Russia decided to service its dollar debt as it should, that is, to make interest payments in dollars instead of rubles, which it tried to do a month ago. The money was transferred from Moscow by one of the non-sanctioned Russian banks first to the Bank of New York Mellon Corp. Then to Citibank, which will now ship the appropriate amounts through the US clearinghouse to selected investors who hold Russian dollar bonds. Bloomberg writes that The relevant authorities of the USA and Great Britain agreed to everything, and for a long time the banks before making transfers made sure that there was no threat to them.
The money that will go to the investors’ accounts comes from the financial reserves located in Russia, and this is what the Americans wanted. Previously, Russia tried to pay interest on its debt with money from the foreign exchange reserves in the United States, which it was not allowed to do. In protest, the Russians came up with the idea of servicing their debt in rubles, but soon it turned out that the market considers this situation identical to the bankruptcy of Russia. The interest was due on April 4th, so as of that day there was a 30-day period of acceptable delay in payments, which expired on May 4, which is the day after tomorrow. If the situation does not change, Russia will be officially declared bankrupt next Wednesday, which will affect its long-term financial credibility. The Kremlin almost gave up – as a result, American investors have or will have their money in the next few hours, Russian reserves in the United States remain frozen, and those in Russia are exhausted.
The whole issue was about relatively small amounts – the interest due on April 4th was a total of about $640 million. The total value of all Russian bonds issued in foreign currencies on world markets is about 150 billion dollars, of which about 40 billion dollars. These are government bonds, and the rest are debts of Russian companies, which amount to $25 billion. Gapzromem on the head.
According to the latest forecasts of the Central Bank of Russia, inflation in Russia by the end of the year may exceed 20%. Its GDP will fall by about 10%, then in 2023 it will see another decline, albeit much less.
See also: Bloomberg: The European Union proposes cutting off Russian oil by the end of the year
2. Inflation above 12%, WIBOR 3M broke 6%.
Inflation in Poland reaches 12.3%. – The Central Bureau of Statistics reported that core inflation, according to economists’ calculations, is about 7.5 percent. In contrast, the rate of WIBOR 3M, commonly used in loan agreements in Poland, exceeded 6%. One, of course, is closely related to the other. Higher inflation increases expectations of a rate hike in NBP, and these expectations immediately translate into an increase in market rates, including WIBOR. 3M WIBOR futures indicate that at the end of the year it will be at the level of 7.6%.
Already this week, the Monetary Policy Board will raise interest rates again, and many economists expect it to be a 1 percentage point rise: from the current 4.5 percent. up to 5.5 percent
On a monthly basis, prices in April rose by 2%. Compared to March, after growing 3.2 percent a month earlier. compared to February. This is the first time since 1995 that prices have increased by at least 2% for two consecutive months. The causes of the rising inflation, on the one hand, are the war (the so-called “boutique inflation”) that has led to uncertainty and raised energy prices, and on the other hand, the market demand remains very high, driven by wage growth, government fiscal policy, and the recent influx of refugees. . According to many economists, inflation will continue to rise in the coming months and will reach its peak in the summer. There are also more and more opinions suggesting that the official interest rates in NBP may exceed the 10% level in the coming months, which could lead to a serious slowdown in the economy, and possibly even a temporary recession.
3. Ladybug: Customers start buying less
In response to constantly rising prices, we have begun to reduce our expenses. The management of Jeronimo Martins – owner of the Biedronka chain – said during a press conference marking the publication of the financial results that this consumer behavior is becoming more evident.
We noticed some change in the mix, especially in March. These are the first signs that (…) you can see the stock of basic products. Customers buy more basic products that become more expensive, such as flour and oil. We can notice this especially in Poland, but also in Portugal (…) we can see that customers in Poland are more careful about their shopping, which is why we have introduced our anti-inflation shield.
said Anna Luisa Virginia, chief financial officer of Jeronimo Martins. By the way, UOKiK keeps a close eye on the aforementioned Biedronka Shield, to check whether the rules of this promotion are fair to customers.
“They are more careful about their purchases” means that they simply buy less and spend less money. In the fight against inflation, this is a key effect that is necessary for prices to eventually stop rising – market demand eventually begins to decline, and if this continues, another effect will be a slowdown in price growth. The other side of the same coin would be an economic slowdown, because if we actually buy a little, it will also mean the need to reduce production, that is, in a moderate version: a slower GDP growth rate, and in a less gentle version: a decline in GDP.
See also: Getin Noble Bank has to try to handle itself. It may not be possible to raise capital
4. Italy and Sweden’s GDP declines, France stops growing
Exactly this effect: a decline or stunting of GDP is already evident in some economies in Western Europe. According to new Eurostat data, in the first quarter of this year Italy’s GDP was 0.2 percent. Less than a quarter earlier. The largest decrease – by 0.4 percent. – He passed Sweden. On the other hand, France’s GDP growth was exactly zero. In all of these countries, the slowdown in economic growth, according to some analysts, is the effect of inflation and a deterioration in consumer sentiment, limiting buying. Despite the importance of severe logistical bottlenecks in the world, which often force industrial companies to reduce production.
See also: The rating agency ranked the Polish economy in the face of the war in Ukraine
5. China’s PMI indicates recession
It also shows a clear deterioration in the economic situation in China. The official manufacturing PMI, calculated by the government, fell to 47.4, indicating a deepening recession. In contrast, the index calculated by private companies S&P Global and Caixin fell even lower, to 46 points. One focuses on the larger, mainly state-owned companies, and the other also focuses on smaller companies. However, it can be noted that at the moment, problems affect all sectors of Chinese industry on a similar scale. We’ve only seen major recessions this century during the first wave of the coronavirus in early 2020 and the financial crisis that followed the bankruptcy of Lehman Brothers in 2008.
PMI readings above 50 indicate an economic expansion, and those below 50 indicate a recession. They are based on interviews with logistics managers in companies. According to the latest reports, industrial companies in China are currently experiencing a decline in production, a decline in new orders and a decline in employment.