Energy prices pushed US consumer prices up 0.3 per cent in August, as in July. (Without seasonal adjustment, the increase was 0.1 per cent.)
Holding energy and food prices constant, however, prices would have been static on the month. This is unusual: for the past three months, the index for all items less food and energy increased. Year-on-year, this index has remained at 0.9 per cent for five straight months, making the headline rise in inflation potentially misleading. Read more
Both short- and medium- term rouble volatility will fall if the central bank gets its way. The Bank of Russia tweaked its currency interventions strategy yesterday, saying it would consider oil prices when working out how many roubles to sell.
A warning was also issued to forex speculators as the Bank said its currency interventions were “directed mainly at neutralising the firm expectations of forex market participants”. Oil price rises can heighten speculation of a rouble rise, as the Russian economy is heavily dependent on the stuff.
The rouble has greatly appreciated in recent months, and the Bank is still cutting interest rates and buying dollars and euros to counter the rise.
The Bank of Russia explained its intervention strategy thus:
The operations of the Bank of Russia on purchases/sales of foreign currency undertaken in excess of the set target volumes are directed at smoothing out the movements in the rouble’s exchange rate which are not determined by the influence of fundamental economic factors.
It’s not about central banks, but it has the potential to affect the risk profile of every country in Europe.
Kazakhstan is considering a new pipeline route to bring its growing oil surplus to Europe, via Georgia and Armenia, a route that was damaged during the 2008 Russian-Georgian conflict. This would reduce Kazakh dependence on Russian pipelines. A surge of oil production is expected from 2012 when the Kashagan oilfield comes onstream in the Caspian sea – doubling Kazakh output to 3m barrels per day. Read more
The US, Britain, France and Germany are trying to convince Russia and China to agree to blacklist Iran’s central bank and firms linked to the Revolutionary Guard Corps, in a new round of UN sanctions over Tehran’s nuclear program. Russia and China are permanent members of the UN Security council, which means they can – and do – veto resolutions.
Such sanctions could hurt Iran’s energy market. The government has allowed for up to €5bn euro bond issues by the oil ministry to help finance development of the country’s oil, gas and petrochemical sectors. Read more
A report published by MIT suggests the world faces a uranium shortage from 2013. So, a few excel spreadsheets later, we have a rough-and-ready Vulnerability Index for you. Most vulnerable, by our reckoning, are France, Japan and South Korea. Most secure are Australia, Kazakhstan and Uzbekistan. More here. Read more
Banks face higher refinancing costs as $7,000bn of short-term debt is due to mature in the next three years. The IEA is accused of overstating energy reserves and the chief economist of the World Bank says China should not be forced to allow appreciation of the renminbi Read more