2025-11-26 11:00

ECB warns of risks from Trump's tariffs on dollar stability De Guindos downplays risk of Fed shutting emergency liquidity line ECB highlights reliance on repos and FX swaps for dollar liquidity Euro zone banks hold 681 billion euros in dollar securities FRANKFURT, Nov 26 (Reuters) - Euro zone lenders with big dollar businesses should bulk up their liquidity and capital cushions to withstand any squeeze in a U.S. currency made more volatile by President Donald Trump's actions, the European Central Bank said on Wednesday. The ECB has been telling banks to watch their dollar exposure since Trump's tariffs and his pressure on the Federal Reserve rattled confidence in the world’s reserve currency in the spring. Sign up here. In the ECB's latest Financial Stability Review, the message sharpened: the handful of large euro zone banks active in dollars need to prepare. "Capital headroom could be needed to absorb ... higher currency volatility and counterparty credit risk," the ECB said in the twice-yearly report. "Banks should hold liquid U.S. dollar assets to counterbalance outflows and act as a stabilising intermediary." The report repeated warnings about stretched stock market valuations, high debt, trade tariffs and the rise of stablecoins as factors that could endanger financial system stability. Compiled by economists, the FSR does not amount to binding recommendations for the banks under its supervision. However, it underscored the depth of policymakers' concern over dollar liquidity, which euro zone banks normally source via repurchase agreements (repos) and foreign exchange (FX) swaps. "Dollar outflows in an extreme scenario could exhaust their capacity to raise cash through repos, FX swaps and the sale of such assets," the ECB said, without spelling out what one such scenario would look like. One nightmare scenario — not spelled out in the review — would be the Fed shutting its emergency liquidity line to the ECB, removing a backstop banks have relied on since the financial crisis. ECB VP PLAYS DOWN RISK Sources have told Reuters some central bank officials had even been thinking about pooling dollar and gold reserves outside of the United States to prepare for such an event. ECB Vice President Luis de Guindos played down this risk, emphasising that those swap lines are key to keeping markets calm both in the United States and Europe. "We do not have any sort of information with respect to the modification of the present situation, with respect to swap lines," he told a press conference as he presented the FSR. "These bilateral swap lines...are very important factors to keep financial stability in place on both sides of the Atlantic." New York Fed President John Williams also said this month the swap lines were good for both the U.S. and its counterparts. The ECB said dollar operations are concentrated among the bloc’s heavyweights. These are BNP Paribas (BNPP.PA) , opens new tab, Deutsche Bank (DBKGn.DE) , opens new tab, Credit Agricole (CAGR.PA) , opens new tab, Groupe BPCE, ING (INGA.AS) , opens new tab, Banco Santander (SAN.MC) , opens new tab and Societe Generale (SOGN.PA) , opens new tab. The business typically includes borrowing on U.S. money markets to finance hedge funds or selling foreign exchange swaps to European insurers, funds and corporates hedging their dollar exposure. To offset their own currency risk, these banks often take the opposite side with global lenders via swaps that rarely show up on balance sheets. "Rolling over these positions can become challenging during periods of stress in FX swap markets," the ECB said. For now the ECB sees only a "limited" mismatch between dollar assets and liabilities, with some banks using repos to align maturities. But it warned these strategies "do not fully eliminate liquidity risk". Euro zone banks held 681 billion euros ($788.33 billion) in dollar securities and lent the equivalent of 712 billion euros in the U.S. currency as of the end of last year, ECB data shows. ($1 = 0.8639 euros) https://www.reuters.com/business/finance/euro-zone-banks-with-dollar-exposure-need-more-buffers-ecb-says-2025-11-26/

2025-11-26 10:59

ANCIENT OLYMPIA, Greece, Nov 26 (Reuters) - The torch for the Milano-Cortina 2026 Winter Olympics was lit on Wednesday in an indoor and scaled-down ceremony in ancient Olympia due to weather warnings, marking the final push for organisers for the event in February. The traditional ceremony, normally held at the stadium where the Games were born in ancient Greece and using actresses as priestesses who light the flame from the sun's rays using a parabolic mirror, was scrapped ahead of time due to heavy rain warnings. Sign up here. Instead, with the sun shining outside, officials inside the Olympia archaeological museum attended a low-key event with a video showing the lighting of the flame during Monday's rehearsal in the ancient stadium, before the flame was carried into the museum for the torch lighting. Greek rower Petros Gaidatzis was the first torchbearer who left the museum and he was soon joined by Italy's multiple Olympic cross-country skiing medallist Stefania Belmondo for a joint leg of the relay. After a week-long Greek relay, the flame will be handed over in Athens to Italian Games organisers on December 4 before it travels to Italy for the start of a months-long domestic relay. "The past and the present are really coming together," said International Olympic Committee President Kirsty Coventry in a short speech. "Today’s ceremony reminds us what the Olympic Games stand for: bringing people together in peaceful competition, friendship and respect." "As we light the Olympic flame... we carry this light from our ancient past into our shared future," said Coventry, who was elected IOC President in March and will preside over her first Olympics in February. The torch will pass through 60 Italian cities and 300 towns with a total of 10,001 torchbearers, before reaching Cortina D’Ampezzo on January 26 – exactly 70 years after the opening ceremony of the 1956 Games at the same venue. The Italian relay will take in famous landmarks including the Colosseum in Rome and the Grand Canal in Venice, with stops in southern cities such as Palermo and Naples to spark excitement in areas where winter sports are not as prominent. The journey will conclude in Milan, entering the San Siro stadium on the evening of February 6 for the Games' opening ceremony. https://www.reuters.com/sports/torch-milano-winter-games-lit-low-key-indoor-ceremony-2025-11-26/

2025-11-26 10:47

NEW DELHI, Nov 26 (Reuters) - India has approved a 72.8 billion rupees ($815.74 million) rare earth permanent magnets manufacturing programme, the information minister said on Wednesday, in an effort to cut reliance on imports for the elements critical to sectors ranging from electric vehicles and aerospace to defence and renewable energy. India's consumption of rare earth permanent magnets - one of the strongest types of permanent magnets - is expected to double by 2030, but it currently meets its demand primarily through imports, according to the government. Sign up here. The South Asian nation imported 53,748 metric tons of rare earth magnets in the fiscal year ending March 2025. "Right now, all permanent magnets used in the country are imported from somewhere ... with the completion of this programme and the establishment of new plants, our import dependence will practically reduce to zero," Information Minister Ashwini Vaishnaw told reporters after a cabinet meeting. The new programme will increase self-reliance by supporting the establishment of manufacturing facilities with a total capacity of 6,000 metric tons per annum, India's heavy industries ministry said in a statement. The capacity will be allocated to five beneficiaries through a global competitive bidding process, each of whom will be allotted up to 1,200 metric tons per annum, it added. ($1 = 89.2440 Indian rupees) https://www.reuters.com/world/india/india-approves-816-mln-rare-earth-permanent-magnets-manufacturing-programme-2025-11-26/

2025-11-26 08:32

Venezuelan bonds top global hard currency returns as US presses Maduro Bets on right-wing electoral wins impacting market sentiment in Colombia Longer term, markets favor credible macro policies over political alignment NEW YORK, Nov 26 (Reuters) - Latin America's political map is tilting to the right just as Washington signals deeper support for ideologically aligned governments, a convergence that investors say is starting to reshape how risk is priced across the region's assets. Conservative leaders already govern Argentina, Ecuador and El Salvador, with Bolivia joining the market-friendly column this month. A right-wing bloc came close to winning simple majorities in the Chilean Congress earlier this month, with Jose Antonio Kast tipped to become the country's first far-right president since the Pinochet dictatorship. Sign up here. Conservative candidates are also likely to win presidential elections in Peru and Colombia next year. This leads up to the upcoming departure of leftist Gustavo Petro, who cannot run for reelection in Colombia, and whose outspoken criticism of U.S. policies has made him one of President Donald Trump's top bogeymen in the region. Amid the burst of support for Argentina's government during the October midterms, U.S. Treasury Secretary Scott Bessent said there was a "generational opportunity" to create allies in Latin America, citing upcoming elections in Chile and later in Colombia. While Trump has picked fights with Colombia, Brazil and above all Venezuela, his administration has also cozied up to governments pursuing deregulation, aggressive crime-busting or budget-cutting, showering such allies with financial favors that some fund managers say are now starting to influence sentiment. Trump'sactions against Venezuelan President Nicolas Maduro have triggered massive market interest on bets of a change. "We've generally seen it as a positive development for risk in the countries which matter to the U.S., and there's definitely been a pickup in focus around Latin America in particular," said Grant Webster, co-head of EM FX and sovereign in the EM fixed income team at investment manager Ninety One. Latin American financial assets have had a strong 2025 across the board, with some countries' markets enjoying outsized gains despite tangling with Trump. For example, Brazil's and Colombia's currencies are up 15% and 16% against the greenback, respectively. The dollar is down 8% this year against its developed market peers. The outperformance has straddled the region, with local currency bonds gaining 15% at the index level, while hard-currency has gained 16%, both outperforming their global peers. Equities in the region have rallied over 40% in dollar terms this year, while their price-to-earnings ratio shows they remain cheap compared to both emerging and developed markets. Yet the U.S. approach in the region could work as more of a differentiating variable going forward, with Argentina serving as the poster boy for the new U.S. approach. Washington has been an outspoken supporter of Argentine President Javier Milei's libertarian overhaul, offering up to $20 billion of the country's balance sheet to stabilize the economy and support the government. Fitch said the involvement spared Argentina, whose reserves had been dwindling in the weeks before the U.S. intervention, another credit rating downgrade. That stance has reinforced the perception that ideological alignment may bring financial benefits. "It certainly has been for Argentina. It's been helpful for Venezuelan debt prices," Webster said. "We take each one as it comes, but on the whole we slightly view other countries in a different light now, because we think the U.S. could have positive influence over them." Venezuelan bonds, although deeply distressed and still trading around 30 cents on the dollar, have returned close to 100% this year, making them the top performers globally in hard currency bond returns according to JPMorgan's benchmark (.JPMEGD) , opens new tab. Chile's impending realignment has driven one of the region's strongest equity rallies this year, with the S&P IPSA index up 48%, far outperforming even Mexico and Brazil's local benchmarks, up close to 30%. "With right-leaning parties only one vote away from securing simple majorities in the recent Lower House and Senate elections, we would expect strong Congressional support for growth and investment-enhancing reforms, even if in practical terms they might take time to materialise," Morgan Stanley analysts wrote this week. Foreign investment in the country could ramp up early next year, they added. Conservative candidates' electoral dominance has supported expectations of regulatory streamlining and tight-fisted budget policies beyond Chile. For investors, the election result there "just confirms the trend, which I would say is market positive," said Viktor Szabo, portfolio manager at Aberdeen Investments. "We do have that move to the right, as we have seen in Argentina, as we've seen in Bolivia. And it's quite important, because we have some really important elections coming up next year, particularly in Colombia and especially in Brazil," he added. "It's clear the markets have preference for right-wing governments." Still, Trump's alliances, which are sometimes fickle, could end up taking a back seat to fiscal health and macroeconomic stability over the longer-term, favoring countries like Peru over Chile and especially Argentina, which is haunted by memories of fiscal crises. "We don't see Washington alignment as a primary pricing variable yet," said Pramol Dhawan, head of PIMCO's emerging markets portfolio management team. "Markets favor credible macro policies regardless of political orientation. The real question is policy execution and institutional strength. We price country-specific fundamentals first, geopolitics second." https://www.reuters.com/world/us-political-support-tilts-latam-market-risk-investors-say-2025-11-26/

2025-11-26 07:47

BELGRADE, Nov 26 (Reuters) - Serbia is preparing an amendment to the draft budget law that would enable it to take ownership of its Russian-owned, U.S.-sanctioned oil refiner NIS (NIIS.BEL) , opens new tab, the parliament speaker told Euronews Serbia on Tuesday. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) placed sanctions on Russia's oil sector in January, including NIS, which is majority owned by Russia's Gazprom Neft (SIBN.MM) , opens new tab and Gazprom (GAZP.MM) , opens new tab. The U.S. granted NIS repeated waivers before the sanctions finally came into effect in October. Sign up here. Ana Brnabic, a close ally of President Aleksandar Vucic, said on Tuesday evening that the parliament would start debating amendments to the budget law, prepared by the country's ruling SNS party, on Wednesday afternoon or on Thursday. "One of the amendments that will be submitted will be the one that will foresee the circumstance that at some point we will take over NIS," Brnabic told Euronews. Vucic said on Tuesday that NIS oil refinery will shut down in four days if the United States does not lift sanctions, risking fuel supplies ahead of winter. https://www.reuters.com/business/energy/serbia-prepares-amendment-enable-takeover-russian-owned-refiner-official-says-2025-11-26/

2025-11-26 07:45

LONDON, Nov 26 (Reuters) - Sterling was steady against the dollar early on Wednesday as wary investors awaited what is expected to be a tax-heavy budget from British finance minister Rachel Reeves, with her speech due to start at around 1230 GMT. Reeves is expected to raise tens of billions of new tax revenue in a budget that will test her credibility with investors. Sign up here. The pound was last down less than 0.1% on the dollar at $1.3159. It is up around 0.6% for the week so far, however, partly thanks to the weaker dollar and traders fine-tuning their positions heading into the speech. PREPARED FOR BAD NEWS "I think the market has, in recent weeks, probably months, built up short positions in sterling, so I think the market is prepared for bad news," said Jane Foley, head of FX strategy at Rabobank. "That is why we saw Sterling a little bit higher yesterday. I believe there is scope that if we don't get have any big negative surprises today, there may be even a little bit of short covering," she said. The pound was also steady against the euro at 87.91 pence, very marginally stronger so far this week. In the medium term, however, most analysts see the pound weakening further as the Bank of England cuts rates. Reeves' public remarks ahead of the budget indicate she hopes it will put downward pressure on prices, making it easier for the BoE to ease. "Keeping inflation down is a theme, because Reeves needs the BoE to cut interest rates," Foley added. The BoE kept interest rates unchanged in November in a tight 5-4 vote, but markets expect the central bank will resume its rate-cutting cycle when it convenes next month. Money market traders are currently pricing in a more than 80% chance of a rate cut from the BoE in December. https://www.reuters.com/world/uk/pound-edges-up-ahead-uk-budget-2025-11-26/