(Reuters) -KDDI Corp shares fell as much as 3.9% on Monday after a weekend outage, the biggest system failure in the history of Japan’s No.2 wireless carrier, which affected almost 40 million users nationwide.

In a statement issued at 9:00 a.m. local time (0000 GMT) on Monday KDDI said data transmission had been broadly restored, but users might still experience difficulty in making voice calls due to service restrictions.

The disruption, which began in the early hours of Saturday morning, was caused by an equipment malfunction and affected services ranging from weather data to parcel delivery and banking.

The outage at a pillar of Japan’s corporate establishment is the latest sign of strain on infrastructure in the world’s third-biggest economy, after its power grid creaked during a heatwave last weak, though blackouts were narrowly avoided.

The KDDI disruption came just days before an election to the upper house of Japan’s parliament. Prime Minister Fumio Kishida is promoting digital infrastructure as part of his “new capitalism” agenda to invigorate the economy.

By the midday break in Tokyo trading KDDI shares had regained some lost ground, but were still down 1.8%, compared with a 0.6% gain in the benchmark Nikkei 225 index.

“We take this issue very seriously and expect KDDI to explain in detail what happened to those who were affected,” Deputy Chief Cabinet Secretary Seiji Kihara told reporters on Monday.

“Many couldn’t use mobile phone service – important infrastructure for daily life and the global economy – for a long time, and we find that very disappointing,” the government spokesperson said.

“We deeply regret this as a telecommunications carrier in a position to support critical infrastructure and provide stable services,” KDDI President Makoto Takahashi said on Sunday.

Japan’s government will take necessary measures after receiving an official report from KDDI, Yasushi Kaneko, minister for internal affairs and communications, said on Sunday.

Regulators took a role in overseeing computer systems at the retail banking arm of the country’s third-largest lender, Mizuho Financial Group, after a string of ATM outages.

“The main risk is that more outages are possible because network complexity is difficult to manage,” said Redex Research analyst Kirk Boodry, who publishes on the Smartkarma platform.

Japan’s three big telcos have all had widespread network failures in recent years.

NTT Docomo’s outage last October affected 12.9 customers, while disruption to SoftBank Corp’s network in late 2018 cast a shadow over its bumper public listing.

(Reporting by Sam Nussey, Sakura Murakami and Sam Byford; Editing by Muralikumar Anantharaman and Kenneth Maxwell)

BEIJING -China’s central bank said on Monday that it has upgraded a currency swap facility with Hong Kong to a permanent agreement and expanded the size to 800 billion yuan ($119.40 billion) from 500 billion yuan.

The agreement, signed by the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority, is the PBOC’s first standing swap agreement, according to a statement posted on its website.

The PBOC said the upgraded agreement could provide long-term liquidity support to the Hong Kong market, help stabilize market expectations, and promote the development of Hong Kong’s offshore yuan market.

The agreement came as Hong Kong celebrates 25 years since its return to Chinese rule.

“This year marks the 25th anniversary of Hong Kong’s return to the motherland. The signing of the agreement will help consolidate Hong Kong’s status as a global financial centre and promote the long-term and prosperous development of Hong Kong’s financial industry,” read a separate statement from the PBOC.

China’s President Xi Jinping said on Thursday during a rare visit to the global financial hub that the city has overcome its challenges and “risen from the ashes”.

Xi also said China would support Hong Kong’s role as an international finance and trade hub.

Mainland Chinese and Hong Kong regulators will also create a new programme to allow mutual access between the Hong Kong and mainland interest rate swap markets, they said in a joint statement on Monday.

($1 = 6.7000 Chinese yuan renminbi)

(Reporting by Ellen Zhang, Albee Zhang and Ryan Woo; Editing by Kim Coghill and Sonali Desai)

By Jorge Otaola

BUENOS AIRES -Argentine President Alberto Fernandez named economist and government official Silvina Batakis as the new economy minister late on Sunday after the abrupt resignation of long-standing minister Martin Guzman amid crises and tensions.

Fernandez held meetings all day, including with his powerful and divisive vice president, Cristina Fernandez de Kirchner, as he raced to find a new economy chief after the shock exit of Guzman, a key ally, shook his center-left government.

Presidential spokesman Gabriela Cerruti announced that Fernandez had appointed Batakis to the role. She had been economy minister for the key province of Buenos Aires from 2011 to 2015 and had been leading a government secretariat.

Guzman, 39, submitted his resignation late on Saturday amid rising tensions within the ruling Peronist coalition over how to handle economic crises that have been exacerbated by Russia’s invasion of Ukraine and sky-high inflation.

The shock exit has brought deep-seated splits in the government to the surface, with a more militant wing around Fernandez de Kirchner appearing to land a blow on the more moderate wing over economic plans.

“We are facing a complex political crisis, deepened by the fight for power,” said Rosendo Fraga, a political analyst.

Guzman, a moderate had who served since 2019, was the driving force behind major debt restructurings with creditors. He was also key to sealing a $44 billion deal with the International Monetary Fund (IMF) this year to replace a failed 2018 program with the global lender.

A source at the presidential palace said the President and Vice President, who have not always seen eye-to-eye in recent months, had held a “friendly” dialogue, helping them come to an agreement over who should lead the economy ministry.

POLICY RISK

Batakis, who is more closely allied with Fernandez de Kirchner’s wing, will be key in shaping economic policy over a tightly controlled foreign exchange market, ongoing debt deals and trade. Argentina is a major exporter of soy, wheat and corn.

Goldman Sachs analyst Alberto Ramos said the departure of Guzman was a political blow to Fernandez, already facing slumping support in opinion polls ahead of elections next year, and may compromise the relationship with the IMF.

“A politically weaker and unpopular presidency would increase the risk that macro policy could turn more heterodox and interventionist,” he wrote in a note, adding that foreign exchange and other local markets would likely remain under pressure.

Guzman had come under fire from the militant wing of the ruling coalition around Fernandez de Kirchner, which has been pushing for more state spending to support hard-hit Argentines.

He had been balancing that pressure with the need to cut a deep fiscal deficit, which had become tougher amid soaring energy import costs that have hit foreign-currency reserves.

Economist Joseph Stiglitz, Guzman’s mentor and a close ally, said the minister had done a strong job to resolve a debt crisis left by the previous government and revive growth after the pandemic, but splits in the government had made things untenable.

“His deep principles made it impossible for him to continue in office without a commitment of the government to a united, integrated and coordinated approach to the enormous challenges facing the economy,” Stiglitz said.

(Reporting by Jorge Otaola; Additional reporting by Hugh Bronstein; Editing by Diane Craft and Bradley Perrett)

(Reuters) – Amazon.com Inc founder Jeff Bezos renewed his spat with the White House over the weekend, as the world’s third-richest person criticized President Joe Biden for calling on companies running gasoline stations to lower their prices.

In a tweet on Saturday, Biden said, “this is a time of war and global peril,” and demanded the companies lower gasoline prices, which have soared to about $5 a gallon in many parts of the country.

“Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now,” the president said https://bit.ly/3nCiibW.

Bezos soon after wrote on Twitter: “Ouch. Inflation is far too important a problem for the White House to keep making statements like this. It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics.”

On Sunday, White House press secretary Karine Jean-Pierre rejected the criticism from Bezos, arguing that oil prices had dropped by about $15 a barrel in the past month while prices at the pump had “barely” fallen.

“But I guess it’s not surprising that you think oil and gas companies using market power to reap record profits at the expense of the American people is the way our economy is supposed to work,” she wrote on Twitter.

Bezos has locked horns with Biden’s administration in the past. In May, he accused Biden of misleading the public and blamed his administration for a spike in inflation.

(Reporting by Akriti Sharma in Bengaluru; Editing by Paul Simao)

By Sonali Paul

MELBOURNE -Australia’s mining and energy export revenues are forecast to climb 3% to a record A$419 billion ($286 billion) in the year to June 2023, buoyed by surging coal and gas prices in the wake of Russia’s invasion of Ukraine, the government said on Monday.

Sanctions on Russia for what Moscow calls a “special military operation” to disarm Ukraine have sent prices for liquefied natural gas (LNG) and coal to all-time highs, underpinning record revenue for Australia’s second- and third-largest exports.

“The outlook is for the prices of energy commodities to remain strong for longer than previously forecast, as Western nations look for alternatives to Russian energy supplies,” the Department of Industry said in its resources and energy quarterly report.

However it said higher global interest rates to combat inflation could hurt global economic activity and in turn lower resource and energy export earnings.

The value of LNG exports is forecast to jump 19% to A$84 billion in the year to June 2023, even as volumes are expected to slip by 3% with output declining from gas fields feeding the North West Shelf and Darwin LNG plants.

Exports of thermal coal used in power generation are expected to rise 15% to A$44 billion on strong prices and a small rise in volume, as Australian coal is considered the main alternative to Russia’s higher coal grades, the government said.

Revenue from metallurgical coal used in steelmaking is forecast to climb 3% to A$60 billion.

“With inventories of energy in the Northern Hemisphere well below normal, any supply disruptions will result in more price surges,” the report said, pointing to potential declines in coal output due to heavy rains lashing eastern Australia.

Offsetting gains in LNG and coal, the value of Australia’s top export earner, iron ore, is expected to fall by 12% to A$116 billion in the year to June 2023, with the average price seen falling to $99 a tonne from $119.

($1 = 1.4676 Australian dollars)

(Reporting by Sonali Paul; Editing by William Mallard)

By Anant Chandak and Shaloo Shrivastava

BENGALURU – Malaysia’s central bank will raise rates by 25 basis points on Wednesday, its first consecutive rise in more than a decade, to rein in inflation stemming in part from a weaker ringgit as the U.S. Federal Reserve hikes aggressively, a Reuters poll found.

Bank Negara Malaysia (BNM), although dealing with low inflation compared with many other economies, unexpectedly raised its key overnight policy rate by 25 basis points to 2.00% at its May meeting.

All 22 economists in the June 27-July 1 poll forecast rates to rise by another 25 basis points to 2.25% at the July 6 meeting. The central bank last raised rates twice in a row in mid-2010.

Still, BNM, which has said it intends to take a “measured and gradual” pace, was expected to go slow compared with other global peers.

A slight majority of survey respondents, 12 of 22, predicted another 25 basis point rise in September to 2.50%, while the remaining 10 expected no change after a July hike.

Either way, more rate hikes are certainly coming.

“BNM will be mindful of potential upside pressure to inflation stemming from recent increases in minimum wages, upward adjustments in price ceilings for certain food products, and a pickup in demand-pull inflation on the back of economic reopening,” noted Derrick Kam, Asia economist at Morgan Stanley.

Inflation rose to 2.8% in May from 2.3% in April. The Malaysian ringgit lost ground last quarter and has weakened nearly 6% so far this year, raising the prospect of imported inflation pressure.

“The Malaysian ringgit has been falling against the greenback due to aggressive rate hikes by the U.S. Federal Reserve, and raising the overnight policy rate will help to shore up the currency by maintaining the interest rate differential,” said Denise Cheok, an economist at Moody’s Analytics.

For the November meeting, 12 of 22 analysts in the poll predicted rates at 2.50%, eight said 2.75% while two said 2.25%.

Median forecasts from the poll also predicted 25 basis points hikes in each of the first two quarters of 2023. For Q1 2023, nine of 20 economists expected rates to rise to 2.75%, six forecast 3.00% while five said 2.50%.

The overnight rate was expected to reach its pre-pandemic level of 3.00% in the second quarter next year. Around half of respondents, nine of 19, predicted it to have risen to 3.00%, six said 2.75%, three said 2.50% and one said 3.25%.

BNM at its May meeting kept its 2022 economic growth forecast between 5.3%-6.3% and projected headline inflation to remain between 2.2%-3.2% this year.

(Reporting by Anant Chandak and Shaloo Shrivastava; Polling by Devayani Sathyan; Editing by Ross Finley, Hari Kishan and Alison Williams)

By Gayatri Suroyo and Stefanno Sulaiman

JAKARTA – A decade ago Indonesia earned the unwelcome label of being among the so-called “Fragile Five” emerging markets, economies highly vulnerable to capital outflows and a currency slump whenever global interest rates rise.

But fast forward to a new round of monetary tightening led by the U.S. Federal Reserve, Southeast Asia’s biggest economy and its capital markets have shown remarkable resilience, throwing a spotlight on whether the situation has fundamentally changed.

Indonesia’s central bank is among the world’s least hawkish, having given no hint of when it might lift rates, while inflation has only just nudged above the 2%-4% target range and the rupiah is one of emerging Asia’s best performing currencies.

This contrasts with 2013, when the Fed’s mere mention of plans to taper stimulus triggered destabilising capital outflows that saw the rupiah drop 20%, forcing Bank Indonesia (BI) to hike rates by 175 basis points.

“In Indonesia… there has been no year-to-date increase in the policy rate. Now that’s extremely rare,” Ivan Tan, ratings agency S&P’s financial institutions analyst, told a seminar last week.

Notwithstanding some political risks, Indonesia does appear to be weathering economic conditions better than the others lumped in the Fragile Five – India, Turkey, South Africa and Brazil.

Policymakers say they have learnt lessons from past crises and devised policies such as setting up a domestic non-deliverable forward foreign exchange market, promoting greater use of other currencies in trade and investment rather than the U.S. dollar and selling more bonds to local investors to avoid over-reliance on foreign hot money.

While there is debate about how much these policies have helped, analysts agree record-high exports amid a global commodity boom have helped Indonesia shore up its economic resilience.

“Indonesia benefits as a net commodity exporter … it is in a very good place to control some of the supply side inflationary pressures that some of the other economies are grappling with,” S&P’s Tan said.

This has not only helped the resource-rich country book current account surpluses, it also helped the government reduce bond sale targets and fund energy subsidies to shield its 270 million population from high global oil prices.

Moreover, Indonesia’s stock market is up by more than 5% year-to-date compared with falls in other major Asian equity markets, after having Southeast Asia’s busiest IPO schedules last year.

Authorities hope financial market stability will allow the economy to grow by at least 6% per year so Indonesia can achieve a goal of becoming a rich country by 2045, its 100th anniversary since independence. Indonesia’s long-term targets also include squeezing more out of its ample resources including minerals such as nickel ore by processing more at home.

BI Governor Perry Warjiyo has said the government’s focus on moving up the commodity processing chain would alter the structure of Indonesia’s external balance, strengthening capital flows with foreign direct investment while diversifying exports.

“For the whole year, the (current account) deficit will be small and the balance of payments overall will book a surplus. This means fundamentally, foreign exchange supply is high and it will maintain the rupiah exchange rate stability,” Warjiyo said at BI’s latest policy meeting.

TEMPORARY IMPROVEMENT?

Clouding Indonesia’s current outperformance are political risks to some of President Joko Widodo’s key reforms and longer-term ambitions to become a rich nation by 2045.

These include a court challenge to his flagship Job Creation law, aimed at cutting red tape and the European Union’s objections to Indonesia’s nickel export ban.

Questions also remain over whether Indonesia’s stability can sustain with the Fed still expected to aggressively raise rates further, commodity prices cooling and global recession risks looming.

“Much of (Indonesia’s) improvement seems of temporary nature,” Thomas Rookmaaker, head of Asia-Pacific sovereigns at Fitch Ratings, told Reuters.

Fitch, which affirmed Indonesia’s investment grade ratings last week, expects BI to hike interest rates by 50 bps this year and another 100 bps in 2023 to limit the rate differential with the United States and avoid a sharp rupiah depreciation, he said.

S&P’s Tan also expects pressures in the rupiah this year amid the global monetary tightening.

But some analysts do not see BI in a hurry to hike rates due to low core inflation.

Damhuri Nasution, an economist at BNI Securities, said exports should remain strong for a while, giving BI time to focus on growth and monitor recession risks.

Meanwhile, some foreign investors are backing Indonesia’s growth story.

Jupiter Asset Management’s head of strategy for global emerging markets Nick Payne is overweight Indonesian equities, and anticipates continued recovery from the pandemic.

“Modest inflation, a good current account position and strong commodity prices, all contribute to the stability of the rupiah during the current difficult global environment,” Payne said in e-mailed comments, forecasting a long period of buoyant growth for corporate profits.

(Reporting by Gayatri Suroyo and Stefanno Sulaiman in Jakarta and Rae Wee in Singapore; Editing by Ed Davies and Sam Holmes)

By Satoshi Sugiyama

KYOTO, Japan – Poring over the ledger at her more than 230-year-old liquor shop in Kyoto, Yasuko Fujii has mixed feelings about the return of foreign tourists who would crowd the streets of Japan’s ancient capital before the pandemic – and buy lots of whisky and wine.

Her ambivalence reflects a broader uncertainty in Japan about welcoming tourist hordes amid fears they could trigger a resurgence in COVID-19 cases, even though a weak yen would be a big draw for tourists and a boon for local businesses.

“From a business standpoint, we want foreign tourists to come,” the 79-year-old Fujii said. “But from an emotional standpoint, we want customers from Japan.”

Millions of tourists from China, South Korea and Southeast Asia used to throng the Nishiki market where Fujii’s shop is located before curbs set in two years ago. Locals often felt overwhelmed and many stopped coming, she said.

Japan’s opening up to mass tourism over the last decade brought an economic boost – a record 32 million tourists visited in 2019 and spent some $38 billion – but that also led to complaints of shoddy behaviour at sites such as Kyoto’s temples.

Known for its narrow streets of tea houses and “ryokan” inns, Kyoto has been both badly hit and deeply relieved by the absence of foreign tourists, locals say.

With the yen at its weakest in more the two decades and a revival in global travel, Kyoto’s hard-hit hotels and traditional sweet shops should have been bracing for a tourism surge. Instead, only some visitors have trickled in as Japan is allowing a small number of tourists to enter the country after easing curbs in June.

Prime Minister Fumio Kishida, whose ruling party is expected to win an upper house election on July 10, is seen sticking to a gradual easing of measures after he won public support for keeping borders shut last year. He would face a backlash if visitors sparked fresh COVID cases.

While the weak yen is a boon for tourists – a round-trip ticket to Kyoto from Tokyo by bullet train costs the equivalent of $196 now, versus $244 at the height of the tourist boom three years ago – it is a headache for the government as it drives up fuel and electricity prices.

‘PROPER HOSPITALITY’

At Sengyo Kimura, a fresh fish shop in Nishiki market in business since 1620, Kaoru Kimura, 68, says she wants tourists to return, just not so many of them.

The family-run shop was flooded with visitors before the pandemic. Knowing the Kimuras would not accept tips, visitors often left tokens of gratitude: a Canadian flag pin, paper cutting from China, Russian perfume and Hawaiian nuts.

“The issue is not about foreign tourists but rather our capacity to accommodate customers,” she said. “If too many come we aren’t able to show them proper hospitality.”

The number of hotels that shut down nationwide rose to a five-year high in 2021 and the local tourism industry in Kyoto has been badly hit, according to research firm Teikoku Databank.

“The damage is quite significant,” said Teikoku analyst Keisuke Noda. Demand has dried up for businesses like rental kimono shops, aimed mostly at foreigners.

Across the street from Hakuba, an antiques store founded 40 years ago, fleets of buses used to bring tourists to the Daitokuji Temple complex.

Now the massive parking lot stands empty.

“Kyoto is a tourist city and without foreign tourists we’re really in trouble,” said Hiroshi Fujie, the 70-year-old director of Hakuba, adding he was not sure if the store could survive a third year without foreign tourists.

For Fujii, the liquor shop owner, business is back to 60-70% of pre-pandemic levels thanks to Japanese tourists.

Roughly 5.17 million people stayed in Kyoto hotels and guest houses last year, almost all of them Japanese, government data shows. That compared to about 13.2 million in 2019, when both foreigners and Japanese stayed.

Back at the fish shop, workers in rubber boots and aprons were cutting up salmon and tuna, which they arranged carefully alongside clams and oysters at the store front.

Kimura said she still wanted people from “all walks of life” to try their fish. “The queue, though, is a nightmare”.

(Reporting by Satoshi Sugiyama, Additional reporting by Elaine Lies; Editing by David Dolan and Himani Sarkar)

LONDON – British companies have turned increasingly glum about the outlook, with inflation surging and investment plans looking stagnant, according to the latest business survey that shows momentum rapidly draining from the economy.

The British Chambers of Commerce (BCC) said 54% of more than 5,700 companies it surveyed between May 16 and June 9 expected turnover to increase over the next 12 months. This is down from 63% in the previous survey and the lowest share since late 2020, when many businesses were under some form of COVID restrictions.

A record 65% of companies said they planned to raise their prices in the next three months. Forecasters like the IMF and OECD think Britain will be hit harder by rising prices than other countries.

Three quarters of firms said they had no plans to increase investment, and most no longer expected profits to rise.

A survey published by S&P Global on Friday showed reports of rising costs were more widespread among British manufacturers than anywhere else in Europe.

Bank of England Governor Andrew Bailey said last week that the central bank might not need to act “forcefully” to get inflation under control, adding there were signs of an economic slowdown taking hold in Britain.

“The red lights on our economic dashboard are starting to flash. Nearly every single indicator has seen a deterioration since our last survey in March,” BCC Director General Shevaun Haviland said.

The BCC said the government should reduce value-added tax on business energy bills to 5% from 20%, bringing it in line with the rate paid by households.

(Reporting by Andy Bruce; editing by David Milliken)