  Some analysts suggest Albayrak’s positive statements may be seeking to play down the need for a significant increase in interest rate.

Misjudging international investors expectations could be costly.  “There will be massive sell off to the point of a panic if they don’t raise rates enough,” said political analyst Atilla Yesilada of Global Source Partners, “the sky’s limit, there is no way to make a rational forecast on the exchange rate, because we really don’t know when it stops,” he added.

Analysts warn a further decline in the lira risks undermining the Turkish public’s faith in the currency will lead them to convert their savings into dollars, adding pressure to the currency and risking the economy falling into a vicious cycle.

“Lira weakness feeds into inflation,” Demir said, “insufficient action by the central bank leads to deposit dollarization, which feeds into lira weakness, and that feeds into inflation again.”

“Past experiences in Turkey show, a sharp slow down of the economy followed after sharp depreciation,” Demir said, “the GDP [Gross Domestic Product – the size of the economy] growth rate [has] dropped off by 11 to 13 percent, that is the big risk we are looking at for Turkey.”

International banks are forecasting the Turkish economy heading into recession next year.  The timing for Erdogan could not be worse.  In March, Turkey holds critical local elections for the country’s biggest cities, one of the few places where opposition parties still have the opportunity to exercise power.  Erdogan has made it a priority to win the March polls.

Erdogan is likely to be aware, with many of Turkey’s big companies heavily indebted, a further hike in interest rates also risks driving the economy further into recession.

But interest rate hikes on their own may not be enough to address investor concerns and restore stability to the currency.  “A package of reforms is needed,” Demir said.

The World Bank has warned Turkey to rein in massive state building projects it says are overheating the economy and stoking inflation. Investors are also calling for the central bank to be independent and free of political interference.  Analysts say Ankara will also need to repair relations with Washington.

August’s crash in the lira was triggered by the imposition of Turkish sanctions by U.S. President Donald Trump over the detention of American Pastor Andrew Brunson, who is on trial for terrorism charges that Washington claims are politically motivated.

“To stop inflation they [Turkish central bank] will need at least 500 basis points or possibly like Argentina 1,000 basis points interest rate hike,” analyst Yesilada said.

“But is the problem [currency weakness] lack of confidence in running the economy or Father Brunson,” he added.  “If it’s Brunson then raising rates will hurt the economy, but not do much to stabilize the currency.  So maybe it’s better to wait until Mr. Erdogan decides to end this crisis with the United States.”

For now, Erdogan appears to be ready to tough it out, insisting Brunson should stand trial and that lira weakness is part of an international conspiracy against Turkey.
…

The Turkish central bank is facing growing pressure to decisively hike interest rates at a meeting Thursday to defend an ailing currency and rein in double-digit inflation.  But concerns remain over President Recep Tayyip Erdogan’s grip on monetary policy.

The Turkish lira has fallen more than 40 percent, much of it in the past few weeks, fueling rampant inflation.  

”Just to keep up with the acceleration of inflation the central bank needs to hike by more than 400 basis points,” said chief economist Inan Demir of Nomura International, “This is only to keep up with the acceleration in inflation, since last formal hike.  If we consider the prospect of a further acceleration inflation outlook, perhaps more is needed [interest rate hikes],” he added.

Demir says what has accelerated heavy lira falls are investor concerns the central bank can’t act decisively because of Erdogan, who has sweeping executive powers.  He has repeatedly voiced opposition to high-interest rates, which he claims “enslaves poor people.”

In a statement, this month the central bank declared it was ready to alter monetary policy to rein in inflation.  Financial markets interpreted the comment as the bank preparing to hike rates aggressively.  “The statement suggests we will see some action,” Demir said, “but I am not very confident the policy response will be as large as the markets need.”

This week, Finance Minister Berat Albayrak sought to talk up the Turkish economy, claiming the financial system was already “correcting itself.”  

Albayrak is the president’s son in law and widely seen as having the inside track with  Erdogan.  Some analysts suggest Albayrak’s positive statements may be seeking to play down the need for a significant increase in interest rate.

Misjudging international investors expectations could be costly.  “There will be massive sell off to the point of a panic if they don’t raise rates enough,” said political analyst Atilla Yesilada of Global Source Partners, “the sky’s limit, there is no way to make a rational forecast on the exchange rate, because we really don’t know when it stops,” he added.

Analysts warn a further decline in the lira risks undermining the Turkish public’s faith in the currency will lead them to convert their savings into dollars, adding pressure to the currency and risking the economy falling into a vicious cycle.

“Lira weakness feeds into inflation,” Demir said, “insufficient action by the central bank leads to deposit dollarization, which feeds into lira weakness, and that feeds into inflation again.”

“Past experiences in Turkey show, a sharp slow down of the economy followed after sharp depreciation,” Demir said, “the GDP [Gross Domestic Product – the size of the economy] growth rate [has] dropped off by 11 to 13 percent, that is the big risk we are looking at for Turkey.”

International banks are forecasting the Turkish economy heading into recession next year.  The timing for Erdogan could not be worse.  In March, Turkey holds critical local elections for the country’s biggest cities, one of the few places where opposition parties still have the opportunity to exercise power.  Erdogan has made it a priority to win the March polls.

Erdogan is likely to be aware, with many of Turkey’s big companies heavily indebted, a further hike in interest rates also risks driving the economy further into recession.

But interest rate hikes on their own may not be enough to address investor concerns and restore stability to the currency.  “A package of reforms is needed,” Demir said.

The World Bank has warned Turkey to rein in massive state building projects it says are overheating the economy and stoking inflation. Investors are also calling for the central bank to be independent and free of political interference.  Analysts say Ankara will also need to repair relations with Washington.

August’s crash in the lira was triggered by the imposition of Turkish sanctions by U.S. President Donald Trump over the detention of American Pastor Andrew Brunson, who is on trial for terrorism charges that Washington claims are politically motivated.

“To stop inflation they [Turkish central bank] will need at least 500 basis points or possibly like Argentina 1,000 basis points interest rate hike,” analyst Yesilada said.

“But is the problem [currency weakness] lack of confidence in running the economy or Father Brunson,” he added.  “If it’s Brunson then raising rates will hurt the economy, but not do much to stabilize the currency.  So maybe it’s better to wait until Mr. Erdogan decides to end this crisis with the United States.”

For now, Erdogan appears to be ready to tough it out, insisting Brunson should stand trial and that lira weakness is part of an international conspiracy against Turkey.
…

South Korea’s unemployment rate hit an eight-year high in August as mandatory minimum wages rose, adding to economic policy frustrations and political challenges for President Moon Jae-in whose approval rating is now at its lowest since inauguration.

The unemployment rate rose to 4.2 percent in August from 3.8 percent in July in seasonally adjusted terms as the number of unemployed rose by 134,000 people from a year earlier.

This was the labor market’s worst performance since January 2010, when the economy was still reeling from the global financial crisis, when 10,000 jobs were lost.

Finance Minister Kim Dong-yeon said on Wednesday the government will need to adjust its wage policies, signaling some future soft-pedaling in the drive to raise minimum wages.

“(The government) will discuss slowing the speed of minimum wage hikes with the ruling party and the presidential office,” Kim Dong-yeon told a policy meeting in Seoul, adding he did not expect a short-term recovery in the job market.

Experts say the uproar over jobs could also cost Moon considerable political capital as he pursues closer ties with Pyongyang, as any good news from an inter-Korean summit may not be enough to offset public discontent over the lack of jobs and soaring housing prices.

More than 60 percent of respondents in a Gallup Korea survey criticized Moon’s handling of the economy, including his ‘inability to improve the livelihoods of ordinary citizens’ and ‘minimum wage increases.’

The jobs report showed the labor-intensive retail and accommodation sector, which lost 202,000 jobs in August from a year earlier, was the hardest hit.

A total 105,000 jobs were lost from manufacturing industries, the report said.

However, the agriculture, construction and transport sectors saw a rise in the number of employed, partly offsetting the rise in the number of workers laid off.

The overall number of employed people rose by just 3,000 – also the worst since January 2010.

Each month’s worsening jobs report has sparked a strong public backlash, with President Moon Jae-in’s approval rating falling below 50 percent for the first time on Sept. 7.

A weekly Gallup Korea survey released on Friday showed Moon’s support fell 4 percentage points to 49 percent, the lowest since he took office in May 2017.

“At this rate, we may not see any gains in the number of employed in September or the month after that,” said Oh Suk-tae, an economist at Societe Generale.

Oh said economists at the Korea Development Institute, a state-run think tank, believed this year’s 16 percent increase in the minimum wage – the biggest jump in nearly two decades – was discouraging employers from hiring.

“The president should be held responsible for this, nothing could change the trend unless the boss changes his mind about minimum wage hikes,” Oh said.

The workforce participation rate declined slightly to 63.4 percent from 63.6 percent in July, as more jobs were lost than created, Statistics Korea data showed.

 
…

South Korea’s unemployment rate hit an eight-year high in August as mandatory minimum wages rose, adding to economic policy frustrations and political challenges for President Moon Jae-in whose approval rating is now at its lowest since inauguration.

The unemployment rate rose to 4.2 percent in August from 3.8 percent in July in seasonally adjusted terms as the number of unemployed rose by 134,000 people from a year earlier.

This was the labor market’s worst performance since January 2010, when the economy was still reeling from the global financial crisis, when 10,000 jobs were lost.

Finance Minister Kim Dong-yeon said on Wednesday the government will need to adjust its wage policies, signaling some future soft-pedaling in the drive to raise minimum wages.

“(The government) will discuss slowing the speed of minimum wage hikes with the ruling party and the presidential office,” Kim Dong-yeon told a policy meeting in Seoul, adding he did not expect a short-term recovery in the job market.

Experts say the uproar over jobs could also cost Moon considerable political capital as he pursues closer ties with Pyongyang, as any good news from an inter-Korean summit may not be enough to offset public discontent over the lack of jobs and soaring housing prices.

More than 60 percent of respondents in a Gallup Korea survey criticized Moon’s handling of the economy, including his ‘inability to improve the livelihoods of ordinary citizens’ and ‘minimum wage increases.’

The jobs report showed the labor-intensive retail and accommodation sector, which lost 202,000 jobs in August from a year earlier, was the hardest hit.

A total 105,000 jobs were lost from manufacturing industries, the report said.

However, the agriculture, construction and transport sectors saw a rise in the number of employed, partly offsetting the rise in the number of workers laid off.

The overall number of employed people rose by just 3,000 – also the worst since January 2010.

Each month’s worsening jobs report has sparked a strong public backlash, with President Moon Jae-in’s approval rating falling below 50 percent for the first time on Sept. 7.

A weekly Gallup Korea survey released on Friday showed Moon’s support fell 4 percentage points to 49 percent, the lowest since he took office in May 2017.

“At this rate, we may not see any gains in the number of employed in September or the month after that,” said Oh Suk-tae, an economist at Societe Generale.

Oh said economists at the Korea Development Institute, a state-run think tank, believed this year’s 16 percent increase in the minimum wage – the biggest jump in nearly two decades – was discouraging employers from hiring.

“The president should be held responsible for this, nothing could change the trend unless the boss changes his mind about minimum wage hikes,” Oh said.

The workforce participation rate declined slightly to 63.4 percent from 63.6 percent in July, as more jobs were lost than created, Statistics Korea data showed.

 
…

In Iraq, a major Middle East grain buyer, will cut the irrigated area it plants with wheat by half in the 2018-2019 growing season as water shortages grip the country, a government official told Reuters.

Drought and dwindling river flows have already forced Iraq to ban farmers from planting rice and other water-intensive summer crops. Water scarcity was one of the issues galvanizing street protests in the country this year.

An investigation by Reuters in July revealed how Nineveh, Iraq’s former breadbasket, was becoming a dust bowl after drought and years of war.

This latest move is likely to significantly raise wheat imports.

Deputy Agriculture Minister Mahdi al-Qaisi said irrigated land grown with winter grains, namely wheat and barley, would be halved.

“The shortage of water resources, climate change and drought are the main reasons behind this decision, our expectation is the area will shrink to half,” Qaisi said in an interview.

Iraq’s agricultural plan included 1.6 million hectares of wheat last 2017-2018 season. Of those, around one million hectares were irrigated and the rest relied on rainfall.

“We expect that the irrigated wheat area falls to half of what it was last year,” Qaisi said, implying plantings of 500,000 hectares.

The cut is expected to lower the country’s wheat production by at least 20 percent, implying a significantly higher import bill Fadel al-Zubi, the U.N. Food and Agriculture Organization Iraq Representative said.

Iraq already has an import gap of more than one million tonnes per year, with annual demand at around 4.5 million to 5 million tons.

“Imports will go up as a result of cutting down on production and also as a result of population increase,” Zubi said but he declined to give an exact estimate for size of imports next year.

Haidar al-Abbadi, the head of Iraq’s General Union of Farmers, confirmed the cut saying water shortage was the main reason behind it.

“Irrigated wheat will reach 2 million donhums (500,000 hectares) down from around 4 million last season,” he said.

Qaisi said it was too early to tell the area of land that could be grown with wheat relying on rainfall this season but he hoped it would make up for some of the shortfall.

“We will follow a few programs to increase the crop, like raising yields and bringing Nineveh province back to more production … that can partly make up for shortfall,” he said.

But the rains failed Iraq’s Nineveh last season with the government procuring a little over 100,000 tonnes of wheat this year from a region that used to produce close to one million tons annually before Islamic State took over in 2014.

Iraq imports wheat to supply a rationing program created in 1991 to combat U.N. economic sanctions, including flour, cooking oil, rice, sugar and baby milk formula.

The trade ministry is responsible for procuring strategic commodities, including wheat, for the program.

Trade ministry officials were not immediately available for comment on a potential rise in imports.
…

In Iraq, a major Middle East grain buyer, will cut the irrigated area it plants with wheat by half in the 2018-2019 growing season as water shortages grip the country, a government official told Reuters.

Drought and dwindling river flows have already forced Iraq to ban farmers from planting rice and other water-intensive summer crops. Water scarcity was one of the issues galvanizing street protests in the country this year.

An investigation by Reuters in July revealed how Nineveh, Iraq’s former breadbasket, was becoming a dust bowl after drought and years of war.

This latest move is likely to significantly raise wheat imports.

Deputy Agriculture Minister Mahdi al-Qaisi said irrigated land grown with winter grains, namely wheat and barley, would be halved.

“The shortage of water resources, climate change and drought are the main reasons behind this decision, our expectation is the area will shrink to half,” Qaisi said in an interview.

Iraq’s agricultural plan included 1.6 million hectares of wheat last 2017-2018 season. Of those, around one million hectares were irrigated and the rest relied on rainfall.

“We expect that the irrigated wheat area falls to half of what it was last year,” Qaisi said, implying plantings of 500,000 hectares.

The cut is expected to lower the country’s wheat production by at least 20 percent, implying a significantly higher import bill Fadel al-Zubi, the U.N. Food and Agriculture Organization Iraq Representative said.

Iraq already has an import gap of more than one million tonnes per year, with annual demand at around 4.5 million to 5 million tons.

“Imports will go up as a result of cutting down on production and also as a result of population increase,” Zubi said but he declined to give an exact estimate for size of imports next year.

Haidar al-Abbadi, the head of Iraq’s General Union of Farmers, confirmed the cut saying water shortage was the main reason behind it.

“Irrigated wheat will reach 2 million donhums (500,000 hectares) down from around 4 million last season,” he said.

Qaisi said it was too early to tell the area of land that could be grown with wheat relying on rainfall this season but he hoped it would make up for some of the shortfall.

“We will follow a few programs to increase the crop, like raising yields and bringing Nineveh province back to more production … that can partly make up for shortfall,” he said.

But the rains failed Iraq’s Nineveh last season with the government procuring a little over 100,000 tonnes of wheat this year from a region that used to produce close to one million tons annually before Islamic State took over in 2014.

Iraq imports wheat to supply a rationing program created in 1991 to combat U.N. economic sanctions, including flour, cooking oil, rice, sugar and baby milk formula.

The trade ministry is responsible for procuring strategic commodities, including wheat, for the program.

Trade ministry officials were not immediately available for comment on a potential rise in imports.
…

Residents in a Bangkok neighborhood are trying out a renewable energy trading platform that allows them to buy and sell electricity between themselves, signaling the growing popularity of such systems as solar panels get cheaper.

The pilot project in the center of Thailand’s capital is among the world’s largest peer-to-peer renewable energy trading platforms using blockchain, according to the firms involved.

The system has a total generating capacity of 635 KW that can be traded via Bangkok city’s electricity grid between a mall, a school, a dental hospital and an apartment complex.

Commercial operations will begin next month, said David Martin, managing director of Power Ledger, an Australian firm that develops technology for the energy industry and is a partner in the project.

“By enabling trade in renewable energy, the community meets its own energy demands, leading to lower bills for buyers, better prices for sellers, and a smaller carbon footprint for all,” he said.

“It will encourage more consumers to make the switch to renewable energy, as the cost can be offset by selling excess energy to neighbors,” he told the Thomson Reuters Foundation.

Neighborhoods from New York to Melbourne are upending the way power is produced and sold, with solar panels, mini grids and smart meters that can measure when energy is consumed rather than overall consumption.

The World Energy Council predicts that such decentralized energy will grow to about a fourth of the market in 2025 from 5 percent today.

Helping it along is blockchain, the distributed ledger technology that underpins bitcoin currency, which offers a transparent way to handle complex transactions between users, producers, and even traders and utilities.

Blockchain also saves individuals the drudgery of switching between sending power and receiving it, said Martin.

For the pilot in Bangkok’s upmarket Sukhumvit neighborhood, electricity generated by each of the four locations will be initially used within that building. Excess energy can be sold to the others through the trading system.

If there is a surplus from all four, it will be sold to the local energy storage system, and to the grid in the future, said Gloyta Nathalang, a spokeswoman for Thai renewable energy firm BCPG, which installed the meters and solar panels.

Thailand is Southeast Asia’s leading developer of renewable energy, and aims to have it account for 30 percent of final energy consumption by 2036.

The energy ministry has encouraged community renewable energy projects to reduce fossil fuel usage, and the regulator is drafting new rules to permit the trade of energy.

The Bangkok Metropolitan Electricity Authority forecasts “peer-to-peer energy trading to become mainstream for power generation in the long run,” a spokesman told reporters.

BCPG, in partnership with the Thai real estate developer Sansiri, plans to roll out similar energy trading systems with solar panels and blockchain for a total capacity of 2 MW by 2021, said Gloyta.

“There are opportunities everywhere – not just in cities, but also in islands and remote areas where electricity supply is a challenge,” she said.
…

Residents in a Bangkok neighborhood are trying out a renewable energy trading platform that allows them to buy and sell electricity between themselves, signaling the growing popularity of such systems as solar panels get cheaper.

The pilot project in the center of Thailand’s capital is among the world’s largest peer-to-peer renewable energy trading platforms using blockchain, according to the firms involved.

The system has a total generating capacity of 635 KW that can be traded via Bangkok city’s electricity grid between a mall, a school, a dental hospital and an apartment complex.

Commercial operations will begin next month, said David Martin, managing director of Power Ledger, an Australian firm that develops technology for the energy industry and is a partner in the project.

“By enabling trade in renewable energy, the community meets its own energy demands, leading to lower bills for buyers, better prices for sellers, and a smaller carbon footprint for all,” he said.

“It will encourage more consumers to make the switch to renewable energy, as the cost can be offset by selling excess energy to neighbors,” he told the Thomson Reuters Foundation.

Neighborhoods from New York to Melbourne are upending the way power is produced and sold, with solar panels, mini grids and smart meters that can measure when energy is consumed rather than overall consumption.

The World Energy Council predicts that such decentralized energy will grow to about a fourth of the market in 2025 from 5 percent today.

Helping it along is blockchain, the distributed ledger technology that underpins bitcoin currency, which offers a transparent way to handle complex transactions between users, producers, and even traders and utilities.

Blockchain also saves individuals the drudgery of switching between sending power and receiving it, said Martin.

For the pilot in Bangkok’s upmarket Sukhumvit neighborhood, electricity generated by each of the four locations will be initially used within that building. Excess energy can be sold to the others through the trading system.

If there is a surplus from all four, it will be sold to the local energy storage system, and to the grid in the future, said Gloyta Nathalang, a spokeswoman for Thai renewable energy firm BCPG, which installed the meters and solar panels.

Thailand is Southeast Asia’s leading developer of renewable energy, and aims to have it account for 30 percent of final energy consumption by 2036.

The energy ministry has encouraged community renewable energy projects to reduce fossil fuel usage, and the regulator is drafting new rules to permit the trade of energy.

The Bangkok Metropolitan Electricity Authority forecasts “peer-to-peer energy trading to become mainstream for power generation in the long run,” a spokesman told reporters.

BCPG, in partnership with the Thai real estate developer Sansiri, plans to roll out similar energy trading systems with solar panels and blockchain for a total capacity of 2 MW by 2021, said Gloyta.

“There are opportunities everywhere – not just in cities, but also in islands and remote areas where electricity supply is a challenge,” she said.
…

Policymakers in Indonesia are grappling to deal with a weakened currency, the rupiah, which was valued at just 14,930 per U.S. dollar last week — its lowest point since the 1998 Asian financial crisis. But unlike 20 years ago, when economic turmoil led to major political upheaval in Indonesia, most observers say that Southeast Asia’s largest economy is now far better positioned to endure a poorly performing currency.

The United States Federal Reserve’s planned interest rate hikes have impacted emerging markets worldwide as investors sell assets in countries such as Indonesia in favor of American ones. The Argentine peso and Turkish lira both crashed in late August, crises that sent major shockwaves across developing economies. President Donald Trump’s trade war with Beijing has also seen a devaluation of the Chinese yuan.

These external factors have badly hit the Indonesian rupiah, already one of the weakest currencies in Asia. According to Bloomberg, the rupiah has lost around 9 percent of its value against the greenback during 2018. Like Turkey and Argentina, Indonesia also has a so-called “twin” deficit, meaning it is running both fiscal and current account deficits.

“Indonesia obviously is one of the frontline currencies alongside the Indian rupee and the Philippine peso, these are the three currencies most battered among the regional pack… in the latest turmoil,” said Prakash Sakpal, an economist from ING in Singapore.

Stronger 20 years on

In the late 1990s, the collapse of the rupiah exacerbated a severe economic crisis, which led to the fall of Indonesia’s longtime dictator Suharto.

“We know what we face with the rupiah is a really, really important problem,” the head of Research at the Jakarta-based brokerage and investment management firm Ekuator, David Setyanto, told VOA. “But if you compare with Turkey or Argentina, we are not the same with them because our fundamental economics are much stronger than these two countries.”

Dr. Tommy Soesmanto, an economics lecturer at Griffith University, told VOA that “Indonesians should not be overly concerned with the current situation,” as the economy is in a far stronger position than in 1998. During the Asian Financial Crisis, the rupiah fell from 3000 against the US dollar to 15,000 — a depreciation of some 500 percent from which it never recovered, hovering at around 10,000 per dollar in subsequent years.

Indonesia’s credit rating is now Triple B as opposed to 1998 when it was “considered junk”, Soesmanto said, while the country now has net capital inflow compared with “severe” capital outflow in 1998. Bank Indonesia holds foreign reserves worth some $118 billion compared with just $24 billion back then, allowing it greater leverage to finance debts and imports.

Charu Chanana, Deputy Head of Asia Research at Continuum Economics in Singapore, agreed. “We believe Indonesia is much stronger today fundamentally when compared to 1998,” she wrote in an email. “However, as external headwinds persist, we believe Indonesia’s currency will remain in the firing line due to a weak external position and high foreign exposure in the stock and bond markets.”

“I think it’s a little bit overblown,” said Sakpal of ING when asked about the severity of the currency crisis, noting that “economic fundamentals for most of the regional economies are still solid.”

“In Indonesia, growth has accelerated in the second quarter to 5.3 percent, which was the fastest in many quarters… all the recent turmoil is driven by external factors,” he said.

Unite for the rupiah

Bank Indonesia, the central bank, has responded aggressively to the latest currency problems by raising interest rates four times since May. For months it has also sold foreign currency and bought sovereign bonds in a bid to stabilize the currency.

The government, meanwhile, has now imposed higher import taxes of up to 10 percent on some 1000 consumer goods, including cosmetics and luxury cars.

“This is a good chance for local producers to penetrate our own domestic market that is usually filled with imported goods,” Indonesia’s Finance Minister Sri Mulyani Indrawati said last week.

The weak rupiah is likely to hit Indonesia’s manufacturing sector hardest, and accordingly, the government has imposed lower tax hikes of 2.5 percent on imported raw materials. The energy and resources ministry also announced it would delay $25 billion worth of power projects, aimed at producing an additional 35 gigawatts of electricity, which is expected to save $8 to $10 billion in import costs.

“We can come together for the success of the #AsianGames2018,” read a Facebook post from the Finance Ministry last week, accompanied by infographics urging Indonesians to buy local products, reduce their consumption of imports, change U.S. dollars for rupiah, travel within Indonesia and invest locally. “We can also #BersatuUntukRupiah [unite for the rupiah].”

 
…

Policymakers in Indonesia are grappling to deal with a weakened currency, the rupiah, which was valued at just 14,930 per U.S. dollar last week — its lowest point since the 1998 Asian financial crisis. But unlike 20 years ago, when economic turmoil led to major political upheaval in Indonesia, most observers say that Southeast Asia’s largest economy is now far better positioned to endure a poorly performing currency.

The United States Federal Reserve’s planned interest rate hikes have impacted emerging markets worldwide as investors sell assets in countries such as Indonesia in favor of American ones. The Argentine peso and Turkish lira both crashed in late August, crises that sent major shockwaves across developing economies. President Donald Trump’s trade war with Beijing has also seen a devaluation of the Chinese yuan.

These external factors have badly hit the Indonesian rupiah, already one of the weakest currencies in Asia. According to Bloomberg, the rupiah has lost around 9 percent of its value against the greenback during 2018. Like Turkey and Argentina, Indonesia also has a so-called “twin” deficit, meaning it is running both fiscal and current account deficits.

“Indonesia obviously is one of the frontline currencies alongside the Indian rupee and the Philippine peso, these are the three currencies most battered among the regional pack… in the latest turmoil,” said Prakash Sakpal, an economist from ING in Singapore.

Stronger 20 years on

In the late 1990s, the collapse of the rupiah exacerbated a severe economic crisis, which led to the fall of Indonesia’s longtime dictator Suharto.

“We know what we face with the rupiah is a really, really important problem,” the head of Research at the Jakarta-based brokerage and investment management firm Ekuator, David Setyanto, told VOA. “But if you compare with Turkey or Argentina, we are not the same with them because our fundamental economics are much stronger than these two countries.”

Dr. Tommy Soesmanto, an economics lecturer at Griffith University, told VOA that “Indonesians should not be overly concerned with the current situation,” as the economy is in a far stronger position than in 1998. During the Asian Financial Crisis, the rupiah fell from 3000 against the US dollar to 15,000 — a depreciation of some 500 percent from which it never recovered, hovering at around 10,000 per dollar in subsequent years.

Indonesia’s credit rating is now Triple B as opposed to 1998 when it was “considered junk”, Soesmanto said, while the country now has net capital inflow compared with “severe” capital outflow in 1998. Bank Indonesia holds foreign reserves worth some $118 billion compared with just $24 billion back then, allowing it greater leverage to finance debts and imports.

Charu Chanana, Deputy Head of Asia Research at Continuum Economics in Singapore, agreed. “We believe Indonesia is much stronger today fundamentally when compared to 1998,” she wrote in an email. “However, as external headwinds persist, we believe Indonesia’s currency will remain in the firing line due to a weak external position and high foreign exposure in the stock and bond markets.”

“I think it’s a little bit overblown,” said Sakpal of ING when asked about the severity of the currency crisis, noting that “economic fundamentals for most of the regional economies are still solid.”

“In Indonesia, growth has accelerated in the second quarter to 5.3 percent, which was the fastest in many quarters… all the recent turmoil is driven by external factors,” he said.

Unite for the rupiah

Bank Indonesia, the central bank, has responded aggressively to the latest currency problems by raising interest rates four times since May. For months it has also sold foreign currency and bought sovereign bonds in a bid to stabilize the currency.

The government, meanwhile, has now imposed higher import taxes of up to 10 percent on some 1000 consumer goods, including cosmetics and luxury cars.

“This is a good chance for local producers to penetrate our own domestic market that is usually filled with imported goods,” Indonesia’s Finance Minister Sri Mulyani Indrawati said last week.

The weak rupiah is likely to hit Indonesia’s manufacturing sector hardest, and accordingly, the government has imposed lower tax hikes of 2.5 percent on imported raw materials. The energy and resources ministry also announced it would delay $25 billion worth of power projects, aimed at producing an additional 35 gigawatts of electricity, which is expected to save $8 to $10 billion in import costs.

“We can come together for the success of the #AsianGames2018,” read a Facebook post from the Finance Ministry last week, accompanied by infographics urging Indonesians to buy local products, reduce their consumption of imports, change U.S. dollars for rupiah, travel within Indonesia and invest locally. “We can also #BersatuUntukRupiah [unite for the rupiah].”

 
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United States is a land of opportunity. We have all heard this saying, but what does it mean and how does it happen? A Kurdish-American family in the state of Virginia is seeing how their 13-year-old son has made the most of a unique opportunity. VOA’s Yahya Barzinji recently visited this family and filed this report narrated by Bezhan Hamdard.
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Japan will once again try to get the international ban on whale hunting overturned at the global conference of the International Whaling Commission (IWC), which opened in Brazil on Monday.

The proposal presented by Japan says, “Science is clear: there are certain species of whales whose population is healthy enough to be harvested sustainably.”

While the Japanese proposal is supported by other traditional whaling countries, such as Iceland and Norway, it faces fierce opposition from countries such as Australia and Brazil, and the European Union, as well as from numerous environmental groups.

Japan, which has pushed for an amendment to the ban for years, accuses the IWC of siding with anti-whaling nations rather than trying to reach a compromise between conservationists and whalers.

Whale meat has been a a traditional part of the Japanese diet for centuries.

After the IWC adopted a ban on commercial whaling in 1982, Japan, Norway and Iceland continued to hunt whales. Tokyo justified the practice as a part of scientific research, which was allowed by the moratorium.

But in 2014, the International Court of Justice ruled that Japan’s whaling practice had no scientific basis, but instead it was a way to keep the industry alive.

This year, Japan wants to establish a Sustainable Whaling Committee to oversee the hunting of healthy whale populations for commercial purposes.

But environmentalists say allowing even limited hunting of the mammoth mammals will only again push the species to the brink of extinction. Brazil introduced  proposal Monday that says hunting whales is “no longer a necessary economic activity.”

Australia has vowed to lead the charge against reinstatement of commercial whaling and it has the strong backing of New Zealand, the European Union and the United States.

Japan’s proposal will likely be put to a vote sometime before the conference ends on Sept. 14.
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Japan will once again try to get the international ban on whale hunting overturned at the global conference of the International Whaling Commission (IWC), which opened in Brazil on Monday.

The proposal presented by Japan says, “Science is clear: there are certain species of whales whose population is healthy enough to be harvested sustainably.”

While the Japanese proposal is supported by other traditional whaling countries, such as Iceland and Norway, it faces fierce opposition from countries such as Australia and Brazil, and the European Union, as well as from numerous environmental groups.

Japan, which has pushed for an amendment to the ban for years, accuses the IWC of siding with anti-whaling nations rather than trying to reach a compromise between conservationists and whalers.

Whale meat has been a a traditional part of the Japanese diet for centuries.

After the IWC adopted a ban on commercial whaling in 1982, Japan, Norway and Iceland continued to hunt whales. Tokyo justified the practice as a part of scientific research, which was allowed by the moratorium.

But in 2014, the International Court of Justice ruled that Japan’s whaling practice had no scientific basis, but instead it was a way to keep the industry alive.

This year, Japan wants to establish a Sustainable Whaling Committee to oversee the hunting of healthy whale populations for commercial purposes.

But environmentalists say allowing even limited hunting of the mammoth mammals will only again push the species to the brink of extinction. Brazil introduced  proposal Monday that says hunting whales is “no longer a necessary economic activity.”

Australia has vowed to lead the charge against reinstatement of commercial whaling and it has the strong backing of New Zealand, the European Union and the United States.

Japan’s proposal will likely be put to a vote sometime before the conference ends on Sept. 14.
…

Zimbabwe’s new finance minister has described his task of reviving the country’s moribund economy as extraordinarily difficult, but he is hopeful of success.

“It’s enormous, it is Herculean. I am very energetic and I am very up to the task. I am starting now, but in the process what I will do is listen,” said Finance Minister Mthuli Ncube, a former chief economist and vice president of the African Development Bank.

He spoke to VOA at the State House after being sworn into office Monday by President Emmerson Mnangagwa.

Nearby, 21-year-old Isaac Madyira is jobless. He dropped out of school seven years ago after his also parents, also unemployed, failed to pay the fees. He now sells cash, which has been in acute short supply for the past two years in Zimbabwe. He says he expects change from the new Cabinet Mnangagwa put into office Monday.

“What we want is corruption to be get rid of. We want development as quickly as possible. I think [on] the issue of money, we need our own currency which is valued as compared to other currencies, then bond notes must go [the last two words in Shona],” he said.

Zimbabwe started printing bond notes about two years ago to ease cash shortages. They were supposed to trade at par with the U.S. dollar, but on the black market the notes are worth about half as much as a dollar and cash shortages have not ended.

Almost as if Ncube had talked to Madyira, the new finance minister said he has to address the currency issue for Zimbabwe’s economy to get back on track.

“Restoring confidence in the economy, I make sure that international investors are interested in the Zimbabwean economy again,” said Ncube. “I will be rolling [out] a plan on the arrears clearance and the whole debt restructuring process, coupled with that is building credit lines globally. Internally I make that on the expenditure side we live within or means or move towards that. We need to strengthen our tax collection systems. Ultimately we need to have the Zimbabwe dollar that is stable, that people have confidence in. To have a domestic currency, you need to build reserves.”

Zimbabwe abandoned its worthless dollar in 2009 and has been using the U.S. dollar, South African rand and British sterling pound for trading.

An economist for the Labor and Economic Development Research Institute of Zimbabwe, Prosper Chitambara, says the Ncube is a good choice for the job.

“It is a good start. He is someone who is credible, a professional. But what has to be done is to begin real work,” he said. “To roll up his sleeves and begin to implement key fiscal policies that will bring back confidence into the economy. Reining down on recurrent expenditure. In general, what we need are fiscal consolidation reforms that curtail drastically recurrent government expenditure.”

Chitambara says Zimbabwe’s government spends much of its revenue on salaries, leaving social services sectors like education and health in dire need unless Western aid agencies, like USAID, assist. Chitambara says Ncube has to change that if the country is to recover.

 
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Zimbabwe’s new finance minister has described his task of reviving the country’s moribund economy as extraordinarily difficult, but he is hopeful of success.

“It’s enormous, it is Herculean. I am very energetic and I am very up to the task. I am starting now, but in the process what I will do is listen,” said Finance Minister Mthuli Ncube, a former chief economist and vice president of the African Development Bank.

He spoke to VOA at the State House after being sworn into office Monday by President Emmerson Mnangagwa.

Nearby, 21-year-old Isaac Madyira is jobless. He dropped out of school seven years ago after his also parents, also unemployed, failed to pay the fees. He now sells cash, which has been in acute short supply for the past two years in Zimbabwe. He says he expects change from the new Cabinet Mnangagwa put into office Monday.

“What we want is corruption to be get rid of. We want development as quickly as possible. I think [on] the issue of money, we need our own currency which is valued as compared to other currencies, then bond notes must go [the last two words in Shona],” he said.

Zimbabwe started printing bond notes about two years ago to ease cash shortages. They were supposed to trade at par with the U.S. dollar, but on the black market the notes are worth about half as much as a dollar and cash shortages have not ended.

Almost as if Ncube had talked to Madyira, the new finance minister said he has to address the currency issue for Zimbabwe’s economy to get back on track.

“Restoring confidence in the economy, I make sure that international investors are interested in the Zimbabwean economy again,” said Ncube. “I will be rolling [out] a plan on the arrears clearance and the whole debt restructuring process, coupled with that is building credit lines globally. Internally I make that on the expenditure side we live within or means or move towards that. We need to strengthen our tax collection systems. Ultimately we need to have the Zimbabwe dollar that is stable, that people have confidence in. To have a domestic currency, you need to build reserves.”

Zimbabwe abandoned its worthless dollar in 2009 and has been using the U.S. dollar, South African rand and British sterling pound for trading.

An economist for the Labor and Economic Development Research Institute of Zimbabwe, Prosper Chitambara, says the Ncube is a good choice for the job.

“It is a good start. He is someone who is credible, a professional. But what has to be done is to begin real work,” he said. “To roll up his sleeves and begin to implement key fiscal policies that will bring back confidence into the economy. Reining down on recurrent expenditure. In general, what we need are fiscal consolidation reforms that curtail drastically recurrent government expenditure.”

Chitambara says Zimbabwe’s government spends much of its revenue on salaries, leaving social services sectors like education and health in dire need unless Western aid agencies, like USAID, assist. Chitambara says Ncube has to change that if the country is to recover.

 
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European Union trade chief Cecilia Malmstrom met her U.S. counterpart for the first time on Monday since President Donald Trump dropped his threat to impose tariffs on EU cars, saying they had discussed how to achieve concrete results soon.

Malmstrom hosted United States Trade Representative Robert Lighthizer in Brussels on Monday. The two are set to meet again at the end of September.

Malmstrom, who is the European Trade Commissioner, described the meeting as a first opportunity to follow through on an agreement between Trump and European Commission President Jean-Claude Juncker two months ago.

Lighthizer’s office described the talks as constructive, adding that experts would meet in October to identify tariff and non-tariff barriers that could be cut, with the trade chiefs following that up in November to finalize certain results.

“Specifically, we hope for an early harvest in the area of technical barriers to trade,” the U.S. Trade Representative’s office statement said.

Trump agreed with Juncker in July to refrain from imposing tariffs on EU cars while the two sides launched discussions to remove tariffs on non-auto industrial products.

A working group, headed by the two trade chiefs, has also been charged with finding ways to cut tariffs, boost U.S. liquefied natural gas exports and to reform the World Trade Organization.

“We discussed how to move forward and identify priorities on both sides and how to achieve concrete results in the short to medium term,” Malmstrom wrote. “Lots of work remains this autumn, our services will be in close contact in the coming weeks.”

Malmstrom said last month that the easing of trade tensions between the two partners had not put to rest “profound disagreements” on trade policy.

She also said then that the EU would be willing to reduce its car tariffs to zero if the United States did the same.

Trump rejected the idea as “not good enough”, adding that EU consumers simply tended to buy European rather than American cars.
…

European Union trade chief Cecilia Malmstrom met her U.S. counterpart for the first time on Monday since President Donald Trump dropped his threat to impose tariffs on EU cars, saying they had discussed how to achieve concrete results soon.

Malmstrom hosted United States Trade Representative Robert Lighthizer in Brussels on Monday. The two are set to meet again at the end of September.

Malmstrom, who is the European Trade Commissioner, described the meeting as a first opportunity to follow through on an agreement between Trump and European Commission President Jean-Claude Juncker two months ago.

Lighthizer’s office described the talks as constructive, adding that experts would meet in October to identify tariff and non-tariff barriers that could be cut, with the trade chiefs following that up in November to finalize certain results.

“Specifically, we hope for an early harvest in the area of technical barriers to trade,” the U.S. Trade Representative’s office statement said.

Trump agreed with Juncker in July to refrain from imposing tariffs on EU cars while the two sides launched discussions to remove tariffs on non-auto industrial products.

A working group, headed by the two trade chiefs, has also been charged with finding ways to cut tariffs, boost U.S. liquefied natural gas exports and to reform the World Trade Organization.

“We discussed how to move forward and identify priorities on both sides and how to achieve concrete results in the short to medium term,” Malmstrom wrote. “Lots of work remains this autumn, our services will be in close contact in the coming weeks.”

Malmstrom said last month that the easing of trade tensions between the two partners had not put to rest “profound disagreements” on trade policy.

She also said then that the EU would be willing to reduce its car tariffs to zero if the United States did the same.

Trump rejected the idea as “not good enough”, adding that EU consumers simply tended to buy European rather than American cars.
…

Roads were empty, businesses were closed and schools shut down Monday in parts of India, as opposition politicians looking toward elections called for a nationwide strike over rising fuel prices.

While the strike caused barely a ripple in many cities, protesters burned tires in remote Arunachal Pradesh, threw stones at stores that refused to close in the southern state of Karnataka and stopped buses from running in part of Gujarat. Opposition leaders had called for a complete shutdown, with all businesses, schools and transportation networks closed.

The opposition, with an eye on national elections next year and key state elections later this year, blame the rising prices on Prime Minister Narendra Modi and his Bharatiya Janata Party.

“Narendra Modi: Down! Down!” demonstrators chanted at a small New Delhi protest.

Fuel prices are up nearly 15 percent this year in India, largely as a result of the falling value of the Indian rupee.
…

Roads were empty, businesses were closed and schools shut down Monday in parts of India, as opposition politicians looking toward elections called for a nationwide strike over rising fuel prices.

While the strike caused barely a ripple in many cities, protesters burned tires in remote Arunachal Pradesh, threw stones at stores that refused to close in the southern state of Karnataka and stopped buses from running in part of Gujarat. Opposition leaders had called for a complete shutdown, with all businesses, schools and transportation networks closed.

The opposition, with an eye on national elections next year and key state elections later this year, blame the rising prices on Prime Minister Narendra Modi and his Bharatiya Janata Party.

“Narendra Modi: Down! Down!” demonstrators chanted at a small New Delhi protest.

Fuel prices are up nearly 15 percent this year in India, largely as a result of the falling value of the Indian rupee.
…

Ford says it has no plans to move production of a small car from China to the United States despite President Donald Trump’s enthusiastic tweet Sunday.

“It would not be profitable to the build the Focus Active in the U.S. given an expected annual sales volume of fewer than 500,000 units,” a Ford statement said.

Ford earlier announced it would not ship the cars from China to the United States because tariffs would make them too expensive, prompting a Trump tweet saying “This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs.”

Ford may keep building the Focus Active in China, but won’t not sell them in the United States.

Trump has imposed tariffs on $50 billion in Chinese imports to remedy what he calls unfair Chinese trade practices. China has retaliated and both countries threaten more tariffs.
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Ford says it has no plans to move production of a small car from China to the United States despite President Donald Trump’s enthusiastic tweet Sunday.

“It would not be profitable to the build the Focus Active in the U.S. given an expected annual sales volume of fewer than 500,000 units,” a Ford statement said.

Ford earlier announced it would not ship the cars from China to the United States because tariffs would make them too expensive, prompting a Trump tweet saying “This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs.”

Ford may keep building the Focus Active in China, but won’t not sell them in the United States.

Trump has imposed tariffs on $50 billion in Chinese imports to remedy what he calls unfair Chinese trade practices. China has retaliated and both countries threaten more tariffs.
…

Greek Prime Minister Alexis Tsipras on Saturday unveiled plans for tax cuts and pledged spending to heal years of painful austerity, less than a month after Greece emerged from a bailout program financed by its European Union partners and the International Monetary Fund.

Tsipras, who faces elections in about a year, used a keynote policy speech in the northern city of Thessaloniki to announce a spending spree that he said would help fix the ills of years of belt-tightening and help boost growth.

But he said Athens was also committed to sticking to the fiscal targets pledged to lenders.

“We will not allow Greece to revert to the era of deficits and fiscal derailment,” he told an audience of officials, diplomats and businessmen.

Tsipras promised a phased reduction of the corporate tax to 25 percent from 29 percent from next year, as well as an average 30 percent reduction in a deeply unpopular annual property tax on homeowners, rising to 50 percent for low earners.

He also said a pledge to maintain a primary budget surplus at the equivalent of 3.5 percent of gross domestic product could be achieved without further pension cuts, and that he would discuss this with the European Commission.

The government had been expected to announce further pension cuts next year — a deeply controversial measure in a country where high unemployment means that pensioners are occasionally the primary family earners. It is also a group that has been targeted for cutbacks more than a dozen times since 2010.

The leftist premier said he would also reinstate labor rights and increase the minimum wage. And he said the state would either reduce or subsidize social security contributions for certain sections of the workforce.
…

Greek Prime Minister Alexis Tsipras on Saturday unveiled plans for tax cuts and pledged spending to heal years of painful austerity, less than a month after Greece emerged from a bailout program financed by its European Union partners and the International Monetary Fund.

Tsipras, who faces elections in about a year, used a keynote policy speech in the northern city of Thessaloniki to announce a spending spree that he said would help fix the ills of years of belt-tightening and help boost growth.

But he said Athens was also committed to sticking to the fiscal targets pledged to lenders.

“We will not allow Greece to revert to the era of deficits and fiscal derailment,” he told an audience of officials, diplomats and businessmen.

Tsipras promised a phased reduction of the corporate tax to 25 percent from 29 percent from next year, as well as an average 30 percent reduction in a deeply unpopular annual property tax on homeowners, rising to 50 percent for low earners.

He also said a pledge to maintain a primary budget surplus at the equivalent of 3.5 percent of gross domestic product could be achieved without further pension cuts, and that he would discuss this with the European Commission.

The government had been expected to announce further pension cuts next year — a deeply controversial measure in a country where high unemployment means that pensioners are occasionally the primary family earners. It is also a group that has been targeted for cutbacks more than a dozen times since 2010.

The leftist premier said he would also reinstate labor rights and increase the minimum wage. And he said the state would either reduce or subsidize social security contributions for certain sections of the workforce.
…

U.S. President Donald Trump said on Friday the United States and Japan have begun discussion over trade, saying that Tokyo “knows it’s a big problem” if an agreement cannot be reached, and that India has also asked to start talks on a trade deal.

“We’re starting that,” Trump told reporters aboard Air Force One. “In fact Japan has called us … they came last week.”

“If we don’t make a deal with Japan, Japan knows it’s a big problem,” he added.

Later in a speech in Sioux Falls, South Dakota, Trump said:

“India called us the other day. They said we’d like to start doing a trade deal. First time.”

“They wouldn’t talk about it with the previous administrations. They were very happy with the way it was,” he said without giving further details.

Trump, who is already challenging China, Mexico, Canada and the European Union on trade issues, has expressed displeasure about his country’s large trade deficit with Japan, but had not asked Tokyo to take specific steps to address the imbalance.

On Thursday, though, CNBC reported he had told a Wall Street Journal columnist he might take on trade issues with Japan, causing the dollar to slip against the yen. The White House said Trump would push for fair trade.

“The president has been clear that he will fight to promote free, fair, and reciprocal trade with countries around the world, including Japan, that impose a range of restrictions on U.S. market access,” White House spokeswoman Lindsay Walters said in a statement.

“The United States and Japan have been in close contact on ways to address such barriers, including through the U.S.-Japan Economic Dialogue.”
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