High rates draw investors
Global trade is on track to expand 2.4 percent this year after growing at the slowest pace since the financial crisis, just 1.3 percent, in 2016, according to the World Trade Organisation.
WTO director-general Roberto Azevedo said last week there was “deep uncertainty” about economic and policy developments, particularly in the US, and clarity was needed on US President Donald Trump’s “America First” trade policies.
Similar concerns were voiced by an overwhelming majority of economists who answered an additional question in the poll, suggesting broad agreement among economists on the need to resist protectionism.
While US Commerce Secretary Wilbur Ross said such warnings were “rubbish,” because the US was less protectionist than its trading partners, Trump has made reducing trade deficits a key focus of his economic agenda. FOREIGN investors lured by interest rates among the highest in emerging markets poured 159 billion rubles (R37.1 million) into Russia’s local-currency debt in March, the most on record. Most of the inflow came in the second half of the month after the US Federal Reserve laid out an unexpectedly dovish rate-hike outlook, Russia’s central bank said in a report on Wednesday. The strong demand means there’s little risk of substantial ruble weakening, even after the currency’s 8.7 percent surge this year, it said. The Fed’s tone reignited the so-called carry trade for investors, who borrow where interest rates are low to invest in high-yielding currencies. Demand for the bonds, also known as OFZs, hasn’t abated and the finance ministry sold all 39.5 billion rubles of 2019 and 2033 notes tendered. – Bloomberg US