News

The United States government credit rating has been downgraded following concerns over the country’s finances and debt burden.

Yes, that is correct. On August 1, 2023, Fitch Ratings downgraded the United States’ long-term credit rating from AAA to AA+. This was the first time the US had been downgraded since 2011.

Fitch Cited three Main Reasons for the Downgrade.

• The expected fiscal deterioration over the next three years. As the US government faces rising interest payments on its debt and increasing spending on entitlement programs such as Social Security & Medicare.
• The high and growing general government debt burden, which is now over 100% of GDP.
• The erosion of governance relative to peers, as evidenced by the repeated debt ceiling standoffs and last-minute resolutions in recent years.

The Downgrade is a significant development. As it could make it more expensive for the US government to borrow money and could also lead to a decline in the value of the US dollar. However, it is essential to note that the US still has a solid credit rating. And the Downgrade is not a sign that the US is about to default on its debt.

Fitch also assigned a Stable Outlook to the US rating, meaning they do not expect to downgrade the rating further soon. However, they warned that the rating could be downgraded if the US government does not take steps to address its fiscal challenges.

The Downgrade has been met with mixed reactions. Some economists have argued that it is a necessary wake-up call for the US government. While others have argued that it is an overreaction. Only time will tell how the Downgrade will impact the US economy and financial markets.

Continue to read click on this link: https://www.bbc.com/news/business-66379366

Donald Trump Proposes Harsher Tax, Trade Policies With India

Donald Trump, who is considering running for president again in 2024, has proposed harsher tax and trade policies with India if he is elected. These policies would include:

• Retaliating against India for imposing higher tariffs on American goods by imposing equally harsh tariffs on Indian goods.
• Ending the Generalized System of Preferences (GSP) program, which gives India duty-free access to some American goods.
• Imposing tariffs on Indian imports of steel, aluminium, and other products.
• Increasing scrutiny of Indian investment in the United States.

Trump has argued that these policies are necessary to protect American jobs and businesses from unfair competition from India. However, Indian officials have criticized the proposals, saying that they would damage the bilateral trade relationship.

It is unclear whether Trump would be able to implement these policies if he is elected president. The US Congress would need to approve any changes to the GSP program or tariffs on Indian imports. However, Trump has shown a willingness to use executive power to impose tariffs, and he could do the same with India if he feels that it is necessary.

The impact of these policies on the US-India relationship is also uncertain. The two countries are important trading partners, and any disruption to trade could have a negative impact on both economies. However, it is also possible that the policies could lead to a more balanced trade relationship between the two countries.

Only time will tell whether Trump will be able to implement his proposed trade policies with India. However, his announcement of these policies has already raised tensions between the two countries.

Click To Read More: https://www.livemint.com/news/world/donald-trump-2024-us-poll-bid-proposes-harsher-tax-trade-policies-with-india-11693994381080.html

US Commerce Secretary Gina Raimondo warned on August 30 that US firms could deem China’s business environment as “too risky” without changes to the regulatory environment.

She cited a number of concerns, including:

• The lack of transparency & predictability in the regulatory process.
• The arbitrary enforcement of regulations.
• The theft of intellectual property.
• The forced transfer of technology.
• The lack of due process for foreign businesses.

Raimondo said that US businesses need to see “some action taken” to address these issues before they will be willing to invest more in China.

The Chinese government has denied these allegations, but it has also taken some steps to address them. In recent months, it has released a number of new regulations aimed at improving the business environment for foreign companies. However, it remains to be seen whether these measures will be enough to convince US businesses that China is a safe place to invest.

The US-China relationship is currently at a low point, and the issue of business investment is just one of many areas of contention. It is unclear how the two countries will resolve these differences, but it is clear that the business environment in China will be a key factor in any future deal.

Here are some other risks of doing business in China:

• The political risk of instability or conflict.
• The economic risk of a recession or financial crisis.
• The legal risk of being subject to Chinese law, which can be different from US law.
• The cultural risk of misunderstanding or conflict between Chinese and foreign business practices.

These risks can be eased by careful planning and due diligence, but they are always present when doing business in China.

To Read More: https://www.thehindu.com/news/international/us-says-its-firms-could-deem-chinese-business-environment-too-risky/article67252087.ece

Dollar Set for Weekly Loss

Yes, that’s correct. The dollar is set for a weekly loss as it heads into a pivotal monthly US jobs report likely to inform the path for Federal Reserve policy over coming months.

The dollar index, which trials the currency against a basket of six developed-market peers, is down about 0.5% this week. It is on track to snap a six-week winning streak.

Dollar has been Driven by a Combination of Factors

• Soft economic data from the US. Several recent financial reports have been weaker than expected, raising concerns about the strength of the US economy.
• They are falling Treasury yields. US Treasury yields have declined this week, which has made the dollar less attractive to investors.
• The upcoming US jobs report. The nonfarm payrolls report for August is due to be released on Friday. A strong jobs report could boost the dollar, while a weak report could weigh the currency.

The Federal Reserve is expected to raise interest rates in September, but the pace of future rate hikes will depend on the strength of the US economy. A strong jobs report could lead the Fed to raise rates more aggressively, while a weak report could prompt the Fed to slow down its tightening cycle.

Overall, the dollar will likely remain volatile in the near term as investors await the upcoming US jobs report and assess the outlook for the US economy.

Read More Here: https://www.republicworld.com/business-news/international-business/dollar-set-for-weekly-loss-as-crucial-us-jobs-data-looms-articleshow.html

US Commerce Secretary Gina Raimondo’s Statement on China

Yes, that’s correct. US Commerce Secretary Gina Raimondo said on Tuesday that American companies have told her that China has become “Uninvestable” because of the risks posed by the Chinese government’s actions.

Raimondo made the comments during a visit to China, where she met with Chinese officials to discuss trade and economic relations. She said that US companies are concerned about the Chinese government’s increasing use of fines, raids, and other measures to target foreign businesses. She also said that companies are worried about the Chinese government’s opaque regulatory environment and its lack of respect for intellectual property rights.

Raimondo’s comments are a sign of the growing concerns that US companies have about doing business in China. The Chinese government has been taking a more aggressive approach to regulating foreign businesses in recent years, and this has made it more difficult and riskier for companies to operate in China.

The Chinese government has denied that it is trying to drive away foreign businesses. However, Raimondo’s comments suggest that the Chinese government needs to do more to address the concerns of US companies if it wants to maintain its attractiveness as a destination for overseas investment.

Specific Concerns US Companies have about doing Business in China:

• Intellectual property theft: The Chinese govt has been accused of widespread intellectual property theft, which has cost US companies billions of dollars.
• State-owned enterprises: Chinese state-owned enterprises (SOEs) enjoy unfair advantages over private businesses, which makes it difficult for foreign companies to compete.
• Opaque regulatory environment: The Chinese government’s regulatory environment is often opaque and unpredictable, which makes it difficult for foreign companies to comply with the law.
• Raids and fines: The Chinese government has been known to raid the offices of foreign businesses and impose fines without due process.
• Data security: The Chinese government has been accused of using data collected from foreign businesses for its own purposes, such as spying.

These concerns have led many US companies to reconsider their investments in China. In recent years, there has been a decline in the number of new US investments in China.

The Chinese government has taken some steps to address the concerns of US companies. But it is not clear if these measures will be enough to reverse the trend. The Chinese government needs to do more to create a level playing pitch for foreign businesses. And also to protect intellectual property rights. It also needs to make its regulatory environment more transparent and predictable.

Only time will tell if the Chinese government is willing to make the necessary changes to attract more foreign investment.

To read more click On this link: https://www.aljazeera.com/news/2023/8/29/us-commerce-secretary-says-companies-see-china-as-uninvestable

Introduction

China Evergrande Group filed for Chapter 15 bankruptcy protection in a New York court on Thursday, August 18, 2023. This type of bankruptcy protection allows foreign companies to protect their assets in the United States while they work on restructuring their debts.

Evergrande is the world’s most obligated property developer, with over $300 billion in liabilities. It has been struggling to pay its debts since 2021, and its default has raised concerns about the stability of China’s property market and the global financial system.

The Chapter 15 filing does not mean that Evergrande is going bankrupt. It allows the company to protect its assets in the United States while working on a restructuring plan. The company has said it is still committe to completing its restructuring and will continue to operate its businesses.

The restructuring process is likely to be complex and time-consuming. It is not clear how much of Evergrande’s debt will repaid, and it is possible that some creditors will not be fully compensated. However, the Chapter 15 filing is a positive step for Evergrande, giving the company some breathing room to work on a solution.

The Chinese government is closely monitoring the Evergrande situation. It has taken steps to stabilize the property market and is likely to play a role in Evergrande’s restructuring. The government’s goal is to prevent a disorderly collapse of Evergrande. Which could have a ripple effect on the Chinese economy and the global financial system.

Conclusion

China Evergrande Group crisis is a reminder of the risks of over-leverage in the Chinese property market. The government has been trying to reduce leverage in the sector for some time. But the Evergrande crisis has shown that there is still a long way to go. The government is likely to continue tightening property market regulations to prevent another situation like Evergrande from happening.

To continue to read more click on this link: https://www.bbc.com/news/business-66540785

FED CHAIR POWELL SENDS A Goldilocks SPEECH

Yes, that’s right. Wall Street closed higher on Friday after Federal Reserve Chair Jerome Powell delivered a speech in Jackson Hole, Wyoming. In which he said that the central bank is ready to increase interest rates further if needed to combat inflation. Powell’s speech was a “Goldilocks” message.  It was not too hawkish and not too dovish. This helped to calm market nerves.

The Dow Jones Average rose Industrial 125 points, or 0.4%, to close at 35,330. The S&P 500 gained 0.2% to 4,459. The Nasdaq Composite added 0.1% to 14,861.

Powell said in his speech that the Fed is “strongly committed” to taking inflation back to its 2% target. He acknowledged that inflation is running well above that level. He said that he believes it is transitory and will come down as supply chain disruptions ease and the economy grows.

Powell predicted the Fed is prepared to raise interest rates more than once to control inflation. However, he stressed that the Fed will be “data-dependent” in making its decisions and will not raise rates too quickly or aggressively.

The markets took Powell’s speech as a sign that the Fed is more serious about fighting inflation but also mindful of the risks to the economy from raising rates too quickly. This helped calm market nerves and led to stock gains on Friday.

This will show how the markets will react to the Fed’s next policy decision, due in September. However, Powell’s speech reassured investors that the Fed is on top of the inflation situation which also effected the wall street.

Click here to continue reading: https://edition.cnn.com/business/live-news/markets-jackson-hole-fed-meeting/index.html

Rupee Rises Paise Against US Dollar

The news “Rupee rises 2 paise to 82.61 against US dollar” indicates that the Indian rupee has appreciated against the US dollar.

• Rupee: The Indian rupee (INR) is the official currency of India.
• 2 paise: A “paise” is a subunit of the Indian rupee. There are 100 paise in 1 rupee. An appreciation of 2 paise means that the value of 1 rupee has increased by 2 paise against the US dollar.
• 61 against the US dollar: This figure (82.61) represents the exchange rate between the Indian rupee (INR) and the US dollar (USD). It means that 1 US dollar equals 82.61 Indian rupees in this particular instance.

Overall, it indicates that the value of the Indian rupee has strengthened slightly against the US dollar, as it takes fewer rupees to purchase 1 US dollar compared to the previous exchange rate. Exchange rates can fluctuate due to various economic factors, including interest rates, inflation, trade balances, and geopolitical events.

To read more: https://indianexpress.com/article/business/economy/rupee-rises-paise-against-us-dollar-8914379/