Headlines

India’s central bank raised its main lending rate Wednesday, after inflation picked up following a recent surge in crude-oil prices, The Wall Street Journal reported. The Reserve Bank of India’s monetary-policy committee, headed by Gov. Urjit Patel, raised its repurchase rate to 6.25% from 6%. Equity markets, bonds and the Indian rupee were little changed in response. “This wasn’t a total surprise,” said Sujan Hajra, chief economist at Anand Rathi Securities. Still, nine out of 11 economists polled by The Wall Street Journal had predicted the RBI would leave the rate unchanged.

Ethiopia, Africa’s second-most-populous country and the continent’s fastest growing economy, is inviting big business to cash in, Bloomberg News reported. For so long a closed shop, the Horn of Africa nation on Tuesday invited foreign investors to buy stakes in state-owned telecoms, shipping, power generation and aviation companies, a rare opportunity to access such a large market. The bonanza will extend to railways, sugar mills and industrial parks, with the top brass of the ruling party embarking on long-awaited market reforms.

A top European Central Bank official says bank officials will begin discussions next week on withdrawing their bond-purchase stimulus — suggesting the ECB isn’t overly worried by the recent political upheaval in Italy, the Associated Press reported. Executive board member Peter Praet said in a speech Wednesday that “next week, the governing council will have to assess whether progress so far has been sufficient to warrant an unwinding of our net asset purchases.” Currently the bank says it will keep buying 30 billion euros ($35 billion) in bonds at least through September.

Asian companies face increased risk of default as politicians in the region accept more corporate failures, adding to strains as refinancing costs climb, Bloomberg News reported. China is allowing more defaults to happen as it promotes more market-driven pricing in bond markets, while India’s overhaul of its bankruptcy courts is forcing large delinquent borrowers into the courts. JPMorgan Chase & Co. has revised its default-rate forecast for Asian high-yield bonds to 2.8 percent, citing negative surprises such as China Energy Reserve & Chemicals Group Co.’s recent debt failure.

The Mexican peso sank to its weakest in more than a year on concern the U.S. may leave the Nafta agreement and try to negotiate two separate free-trade deals with Mexico and Canada, Bloomberg News reported. The currency slid for a fourth day, dropping 1.6 percent to 20.4031 per dollar as of 3:46 p.m. in New York, the second-sharpest retreat among major peers. The cost of insuring Mexican bonds in the credit-default swaps market for five years surged nine basis points to 146.501, climbing for a ninth day in the longest streak since June 2013. Stocks halted a two-day rally.

Australia left its key interest rate unchanged at a record low Tuesday after the key unemployment metric edged higher, Bloomberg News reported. Reserve Bank Governor Philip Lowe kept the cash rate at 1.5 percent, where it has stood since 2016, as expected by all economists. The jobless rate hit 5.6 percent in April, moving further away from the central bank’s estimated level of full employment. The global picture has also become more clouded amid an emerging-market rout, populism in Europe and U.S. trade tariffs.

Barbados must prepare for a long and painful journey back to financial and economic health, after announcing a radical plan to tackle the fourth-biggest debt burden in the world, according to the country’s new premier. The Caribbean island is still reeling from prime minister Mia Mottley’s revelation on Friday that it had discovered previously undisclosed financial liabilities, which lifted the country’s overall debt from 137 per cent of gross domestic product to more than 175 per cent, the Financial Times reported.

The battered Turkish lira has enjoyed a period of relative tranquility over the past two weeks. An emergency interest rate hike and soothing noises from senior officials appeared to calm nerves following a prolonged game of brinkmanship between President Recep Tayyip Erdogan and international investors that drove the currency to record lows, the Financial Times reported. But the problems have not gone away. Figures released on Monday showed a sharp rise in inflation.

When Pedro Parente quit last week as chief of executive of Brazil’s state-controlled Petrobras, Latin America’s largest oil company, he used his resignation to lament his countrymen’s apparent disdain for market dynamics, the Financial Times reported. Mr Parente, a champion of free-market policies, resigned after the Brazilian government gave in to truckers whose strike against an increase in fuel prices brought Brazil’s economy to its knees for 10 days.

Debt collectors in China are harnessing new technologies such as artificial intelligence in a bid to collect on an estimated Rmb1.3tn ($200bn) debt bubble that has formed in the country’s peer-to-peer lending industry, the Financial Times reported. Thousands of online businesses connecting private lenders to people in need of cash sprang up across the country over the past five years, but a spate of scandals has put these lenders in the crosshairs of regulators. Many P2P lenders have been shut down since mid-2017 as lending controls have been implemented and licences required.