Day: April 10, 2018

Russian retailers warned of price increase after ruble tumbles

European electronic and household goods manufacturers have warned Russian retailers of a possible 5 to 10 percent rise in prices after the ruble tumbled this week due to U.S. sanctions, retailers said on Tuesday.

Eldorado, which operates over 400 stores in Russia, said the hikes may mean it has to adjust its retail prices.

“Suppliers have already started warning of a possible 5-10 percent adjustment in prices,” a spokesperson for Eldorado told Reuters, adding that the warnings had primarily come from European manufacturers that do not produce goods in Russia.

A spokesperson for M.Video, which operates a network of 424 stores, also said that some of its suppliers had told them of plans to raise prices by between 5 and 10 percent.

The ruble fell sharply on Monday as investors took fright after a new round of U.S. sanctions against Moscow, targeting officials and businessmen around Russian President Vladimir Putin.

The ruble extended its losses on Tuesday, shedding over 3 percent of its value against the dollar, as investors continued a sell-off of assets fueled by fears that Washington could impose more sanctions and a realization that Russian credit and market risks had substantially increased.
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The Turkish lira Tuesday hit another historic low against the U.S. dollar amid growing financial market concerns that the Turkish economy is overheating.

With elections on the horizon, the government is stoking economic growth. The latest figures saw growth running at over 7 percent, making Turkey one of the fastest-growing economies in the developed world.

But international investors are becoming increasingly alarmed at the cost of such growth, with double-digit inflation and a surge in imports widening Turkey’s current account deficit (the difference between imports and exports).

“Investors are disappointed by the fact the government is pushing growth even faster, rather than addressing the imbalances that show up, such as high inflation and wide current account deficit.” said economist Inan Demir of Nomura banking.

“Some people say this: ‘Too much growth is not a good thing,’ ” Turkish President Recep Tayyip Erdogan said in a speech Monday aimed at challenging financial critics. “Why? Because they are jealous. It is nothing else.”

In another move aimed at defying critics, Erdogan also announced a new $34 billion economic stimulus package. Much of Turkey’s rapid growth has been achieved by the government injecting billions of dollars into the economy.

Erdogan further challenged international markets by renewing his strong opposition to increasing interest rates, which orthodox economic theory demands to protect a falling currency.

“If there isn’t an increase in interest rates, the likelihood will be the lira will continue to depreciate,” warned Demir. “More or less, the lira will remain at the mercy of global sentiment. It’s extremely difficult to draw a line where the depreciation stops on its own.”

Since the start of the year, the lira has fallen over 7 percent against the dollar.

​Reports on Simsek

Last week, the lira fell heavily amid reports that Deputy Prime Minister Mehmet Simsek had resigned after a heated telephone conversation with Erdogan over interest rate policy.

Analysts suggest that Simsek, who is responsible for the economy, is key to maintaining the confidence of financial markets in Turkey, having formerly worked for international investment bank Goldman Sachs. According to Ankara sources, Simsek withdrew his resignation only after intense government pressure.

But with presidential and general elections upcoming in 2019, a booming economy is seen as key to Erdogan and his ruling AKP Party’s re-election chances.

“He [Erdogan] knows the way to win the election is by improving the economic situation,” wrote newspaper columnist and presidential insider Abdulkadir Selvi in Monday’s Hurriyet. “That is why he declared 2018 as the year of performance, growth and employment.”

Analyst Atilla Yesilada of Global Source Partners asked, “What is left with AKP’s vision? Ten years ago, it was a big-tent party. It talked about human rights, modern democracy advancement, a humane society. Now, there is only mega-construction projects left and economic growth. So, if they stop stimulating the economy, economic growth will immediately fall off the cliff, and they will have no chance to win in a fair election.”

But a plummeting currency brings its own economic risks. Experts warn that heavy currency decreases usually undermine consumer confidence, leading invariably to a fall in consumption, and ultimately hitting growth.

A more imminent threat faced by Turkey is debt. Turkish companies’ short-term foreign exchange debt stands at $220 billion.

“We hear more and more companies requesting loan restructuring from the banks,” Demir said. “In the coming days as the lira depreciates further, more and more companies will find it more difficult to meet their foreign currency obligations with an overwhelming Turkish cash flow.”

​Banks under scrutiny

In the past few weeks, two of Turkey’s largest companies have sought to restructure nearly $12 billion in bank loans. Turkish banks are now facing increasing scrutiny over their corporate loan exposure and how many of their loans are still performing.

“Clearly there is an understanding between [Turkey’s] regulatory authorities, the banks and major companies that the system must go on,” Yesilada said. “It’s in nobody’s interest to declare these loans nonperforming or the borrowers bankrupt, so everything looks good. But nothing is being sustained, to be perfectly honest.”

Turkish banking stocks have fallen heavily in the past few months and are now trading at nine-year lows. Most analysts claim, despite growing financial pressures, that the integrity of the banking system still remains strong.

But the same analysts warn that banks may curtail future lending, which would likely affect growth. Demir predicts Erdogan and his government’s dash for growth could ultimately become self-defeating.

“If the insistence on pro-growth measures continues, and investors become more and more concerned about the external financing requirements and sell liras, the pro-growth measures may actually turn out to be counterproductive, because the weaker lira could hurt company balance sheets, forcing more of them to seek a restructuring of their loans, and forcing them to cut back on investment and generating new employment,” Demir said.
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Future Russian gas transit flows through Ukraine to Europe may be between 10 and 15 billion cubic metres per year, Alexei Miller, head of Russian gas giant Gazprom, said on Tuesday, which is a significant decline from current levels.

Miller issued his comments after German Chancellor Angela Merkel said that the planned new Nord Stream 2 pipeline between Russia and Germany could not go ahead without clarity on Ukraine’s role as a transit route for gas.

“We have never raised an issue about abandoning the Ukrainian transit. However, the Russian resource base has been moving northward and there won’t be the same resources in the central gas transportation corridor as it was in the past,” Miller said in a statement.

“That’s why a certain transit could still be in place, in the amount of 10-15 bcm per year, but the Ukrainian side has to explain the viability of the new transit contract,” he said.

He did not give a time frame for when the transit could be 10-15 bcm a year.

Ukraine has been a key route for carrying Russian gas to Europe where it supplies around a third of gas needs, but Moscow and Kiev have clashed frequently over energy.

Last year, the transit amounted to more than 93 bcm, while Gazprom’s total exports to Europe and Turkey reached an all-time high of 194 bcm.

Last year, Ukraine earned around $3 billion in Russian gas transit fees.

Gazprom said last month it would terminate its gas contracts with Ukraine after it lost a court case, escalating a dispute which had left Ukraine struggling to stay warm and which the European Union said could threaten gas flows to Europe.

A Stockholm arbitration court ordered Gazprom in February to pay more than $2.5 billion to Ukrainian energy firm Naftogaz – a ruling meant to conclude a long legal battle that has run alongside Ukraine’s broader political stand-off with Russia.

Gazprom wants to bypass Ukraine as an export route and plans to build two more undersea gas pipelines to Europe: TurkStream to Turkey and Nord Stream 2 to Germany.

Eastern European and Baltic states fear Nord Stream 2, planned to run through the Baltic Sea, could increase reliance on Russian gas and undermine Ukraine’s role as a gas transit route.

The plans for the pipelines were given new impetus after relations between Moscow and Kiev plunged as Russia-leaning president Viktor Yanukovich fled Ukraine in 2014 following street protests and a pro-Moscow revolt subsequently flared in eastern Ukraine.

The current deal between Russia and Ukraine on gas purchases and transit expires at the end of 2019 and Kiev has been worrying about losing its transfer fees for shipping the Russian gas westwards to Europe.

 
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Tuesday, April 10, is Equal Pay Day in the United States. Advocates designated the day to mark how much longer women must work, on average, to earn as much as men averaged in the previous year. 

Germany recognized Equal Pay Day on March 10. The Czech Republic will observe it on April 13. While assigning a date to the gender pay gap is a way to make a point, it makes for an easy gauge of whether the pay gap is getting worse or better from one year to the next. In 2017, the U.S. Equal Pay Day was April 4 — meaning the pay gap is slightly worse this year than last.

There are a number of explanations for historic gender gaps in pay.

One of the major ones is known as “occupational segregation,” meaning a particular job is seen as “men’s work” or “women’s work” and is dominated by that gender. In a study by the Institute for Women’s Policy Research in 2017, among the most common occupations for women and for men in the United States, only six occupations overlap.

In the fields that pay best, men tend to dominate, said the IWPR’s Chandra Childers. She adds that when men start to leave a field and women start to move in, the average pay for that field begins to drop.

Some say the pay gap is due to more women taking time off work or assuming less demanding professional roles so they can care for their families. “Women often choose lower-paying jobs that are closer to home and have better, more flexible hours,” conservative commentator Carrie Lukas said in an April 4 column for Forbes.

Childers says she hears that argument often. But “when you look at the pay gap,” she said, “a lot of it is because women are concentrated in low-wage service jobs. Many of these jobs are not flexible. They’re not family friendly,” and they are less likely to have paid family leave.

The Economic Policy Institute, a Washington think tank that advocates for low- and middle-income workers, found in April 2017 that women are paid less than their male colleagues in almost every occupation, regardless of whether that occupation is traditionally held by men or women. The average wage for preschool and kindergarten teachers was $16.33 per hour for men, and $14.42 per hour for women. Male nurse practitioners made $42.74 an hour, compared to $37.50 per hour for female nurse practitioners. Male software developers made $38.98 an hour, while women software developers made an average $33.65 an hour.

#MeToo movement

Hollywood has recently gotten much attention for starkly different salaries paid to women and men working on the same project. To highlight this point, several high-profile actresses turned up at this year’s Academy Awards ceremony with women’s rights activists as their dates.

Actress Meryl Streep brought Ai-jen Poo, the executive director of the National Domestic Workers’ Alliance. Poo used the opportunity to talk about how attitudes toward women — including those behind the sexual harassment scandal wracking the entertainment industry — affect pay levels at both the bottom of the income scale and the top.

“Equal Pay Day looks different in the #MeToo moment,” Poo said in a column in In Style magazine on April 4. “Each #MeToo story amplified the voice of a woman who has been underpaid, shut out, harassed, assaulted, undermined, ignored, or threatened. We can see clearly how it is that women are paid less when the gender discrimination that leads to the wage gap is exposed.”

Poo goes on to say that pay inequality and sexual harassment are “inextricably linked. They are both the result of a culture in which women’s lives and contributions are devalued.”

Oscar-winning actress Octavia Spencer recently told People magazine how she and Oscar nominee Jessica Chastain teamed up for a tiny experiment in collective bargaining, a tool activists recommend to fight against unfair compensation practices. The two women told producers that they would only take the roles if they were paid the same amount. Spencer — the Oscar winner — said she ended up making five times the amount she had expected for the film.

Technology sector

Women also face tough hurdles in the technology sector. A survey by the job-hunting website Hired.com showed that 63 percent of the time, men were offered higher salaries than women for the same role at the same company. The differences in starting pay for the same job ranged from 4 percent to 45 percent.

Notably, the Hired survey found that 54 percent of the women it surveyed said they had found out at some point in their careers that they were making less money than a man with the same job. Only 19 percent of men had had the same experience.

Equal-pay supporters say the benefit of equal pay is not just confined to the individual earners; it also benefits the employer and the community in which it is based.

Power to employees

There’s no silver bullet, says Jessica Schieder of the Economic Policy Institute, but an important tool in the fight for equal pay is transparency.

“You can’t know you’re underpaid and have a problem until that information is available,” Schieder said. She also recommends collective bargaining, a higher minimum wage, and any other tools that give employees more power. The social taboo against talking about personal income, she says, is not helpful either.

Jess Morales Rocketto of the National Domestic Workers Alliance and We Belong Together, a feminist campaign for immigration reform, says there is one other idea that can’t be overlooked. “There’s nothing more powerful than women coming together. … In the next 10 years, I want to see us close the pay gap. But also, I want ALL working people to be covered by our labor laws. And I want women at every level of public office.

“Our job is to address all forms of gender inequality to ensure that no woman, regardless of where she’s from, is left behind,” she said.
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Chinese President Xi Jinping on Tuesday promised to open the country’s economy further and lower import tariffs on products including cars, in a speech that comes amid rising trade tensions between China and the United States.

Xi also said China would raise the foreign ownership limit in the automobile sector “as soon as possible” and push previously announced measures to open the financial sector.

“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said at the Chinese Boao Forum for Asia in Hainan province.

The comments sent U.S. stock futures, the dollar and Asian shares higher.

They come amid rising trade tensions between China and the United States following a week of escalating tariff threats sparked by U.S. frustration with China’s trade and intellectual property policies.

Xi said that China will take measures to sharply widen market access for foreign investors.

China will also speed up opening of its insurance sector to foreign investors, Xi said.
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In war-torn Afghanistan, honey is regarded as a traditional cure-all but for one schoolgirl, the sticky commodity has also created sweet opportunities to work and own a business in a country where few women do so.

Three years ago, Frozan, now 19 years old, obtained a small loan, bought two beehives and learned about apiculture from Hand in Hand International, a non-governmental organization that focuses on poverty.

The bees collected nectar from flowers growing near her home in the Marmul district in the northern Balkh province. Their first harvest produced about 16kg (35lb) of honey, which enabled Frozan to pay back her loan and still have money left over.

She now has 12 beehives and last year collected 110kg of honey, which earned her 100,000 Afghanis ($1,450) in a country where GDP per capita is only about $600.

“The village I live in is a traditional village and women are not allowed to work outside,” says Frozan, who goes by one name. “But when I started beekeeping I realized that it’s an easy task. I told the people about beekeeping and then they accepted it.”

Since the fall of the Taliban in 2001, the lives and status of women in society have improved significantly. But traditions, insecurity and recently a decline in international donors, have slowed progress.

A Human Rights Watch report, quoting government officials, says 85 percent of the 3.5 million children who don’t go to school are girls. Only 37 percent of adolescent girls are literate compared with 66 percent of adolescent boys.

Frozan is now in her final year of school and would like to study economics and grow her business, goals that may now be possible for her and her three siblings thanks to her income stream.

She says looking after tens of thousands of bees can easily be done between studies and household chores and her father, Ismail, who is a farmer like much of Marmul’s population, supports his daughter’s enterprise.

“It has been my dream to have a daughter who could find a job like this and make a future for herself,” he says.

Every few weeks, Ismail takes the fresh honey to Mazar-i-Sharif, the provincial capital, more than 50km away, where it’s sold to shops and consumed mainly by local customers.

While industry data is scant, local media citing government officials say Afghanistan’s honey production has risen in recent years, hitting 2,000 tons in 2015. Several varieties such as acacia, almond flower, and basil are now available.

However, infrastructure constraints mean most of this honey never leaves Afghanistan.
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Iran unified the country’s official and open market exchange rates, state media said, after its currency, the rial, plunged to an all-time low on Monday on concerns over a return of crippling sanctions.

The U.S. dollar jumped in a day from 54,700 rials to 60,000 rials in the open market in Tehran on Monday. A dollar was worth 36,000 rials in mid-September.

After an emergency cabinet meeting, Iran’s First Vice President Eshaq Jahangiri was quoted by the state media as saying that from Tuesday the price of the dollar would be 42,000 rials in both markets, and for all business activities.

Iran has long been trying to unify its open market rate, used for most commercial transactions, with the official rate, which is a subsidized rate that is only available to government departments and some importers of priority goods.

Jahangiri said from Tuesday the government would not recognize any rate but the official rate, and “it would be illegal to trade dollars with an unofficial rate.”

U.S. sanctions lifted under Iran’s nuclear deal with world powers in 2015 will resume unless U.S. President Donald Trump waives them again on May 12. Trump has effectively set that as a deadline for European powers to fix what he called “the terrible flaws” of the deal.

President Hassan Rouhani warned on Monday that Trump will regret it if he pulls out of the nuclear deal.
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