Day: September 26, 2022

The British pound fell to all-time low against the U.S. dollar early Monday after Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts, fueling concerns about the government’s economic policy as the United Kingdom teeters toward recession.

 

The pound fell as low as $1.0373, its lowest level since the decimalization of the currency in 1971, before rallying to above $1.08 in London early afternoon trading.

 

The weakening currency piles pressure on the U.K.’s new Conservative government, which has gambled that slashing taxes — and increasing borrowing to compensate — will spur economic growth. Many economists say it’s more likely to fuel already high inflation, push down the pound and drive up the cost of U.K. government borrowing — a potential perfect storm of economic headwinds.

 

Despite mounting concern, the government dug in its heels Monday.

 

“We’re not going to be commenting on daily market movements,” said the prime minister’s spokesman, Max Blain. “This is a plan for the medium to long term.”

 

The British currency has lost more than 5% of its value against the dollar since Friday, when Kwarteng announced the U.K.’s biggest tax cuts in 50 years.

 

The government plans to cut 45 billion pounds ($49 billion) in taxes as well as spend billions to help consumers and businesses struggling with high energy bills that are driving a cost-of-living crisis. The combination has sparked investor concern about spiraling government debt.

 

Kwarteng and Prime Minister Liz Truss, who took office three weeks ago, are betting that lower taxes and reduced bureaucracy eventually will generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.

 

Opposition Labour Party economy spokeswoman Rachel Reeves accused the government of “a return to trickle-down economics, an idea that has been tried, has been tested and has failed.”

 

“They are not gambling with their money — they are gambling with yours,” she told an audience at the party’s annual conference Monday.

 

The new and untested Truss, who replaced Boris Johnson as prime minister on Sept. 6, also faces pressure from a nervous Conservative Party, which faces an election within two years.

 

Some Conservatives have welcomed the tax-cutting moves as a return to free-market values after years of state intervention in the economy during the coronavirus pandemic. But others worry it is unconservative for the government to rack up huge debts that taxpayers will eventually have to pay.

 

Kwarteng insisted the government was acting responsibly — and said there were more tax cuts to come.

 

“We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it is the British people that are going to drive this economy,” he told the BBC.

 

As it is cutting taxes, the government plans to cap electricity and natural gas prices for homes and businesses to help cushion price rises that have been triggered by Russia’s war in Ukraine and have sent inflation to a near 40-year high of 9.9%.

 

This program will cost 60 billion pounds, and the government will borrow to finance it, Kwarteng said Friday.

 

He said Sunday that it was the right policy because the government needed to help consumers squeezed by the unprecedented pressures caused by the war in Ukraine and the pandemic.

 

Britain can afford the cost because its debt as a percentage of gross domestic product is the second lowest among the Group of Seven large industrial economies, Kwarteng said. He said the government would announce a “medium-term fiscal plan” for reducing the nation’s debt in the coming months.

 

Sterling is not the only currency showing weakness. The euro also hit a fresh 20-year low against the dollar as the war in Ukraine drives fears about recession and energy security ahead of the winter.

 

While the pound’s slide has accelerated in recent days, the currency has fallen steadily against the dollar for more than a year as investors sought the security of U.S. assets amid the global economic shocks.

 

The pound’s decline against the dollar also has been fueled by the Bank of England not keeping pace with the U.S. Federal Reserve’s efforts to rein in inflation. Britain’s central bank on Thursday raised interest rates by half a percentage point, compared with large three-quarter-point increase by the Fed last week. But U.K. inflation is the highest among major economies, and the bank predicted that Britain could already be in recession, which it defines as two consecutive quarters of economic contraction.

 

The bank’s rate-setting Monetary Policy Committee is not due to meet again until Nov. 3, but many economists say it may have to hike rates sooner if the pound’s slide continues.

 

Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said it was difficult to know how low the pound could fall.

 

“It depends, I think, now on what the Bank of England does in response to sterling’s most recent fall,” she said. “There’s been this dramatic loss of confidence in the government’s economic management. But now the ball is in the Bank of England’s court.”

 

Source: United News of Bangladesh

 

The government of Japan and WFP on Monday signed an exchange of notes to provide food and nutrition assistance to the Rohingyas in Bhasan Char and to develop agricultural infrastructure in Cox’s Bazar.

 

The contribution of USD 4.3 million will be used for critical food assistance through the e-voucher system for the Rohingya refugees living in Bhasan Char and will help further the development of agricultural infrastructure such as irrigation system, canal excavation, and new roads for the Bangladeshi community in Cox’s Bazar.

 

“Japan is an essential partner for WFP, and we are grateful for their staunch support of development in Bangladesh and of our humanitarian efforts in the country,” said Dom Scalpelli, the resident Representative and Country Director of WFP Bangladesh.

 

Scalpelli said this new contribution will help them continue to provide life-saving food assistance on the island of Bhasan Char and will greatly benefit the Bangladeshi community in Cox’s Bazar.

 

Following the emergency grant of USD 2 million in January. Japan decided to provide additional assistance to Bhasan Char, with the “strong hope” that this contribution will respond to the urgent food and nutrition needs of the Rohingya population on Bhasan Char, as well as to enhance the agricultural environment in Cox’s Bazar.

 

“During my recent visit to Cox’s Bazar, I saw the dedicated and professional work of WFP and its partners. Food assistance by E-Voucher in the Cox’s Bazar camps is truly innovative, and it is our great pleasure that the innovative approach will be expanded to Bhasan Char with this funding,” said Japanese Ambassador to Bangladesh Ito Naoki.

 

As the Rohingya crisis has stepped into the sixth year, it is imperative to continue funding for better and dignified lives of refugees, while making every effort for the early repatriation to Myanmar, he said.

 

“Durable solutions of this crisis will be conducive to realizing the vision of a Free and Open Indo-Pacific, Japan will stand by the government and the people of Bangladesh in supporting the Rohingya response,” said Naoki.

 

Since the beginning of the emergency in August 2017, Japan has been a steadfast supporter of the Rohingya refugee response in Bangladesh, contributing over USD $170 million to UNHCR and other UN agencies and NGOs in Bangladesh, including through this new funding.

 

Source: United News of Bangladesh

 

Based on the inputs from intelligence agencies, the Indian Ministry of Information and Broadcasting has directed YouTube to block 45 videos from 10 channels.

 

Orders to block the concerned videos were issued on September 23, 2022 under the provisions of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, said the Press Information Bureau of India on Monday.

 

The content included “fake news” and “morphed videos” spread with the intent to induce hatred among religious communities. Examples include false claims such as the government taking away the religious rights of certain communities, violent threats against religious communities, declaration of civil war in India, etc.

 

Such videos were found to have the potential to cause communal disharmony and disrupt public order in the country.

 

Some of the videos blocked by the ministry were being used to spread disinformation on issues related to Agnipath scheme, Indian Armed Forces, India’s national security apparatus, Kashmir, etc.

 

The content was observed to be “false and sensitive” from the perspective of national security and India’s friendly relations with foreign States.

 

Certain videos depicted erroneous external boundary of India with parts of JandK and Ladakh outside the Indian territory. Such cartographic misrepresentation was found to be detrimental to the sovereignty and territorial integrity of India.

 

Speaking on the issue, Union Minister for Information and Broadcasting Anurag Thakur said that the Government of India remains committed to thwart any attempts at undermining India’s sovereignty and integrity, national security, foreign relations, and public order.

 

Source: United News of Bangladesh

 

US technology giant Apple has said it started assembling its iPhone 14 in India, world’s second-largest smartphone market, to shift some production away from China.

 

Apple partner Foxconn, which makes the majority of the world’s iPhones, is producing the device at its Sriperumbudur factory near Chennai, marking the first time the company has shifted production from China to India this quickly after the launch of a new iPhone.

 

The Cupertino-based giant began locally assembling smartphones in India in 2017, but those were older models.

 

The marquee device will go on sale in India later this year, according to TechCrunch.

 

JPMorgan said this month that Apple will move 5 percent of its global iPhone 14 production to India by late 2022, and could move 25 percent of its entire iPhone production line to the country by 2025.

 

As part of their “China-plus one” or “China-plus two” strategy, major companies are now looking at India.

 

Apple, which still relies heavily on China for the majority of iPhone production, is seeking alternatives as Xi Jinping’s administration clashes with the US government and imposes lockdowns, hurting economic activities.

 

The presence of the foreign production giants, coupled with ample labour resources and competitive labour costs, make India a desirable location, JP Morgan said.

 

Also, the country has attracted investments from Apple manufacturing partners Foxconn and Wistron in recent years by offering lucrative subsidies.

 

Many hope Apple will make its handsets affordable in India as the company expands its manufacturing capacity in the country.

 

The base iPhone 14 model, which is priced at $799 in the US, costs 79,900 Indian rupees ($980); the entry iPhone Pro Max model costs $1,717 in India, compared to its $1,099 sticker price in the US, according to TechCrunch.

 

Source: United News of Bangladesh