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Egypt’s inflation surge begins to slow in March

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CAIRO (Reuters) – Egypt’s urban consumer inflation rose at a slower pace in March and core inflation dipped, the first signs of stabilising prices after the shock from a huge currency depreciation.

President Abdel Fattah al-Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.

Urban inflation rose for the fifth consecutive month to reach an annual 30.9 percent, the official CAPMAS statistics agency said on Monday, its highest point in more than three decades.

However the rise from 30.2 percent in February was the smallest since Egypt abandoned its currency peg in November, driving up the price of imports.

The pound currency has since depreciated by roughly half and in Egyptian cities and towns, food and beverage inflation reached 41.8 percent year on year in March.

Annual core inflation, on the other hand, declined for the first time in eight months, reaching 32.25 percent in March from 33.1 percent in February, the central bank said in a statement.

“The deceleration in core inflation is in line with the expected headline deceleration in March,” said Reham El Desoki, senior economist at Arqaam Securities.

“March 2017 was a month void of significant inflationary pressures, where price rises slowed and a lower customs dollar rate stabilized the cost of imports,” El Desoki said

Egypt abandoned its currency peg of 8.8 to the U.S. dollar on Nov. 3 but the pound has been stable around 18 per dollar for the past two weeks.

March’s annual urban consumer inflation figure is the highest since June 1986, when it reached 35.1 percent, according to Reuters data. However, monthly urban inflation eased to 2 percent in March from 2.6 percent in February.

The central bank accompanied the November float with a 3 percent interest rate hike to fight price pressures but inflation is expected to keep climbing as the government pushes on with economic reforms, including fuel subsidy cuts.

The economic reforms helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November.

Egypt’s central bank has held interest rates steady at four monetary policy meetings since the currency flotation although some economists expect further rate hikes this year.

IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017. [ID:nC6N1DO017]

 

(Reporting by Asma Alsharif; Editing by Toby Chopra)

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South Africa’s bourse to review trades around Gordhan’s recall: BusinessDay

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JOHANNESBURG (Reuters) – South Africa’s bourse will investigate an increase in the trading of certain securities in the hours before former finance minister Pravin Gordhan was recalled from an international investor roadshow, BusinessDay newspaper reported on Monday.

On March 27, news broke that President Jacob Zuma had ordered Gordhan to return immediately from a trip to Britain and the United States. Gordhan was later dismissed in a cabinet reshuffle.

The newspaper reported that the Johannesburg Securities Exchange was examining trading in securities that were affected by news of the recall.

Officials at the exchange would not initially confirm or deny the report when contacted by Reuters.

The report said that the exchange would seek to identify activity that might warrant further investigation by the Financial Services Board’s market abuse department.

“The news precipitated material moves in the value of numerous listed securities including currency futures,” the exchange’s director of market regulation Shaun Davies is quoted as saying by the paper.

Davies declined to say which securities were being investigated, but it is likely that banking stocks will be among them, the BusinessDay said.

The rand weakened by about 2.5 percent ahead of the news, according to Thomson Reuters data, falling further after the recall was confirmed.

Speculation of large bets on currency futures at around the same time also surfaced, causing market watchers to speculate the currency was being “shorted”, local media reported.

Short-selling refers to the selling of instruments that have been borrowed, in anticipation of a fall in prices.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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Anglo American sells Eskom-linked coal operations in South Africa

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JOHANNESBURG (Reuters) – Miner Anglo American will sell its Eskom-linked thermal coal operations in South Africa for $166 million, it said on Monday, part of a strategic overhaul announced a year ago to cope with a slump in commodity prices.

The mines, along with four closed collieries, have a supply agreement with Eskom under which South Africa’s sole power utility paid for their running costs in exchange for coal supply at a pre-set price.

The company said it will sell the assets — New Vaal, New Denmark and Kriel collieries — to Seriti Resources Holdings – a company led by Mike Teke, the president of the local mining industry lobby group, Chamber of Mines.

Anglo was hit hard by a slump in commodity prices in 2015, prompting it to launch a sweeping overhaul to slim down its portfolio and focus on diamonds, platinum and copper.

“This transaction forms part of our ongoing commitment to reshape and upgrade our global asset portfolio,” Anglo Chief Executive Mark Cutifani said in a statement.

($1 = 13.8200 rand)

 

(Reporting by Rahul B in Bengaluru and Tiisetso Motsoeneng in Johannesburg; Editing by Louise Heavens/Keith Weir)

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Gold hits 5-mth high on safe-haven demand as US strikes Syria

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By Sethuraman N R

(Reuters) – Gold rose more than 1 percent on Friday to hit a 5-month high as investors sought safe-haven assets after the United States launched cruise missiles against a Syrian air base, potentially escalating tensions with Syrian allies Russia and Iran.

U.S. President Donald Trump unleashed the military strikes in response to a deadly chemical attack on a rebel-held area, a U.S. official said on Thursday.

Spot gold had risen 1 percent to $1,263.53 per ounce by 0650 GMT. It earlier climbed as much as 1.4 percent to its highest since Nov. 10 at $1,269.28, and was on track for a fourth straight week of gains.

U.S. gold futures also climbed 1 percent to $1,266 an ounce.

“Clearly this raises the stakes and we expect to see gold prices continuing to push higher in the short-term, at least until there is some clarity around whether this is a one-off or develops into something more,” said ANZ analyst Daniel Hynes.

Stocks fell and safe-haven bonds and the yen jumped in Asia on Friday after the missile strike. [MKTS/GLOB]

The dollar fell 0.2 percent against the safe-haven Japanese yen to 110.54.

Investors had already been on edge as Trump met Chinese leader Xi Jinping on Thursday for talks over flashpoints such as North Korea and China’s huge trade surplus with the United States.

“My initial thoughts are the new president (Trump) is sending a big message to the Chinese about their willingness to act on North Korea as well with this strike,” said Jeffrey Halley, senior market analyst at OANDA.

Besides the risk-aversion sentiment in the market, gold is also supported by technicals, analysts said.

“Gold has broken the 200-day moving average intra-day and has tested its upper resistance at $1,264, the Feb. 28 high. A daily close above these levels can open a technical move to $1,300 with support now at $1,250,” Halley said.

Spot gold is expected to break resistance at $1,273 per ounce and rise more to the next resistance level at $1,281, as suggested by its wave pattern and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.

“We saw several foreign investors buying and Chinese investors selling as the prices rose this morning,” said a trader with a Shanghai-based bullion bank.

“Most investors in China think this is a short term impact. These kind of events, unless they cause more severe consequences, will only result in a spike in gold prices.”

Investors will also watch out for March U.S. non-farm payrolls data due later on Friday, which analysts say could be key for the short-term direction of the gold market.

Strong job gains will likely add upward pressure on wages, supporting higher interest rates, which could pressure gold.

Higher interest rates reduce investor appetite for non-interest bearing gold.

Spot silver rose 0.8 percent to $18.37 an ounce, after touching $18.47, the most since Feb. 27.

Platinum rose 0.2 percent to $961.05, while palladium was up 0.6 percent to $807.50

 

(Reporting By Nallur Sethuraman in Bengaluru; Editing by Christian Schmollinger and Joseph Radford)

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Old Mutual puts China insurance joint venture stake on block

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By Sumeet Chatterjee and Carolyn Cohn

HONG KONG/LONDON (Reuters) – Old Mutual has put up for sale its 50 percent stake in a Chinese insurance joint venture, people with direct knowledge of the matter said, as part of a revamp of the Anglo-South African financial group and amid a tough market for foreign insurers in China.

Old Mutual, which is working with financial advisers on the stake sale plan, could sell its holding in the 13-year-old life insurance joint venture with Guodian Corp to one or more local firms, said the people.

The move is part of a broader Old Mutual group restructuring exercise to exit non-core and smaller operations, they said, adding there is no certainty a deal would happen and the company could end the process if the bids don’t match its expectations.

An Old Mutual spokesman declined to comment, while an email sent to Old Mutual-Guodian Life Insurance Co Ltd did not elicit an immediate response.

Despite being the world’s second-largest insurance market, restrictive ownership limits, capped at 50 percent for foreign life insurers, and tough local competition have weighed on foreign firms’ operations and market share in China.

Chinese firms, including China Life Insurance Co, Ping An Insurance Group Co of China and a host of mid-sized insurers dominate the local market, with foreign joint ventures owning less than a 10 percent share.

The restrictive ownership limit and the tough competition from local firms, many of them state-backed, have especially impacted the smaller foreign insurance joint ventures such as Old Mutual’s in China.

In 2015, Old Mutual’s share of profit in the joint venture was 2 million pounds ($2.50 million), as per its annual report. The venture’s insurance business income in the fourth quarter of last year rose 12 percent to 118.4 million yuan ($17.16 million).

Given the venture’s small size, it was not immediately possible to estimate the potential sale value of Old Mutual’s stake, the people said. They declined to be named as they were not authorised to speak about Old Mutual’s plan, which is not public yet.

Guodian is one of China’s five major state-run power generation companies.

Old Mutual is in the midst of breaking up its business in four parts by the end of next year. The firm aims to list or sell its emerging markets business and is sharpening focus on its sub-Saharan Africa business.

The company sold a 25 percent stake in its Old Mutual Asset Management business last month to China’s HNA for $446 million, after selling its Italian wealth management business last year for $297 million.

Besides China, Old Mutual’s Asia presence includes its life insurance joint venture in India with Kotak Mahindra Group.

($1 = 0.8010 pounds)

($1 = 6.8982 Chinese yuan renminbi)

 

(Reporting by Sumeet Chatterjee in HONG KONG and Carolyn Cohn in LONDON; Additional reporting by Julie Zhu; Editing by Muralikumar Anantharaman)

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Nigeria cabinet approves $1.3 billion loan for Development Bank of Nigeria – finance minister

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ABUJA (Reuters) – Nigeria’s cabinet has approved $1.3 billion of loans from international lenders to fund the newly licensed Development Bank of Nigeria, the finance minister said on Wednesday.

The money is made up of $500 million from the World Bank, $450 million from the African Development Bank, $200 million from German state bank KfW and $130 million from France’s state development agency, said Kemi Adeosun, Nigeria’s finance minister.

The loan facility is still subject to approval by the National Assembly, she said.

 

(Reporting by Felix Onuah; Writing by Paul Carsten; Editing by Larry King)

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South Africa’s Treasury says exit of director-general “imminent”

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JOHANNESBURG (Reuters) – South Africa’s Treasury on Wednesday said the departure of its Director General Lungisa Fuzile, whose contract was due to end in May 2018, was now imminent.

The Treasury said in a statement that Fuzile had been indicating his desire to leave the department for some time, and in the past few days he has been focusing on ensuring a smooth hand over to new Finance Minister Malusi Gigaba.

Fuzile’s departure would follow that of his former boss Pravin Gordhan, who was sacked in a cabinet reshuffle and replaced by Gigaba.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Joe Brock)

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South Africa’s deputy central bank governor says downgrade to junk a major setback

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PRETORIA (Reuters) – The deputy governor of South Africa’s central bank said on Thursday the downgrade of the country’s credit rating to junk status by S&P was a “serious set back”, and that the bank was ready to act if the political events caused the favourable rates outlook to reverse.

“It is a serious setback for the country. We will now need to redouble our efforts in providing assurance and communicating continued commitment to sound macro economic policies,” Deputy Governor Daniel Mminele said in a speech at a business cocktail.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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Nigeria oil tanker drivers call off strike after government pay deal

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ABUJA (Reuters) – Nigerian oil tanker drivers ended a strike over pay and the poor condition of the roads just hours after it began on Monday, following a government intervention, ending the threat of fuel shortages developing.

The union called off the strike “because the federal government has intervened and promised to look into the drivers’ demands,” said Charles Eleto, a regional chairman for Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), one of Nigeria’s two major oil workers’ unions.

In a meeting in the capital Abuja on Monday, the head of the Nigerian National Petroleum Corporation agreed with NUPENG’s president to increase transportation fees for the workers, said a spokesman for the firm.

 

(Reporting by Camillus Eboh and Anamesere Igboeroteonwu; Additional reporting by Alexis Akwagyiram in Lagos; Writing by Paul Carsten; Editing by Greg Mahlich)

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Botswana’s economy rebounds in final quarter of 2016

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GABORONE (Reuters) – Botswana’s economy expanded 0.1 percent quarter-on-quarter in the last three months of 2016 versus a revised 1.1 percent contraction in the third quarter, data from the statistics office showed on Monday.

On a year-on-year basis, gross domestic product (GDP) growth was at 4.2 percent in Q4 after expanding by 6.9 percent in Q3.

Statistics Botswana said the increase in growth in the quarter was due to expansions in the trade, hotels and restaurants, transport and communications sectors, while mining production continued to decline due to the closure of the country’s copper and nickel mines.

 

(Writing by Mfuneko Toyana; Editing by James Macharia)

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