By Eliana Raszewski

BUENOS AIRES – Argentine peso bills, devalued by years of inflation now soaring near 60%, are starting to cause a literal strain on wallets – with the largest banknote in circulation worth under $5 in commonly used exchange markets.

That means people need to carry around huge wads of cash, a security concern and logistical headache for savers, businesses and banks.

The situation marks Argentina out in the region, except perhaps for outlier Venezuela. The largest note in Mexico and Peru is worth around $50, in Brazil it is $40, in Chile and Colombia some $25 and in Paraguay $15.

In Argentina the 1,000 peso note is technically worth $8.40 using the official exchange rate, but with strict capital controls limiting dollar purchases most people use alternative markets where the same amount gets you $4.80.

Ten years ago, 1,000 pesos was worth $200. Until around two decades ago the same amount would have got you a full $1,000.

“I have to carry that huge wad of bills in my wallet, because it doesn’t fit in my pockets, and I fear getting robbed,” said Laura, 40, a lawyer from capital Buenos Aires.

“The 1,000-peso bill is no longer enough for anything. The (monthly) rent for my house is just over 50,000 pesos.”

Years of high inflation, tight capital controls since 2019 to prevent currency flight, and popular black markets for trading dollars have hit confidence in the peso.

The low value of the biggest tender means many businesses in the cash-heavy economy are left with huge physical piles of money at the end of the day. It is not unusual for people to arrive to pay larger outlays with bricks of banknotes.

“The denomination of the bills is very decoupled from the average transactions of the economy,” said Camilo Tiscornia, director of C&T Asesores Economicos, adding that this creates inefficiencies in the market. “You have to make ridiculous payments with a huge number of bills.”

A 1,000 peso note will hardly buy you two packages of top-end toilet roll, while a children’s menu hamburger with fries in a fast-food chain comes in at 940 pesos.

While electronic payments have increased during the COVID-19 pandemic, a large part of sales are still made in cash.

President Alberto Fernandez, who is trying to lead a “war against inflation,” unveiled newly designed banknotes on Monday, but there were no changes to the largest denomination. He contends that the solution is finding a way to curb inflation, not issuing bigger denomination bills.

A financial sector source said the situation was also straining bank vaults, where physical cash simply takes up more room and creates higher costs.

“For banks it is crazy time with operating and storage costs,” the source said, asking not to be identified. “Here we have entities that are saturated with banknotes.”

Argentina: Paying the bill – https://graphics.reuters.com/ARGENTINA-CURRENCY/lbvgndljkpq/chart.png

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(Reporting by Eliana Raszewski; Editing by Nicolas Misculin, Adam Jourdan and Rosalba O’Brien)

By Andy Bruce and David Milliken

LONDON -Momentum in Britain’s private sector slowed much more than expected this month, adding to recession worries as inflation pressures ratcheted higher, according to a business survey on Tuesday that showed rising pessimism.

S&P Global’s flash Composite Purchasing Managers’ Index (PMI), a monthly gauge of the services and manufacturing industries, slumped to 51.8 in May from 57.6 in April, its lowest level since February last year.

The preliminary reading was worse than all forecasts in a Reuters poll of economists, which had pointed to a drop to 57.0, and the scale of the fall was bigger than any seen pre-COVID.

Sterling fell sharply against the U.S. dollar after the data, and was 0.7% down on the day at $1.2503 at 1030 GMT.

“The collapse in the composite PMI in May is the clearest sign yet that demand is faltering in response to the intense squeeze on households’ real disposable incomes,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Until now, most surveys of British business activity had been fairly robust, despite record-low consumer confidence after inflation hit a 40-year high of 9%.

May’s survey of British retailers by the Confederation of British Industry, also released on Tuesday, showed sales holding up at normal for the time of year, after a big slump in April.

But the outlook for June was weaker and businesses’ longer-term outlook was the most downbeat since November 2020, when non-essential shops were closed due to the pandemic.

“The latest data indicate a heightened risk of the economy falling into recession as the Bank of England fights to control inflation,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Financial markets still expect the BoE to double interest rates to at least 2% by the end of the year from 1% now.

But Tombs said he expected Britain’s economy to shrink 0.5% in the three months to June – when an extra public holiday to mark Queen Elizabeth’s 70 years on the throne will add to existing growth headwinds – and for the BoE to raise rates just once more this year.

The slowdown was most acute in the services sector, where business optimism about the coming 12 months fell to its lowest since May 2020, during the first coronavirus lockdown.

“Companies cite increasingly cautious moods among households and business customers, linked to the cost-of-living crisis, Brexit, rising interest rates, China’s lockdowns and the war in Ukraine,” Williamson said.

Reports of rising costs paid by businesses were more widespread than at any point since the services PMI started in 1996.

Williamson said there were some signs cost pressures may be peaking, and businesses reported resistance from customers to higher prices and a related reduction in demand.

Separate figures from market research company Kantar on Tuesday showed that more than one in five British households said they were struggling to make ends meet.

The flash PMI for the manufacturing sector also fell in May to its lowest level since January 2021 at 54.6 , down from 55.8 in April. New export orders declined at the fastest rate since May 2020. A number of manufacturers cited Brexit trade frictions as the main reason for the drop.

(Editing by Catherine Evans and Raissa Kasolowsky)

(Reuters) -The Russian rouble strengthened to levels not seen since March 2018 against the dollar on Tuesday, boosted by export-focused companies selling foreign currency to pay taxes and shrugging off a slight easing of capital controls.

The rouble has firmed about 30% against the dollar this year despite a full-scale economic crisis in Russia, making it the world’s .

The rouble is steered by capital controls imposed in late February to shield Russia’s financial sector after Moscow’s decision to send tens of thousands of troops into Ukraine prompted unprecedented Western sanctions.

At 1110 GMT, the rouble was 2.5% stronger against the dollar at 56.36, hovering around this level for the first time in more than four years.

Against the euro, the rouble gained 3% to 58.24, its strongest in seven years.

“The rouble’s sharp gains again owed to tomorrow’s looming deadline for 600 billion roubles ($10.43 billion) in mineral extraction tax payments and the conversion of payment for gas exports into roubles,” Sberbank CIB said in a note.

“We think the local currency may have trouble prolonging its recent rally, as selling activity among exporters may begin to decline.”

The currency’s strength has raised concerns about the negative impact on Russia’s budget revenue from exports. On Monday, Russia cut the proportion of foreign currency revenue that exporters must convert into roubles to 50% from 80%.

Despite the slight relaxation in capital controls, the rouble could firm to 55 against the dollar in the near term, said Dmitry Polevoy, head of investment at LockoInvest.

“Current levels could be used to open long positions in foreign currencies by mid- and long-term investors,” Polevoy said.

The rouble may return to levels of 60-65 against the dollar in June, Sinara Investment Bank said in a note.

The rouble was weaker at banks. Russia’s largest lender Sberbank offered to sell cash dollars and euros for 58.20 and 60.38 roubles, respectively.

Russian stock indexes were mixed.

The dollar-denominated RTS index reversed earlier losses and gains 1% to 1,267.1 points. The rouble-based MOEX Russian index was 1.6% lower at 2,265.5 points, pressured by the rouble gains.

($1 = 57.5000 roubles)

(Reporting by Reuters; Editing by Kirsten Donovan and Chizu Nomiyama)

By Marc Jones

LONDON -Rising borrowing costs and the worldwide fallout from the Russia-Ukraine war could see up to 10% of riskier ‘junk’-rated emerging market countries suffer debt crises this year, analysts at U.S. investment bank JPMorgan have warned.

More acute balance of payment pressures and larger fiscal deficits are now compounding problems for heavily-indebted countries that import most of their energy and food.

Sri Lanka has just suffered its first ever sovereign default, joining a list that already included Lebanon, Suriname, Venezuela and Zambia. Russia and Ukraine are both teetering too and the worry is the numbers globally will soon balloon.

“Nearly half of the (52) country sample is classified as carrying high repayment risk in our assessment. Of these, eight are at risk of reserve depletion by the end of 2023, signalling high default risks. These are Sri Lanka, Maldives, Bahamas, Belize, Senegal, Rwanda, Grenada, and Ethiopia,” said the note led by strategist Trang Nguyen on Tuesday.

A jump in world interest rates in response to fast-rising inflation also means many countries are facing the reality of rising borrowing costs, a departure from over a decade of so-called “easy money”.

“Accounting for risks of a potential default in Russia and restructuring in Ukraine…the EM sovereign HY default rate could reach 10% this year,” JP Morgan’s note added, also pointing out how Ethiopia was moving towards a G20-led restructuring of its debts.

The International Monetary Fund too has said that nearly 60% of low income countries are either in, or at high risk of, debt distress.

Analysts at investment firm Tellimer this week highlighted how a record 27 emerging market countries now have eurobond yields above 10%.

Those yields are a proxy for what a government has to pay to borrow in the international capital markets and anything above 10% is generally seen as a sign of trouble.

JP Morgan said that in addition to the eight countries flagged as in immediate default danger, larger economies such as Egypt, Ghana and Pakistan were also highly vulnerable from fiscal and debt standpoints over the slightly longer term.

9c325c13-c3f3-43d0-aa93-27ee523dc29c1

Countries with bond yields above 10%https://tmsnrt.rs/3NrBtQoimage/pnggraphics:graphic:1https://fingfx.thomsonreuters.com/gfx/mkt/znpneoxyjvl/Pasted%20image%201653389128073.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:znpneoxyjvl

(Reporting by Marc Jones, editing by Jorgelina do Rosario, Kirsten Donovan)

DAVOS, Switzerland – India’s Oil Minister Hardeep Singh Puri told the World Economic Forum in Davos on Tuesday that a crude oil price of $110 a barrel was not sustainable, as the world faces an energy price crisis which is contributing to rising global inflation.

Oil prices have surged this year, with Brent crude hitting $139 a barrel in March for its highest price since 2008, after Russia’s invasion of Ukraine exacerbated supply concerns. [O/R]

As countries around the world struggle with the impact of inflation on disposable income, India’s Commerce Minister Piyush Goyal said on the same WEF panel that food inflation in the South Asian country was at a “manageable level”.

Goyal also said that India was producing enough wheat for domestic consumption, as some countries face shortages due to price rises and problems in getting the grain from major producer Ukraine following Russia’s invasion.

(Reporting by Aditya Kalra; Editing by Alexander Smith)

By Bernadette Christina and Fransiska Nangoy

(Reuters) – Indonesian President Joko Widodo has agreed to allow palm oil exports to resume after a three-week ban, though it is unclear how rapidly shipments will resume given accompanying rules aimed at securing domestic supply.

Indonesia’s frequent export policy changes have unnerved the edible oil markets and heightened concerns about global food prices.

The country is the biggest exporter of palm oil – used in everything from margarine to shampoo – accounting for about 60% of world supply.

WHAT ARE THE LATEST CHANGES?

Indonesia reopened exports for crude palm oil (CPO) and some of its derivative products from May 23 but export permits will be required to show companies have met a so-called Domestic Market Obligation (DMO).

The government has yet to make public details of the DMO, but chief economics minister Airlangga Hartarto said the target was to keep 10 million tonnes of cooking oil at home.

Last year, Indonesian produced 51 million tonnes of CPO and kernel oil, with around 9 million tonnes consumed locally for food.

Asked what portion of palm oil production would be sold domestically under the DMO, Hartarto said it would be 30% with a target to lower it to 20%.

WHY HAS INDONESIA BEEN SEEKING TO CONTROL PALM OIL EXPORTS?

Since November, authorities have unrolled a bewildering array of measures including subsidies, export permits and a palm oil levy as well as export bans to contain cooking oil prices.

However, this has failed to bring the cost of the household necessity made from palm oil into line with a government target of 14,000 rupiah ($0.9554) per litre.

Nonetheless, Indonesia removed the export ban, claiming prices were heading lower and following protests by farmers and calls by lawmakers to reconsider the policy.

Trade ministry data showed as of Monday cooking oil averaged 16,900 rupiah per litre, down from an average of 18,000 rupiah in April but up from 13,300 rupiah in July.

HAVE EXPORTS RESUMED?

While there has been anger over Indonesia’s policy flip-flops among some major buyers in countries such as India and Bangladesh, analysts do not expect many to cut off buying.

Traders in India said Indonesian sellers have started to accept new orders, but were not rushing to sign business before understanding the DMO rules.

Palm oil producer Musim Mas, for example, said on Monday it was still focused on “flooding the domestic markets with cooking oil”, noting concern about stubbornly high retail prices.

Palm oil companies are awaiting further guidance from the government, with authorities holding meetings with industry participants to explain changes.

WHAT HAS BEEN HINDERING COOKING OIL DISTRIBUTION?

Trade Minister Muhammad Lutfi on March 18 blamed a “palm oil mafia” for exploiting the situation.

Still, red tape has also been blamed, with palm refiners wary of releasing cooking oil supplies because of a complicated process of getting subsidies. On Tuesday, a government official said the subsidy would be replaced by another policy to control prices.

The government has also assigned state food procurement agency Bulog to distribute more cooking oil, but last week it said regulations were needed to allow it to start.

Asked about distribution issues, an industry ministry official said there were many components but logistics and transport limitations were key obstacles.

WHAT WILL THE ENDGAME BE?

As was the case with Indonesia’s ban of coal exports in January, the government has eased the ban on palm oil shipments in less than a month.

Still, despite the ban costing hundreds of millions of dollars in lost state revenue, the president appears ready to make further policy changes if needed, particularly after his approval rating hit a six-year low in a recent survey.

He has appointed senior minister Luhut Pandjaitan to oversee cooking oil distribution in the populous islands of Java and Bali.

“The objective is for bulk cooking oil to reach the price level targeted by the government, and to be evenly and amply distributed,” said Jodi Mahardi, a spokesperson for Luhut.

($1 = 14,645.0000 rupiah)

(Editing by Ed Davies and Jason Neely)

By Shilpa Jamkhandikar

MUMBAI – In southern India, devoted fans worship film and TV stars like gods, erecting huge statues of actors which are bathed in milk as part of prayer rituals for a movie’s success.

This is the market Netflix Inc, a streaming laggard in India, is now eager to tap. It has a range of Indian films across various regions to showcase but for TV series – key to keeping viewers loyal to its platform – it only has a few hit shows in Hindi and no TV shows at all in regional languages.

The U.S. company has greenlighted at least six TV shows in southern Indian languages this year, aggressively chasing deals in Tollywood as the Telugu film and TV industry is known, as well as in the Tamil film and TV industry, six people with knowledge of the company’s plans told Reuters.

As prolific as Hindi-language Bollywood and known for flashy, action-packed content, the South Indian film industry is doing extremely well of late, dominating India’s box office revenue so far this year.

Netflix has “had meetings with pretty much every producer and filmmaker here. You will see the results of those meetings by next year,” one of the people, a Tollywood producer, said. All sources spoke on condition of anonymity, fearing loss of work opportunities.

Netflix has long positioned India, with its population of 1.4 billion, as a key market. In 2018, two years after it launched in the country, CEO Reed Hastings predicted its next 100 million subscribers would come from India. But so far it has just 5-6 million, according to analysts’ estimates.

By Hastings’s own admission, Netflix has been frustrated by its lack of success in India relative to its other markets. This new push south also comes at a time when the search for growth has taken on new urgency.

The streaming giant stunned investors last month when it reported a quarterly net loss of subscribers globally for the first time in more than a decade, and predicted deeper losses ahead. Its stock has lost almost half its value since then.

SMALLER THAN RIVALS

In India, Netflix outperforms rivals in terms of revenue share of the subscription video-on-demand market, commanding 39% share in 2021 compared to nearest rival Disney Plus Hotstar’s 23%, according to Media Partners Asia.

But analysts say its subscriber base is too small for comfort. Next to Netflix’s 5-6 million, Disney Plus Hotstar, which owns cricket streaming rights, has about 50 million. Local rival Zee5 has an estimated 20 million and analysts also gauge Amazon Prime and SonyLIV’s subscriber figures to be well above Netflix’s numbers.

India’s market potential “can’t be understated,” says Julia Alexander, director of strategy at U.S.-based Parrot Analytics.

“If Netflix doesn’t try to capitalize on it by creating stronger relationships with local creatives, local studios/production companies, and carving out a real place for itself in India, someone else will,” she said.

Asked by Reuters about criticism of its performance in India and its push into regional languages, Netflix said in a statement it was confident of what it called a “long-term winning strategy in India”.

“India continues to represent a tremendous opportunity for Netflix to invest and grow, both in terms of membership and the variety of content we offer to our members,” it said.

A large part of Netflix’s woes has been its much higher pricing in an extremely cost-conscious market. It slashed fees late last year, making it more competitive but remains much pricier than rivals.

It charges 649 rupees, roughly $8, per month for its highest quality streaming resolution plan that allows use on up to four devices. A similar plan from Disney costs 299 rupees. Netflix’s mobile-only plan for one device is 149 rupees for one month, while Disney charges the same amount for three months.

Netflix’s brand as a premium service may make it reluctant to cut prices further but that means its best, if not only, path to significant subscriber growth is expanding its slate of TV shows, analysts say.

According to two Indian producer sources, however, Netflix tends to take much longer than rivals to commission shows and is less adept in providing feedback to content developers.

Netflix did not address this criticism in its response to Reuters.

Even with new southern Indian shows added to its pipeline, Netflix still lags rivals. For example, Amazon last month announced 22 new original TV shows, eight of them in Tamil or Telugu.

“Netflix is behind compared to Amazon, Hotstar and SonyLIV because it is still in the commissioning stage, whereas the others already have shows out or on the verge of release,” according to a producer who said he was in talks with Netflix.

($1 = 77.7050 Indian rupees)

(Reporting by Shilpa Jamkhandikar in Mumbai; Additional reporting by Nivedita Balu in Bengaluru; Editing by Edwina Gibbs)

By Byungwook Kim

SEOUL – Samsung Group will invest 450 trillion won ($356 billion) in the next five years to accelerate growth in semiconductors, biopharmaceutical and other next-generation technologies, Samsung Electronics said.

South Korea’s top conglomerate said on Tuesday the investments through 2026 are expected to help Samsung drive long-term growth in strategic areas such as the chip sector, while pledging aggressive investments in the biopharmaceutical sector to make it as successful as its chip business.

Samsung Electronics, the world’s largest memory chip maker, did not provide a breakdown of the figures, though it added that 80% of investments will be made in South Korea and that Tuesday’s announcement includes a 240 trillion won investment pledge made in August 2021.

Samsung did not include electric vehicle batteries as a future growth engine in the announcement.

Samsung SDI, the group’s battery unit, and Stellantis, the parent company of Chrysler, are scheduled to announce their new battery plant in the U.S. state of Indiana on Tuesday.

Securing domestic chip and bio supply chains will have strategic significance and be important for South Korea’s economic security, Samsung said in the announcement.

The 450 trillion won investments, expected to create 1.07 million jobs, are over 30% greater than the 330 trillion won Samsung invested in the five years to 2021.

($1 = 1,263.7900 won)

(Reporting by Byungwook Kim; Editing by Sonali Desai)

By Uditha Jayasinghe

COLOMBO -Sri Lanka increased fuel prices on Tuesday, a long-flagged move to mend public finances and combat its debilitating economic crisis, but the hikes are bound to add to galloping inflation at least in the short term.

Power and Energy Minister Kanchana Wijesekera said in a message on Twitter that petrol prices would increase by 20-24% while diesel prices would rise by 35-38% with immediate effect. Daily limits on how much each consumer can purchase will continue.

“The government will hold talks with transport sector stakeholders to increase costs parallel to the latest increases,” he later said in an online cabinet briefing.

Fuel and transport price increases will inevitably flow through to food and other goods, economists said.

Annual inflation in the island nation rose to a record 33.8% in April compared with 21.5% in March, according to government data released on Monday.

“Not only the petrol problem – consumer prices, everything is very high, food is also very high,” said businessman Mohammad Irfan, waiting in a queue at a gas pump in the capital, Colombo. He said he had been there for four hours.

“It is very difficult for the poor people, middle class people. They are facing problems day by day.”

Sri Lanka is in the throes of its worst economic crisis since independence in 1948, as a dire shortage of foreign exchange has stalled imports and left the country short of fuel and medicines, and struggling with rolling power cuts.

The financial trouble has come from the confluence of the COVID-19 pandemic battering the tourism-reliant economy, rising oil prices, and populist tax cuts by the government of President Gotabaya Rajapaksa and his brother, Mahinda, who resigned as prime minister this month.

Wijesekera said people would be encouraged to work from home “to minimise the use of fuel and to manage the energy crisis”, and that public sector officials would work from their offices only when instructed by the head of their institutions.

However, hybrid working models have led to increases in power consumption in other countries, including in neighbouring India.

Economists have said fuel and power price hikes would be necessary to plug a massive gap in Sri Lanka’s government revenues, but agreed that it would lead to short-term pain.

Dhananath Fernando, an analyst for Colombo-based think tank Advocata Institute, said prices of petrol have soared 259% since October last year and diesel by 231%. Prices of food and other essential goods have surged, he said.

“Poor people will be the most effected by this. The solution is to establish a cash transfer system to support the poor and increase efficiency as much as possible.”

Prime Minister Ranil Wickremesinghe, appointed in place of Mahinda Rajapaksa earlier this month after violence broke out when government supporters attacked protesters, said last week: “In the short term we will have to face an even more difficult time period. There is a possibility that inflation will increase further.”

There were no immediate reports of protests or unrest after the price increases on Tuesday.

The Sri Lankan Navy said on Tuesday it had apprehended 67 people attempting to illegally flee the country from the northeastern coast.

GRAPHIC: Inflation in Sri Lankahttps://tmsnrt.rs/3qeFT4B

(Reporting by Uditha Jayasinghe, Devjyot Ghoshal and Sunil Kataria in COLOMBO; Writing by Raju Gopalakrishnan; Editing by Edmund Klamann)

JERUSALEM -Bezeq Israel Telecom reported a rise in first-quarter net profit, as its Pelephone mobile phone service and Yes satellite TV unit both drew more subscribers.

Bezeq, Israel’s largest telecoms group, said it earned 322 million shekels ($96 million) in the first quarter excluding one-time items, compared with 299 million shekels a year earlier. Revenue rose 1.5% to 2.26 billion shekels.

Mobile unit Pelephone – Israel’s third largest mobile operator – recorded quarterly net profit of 56 million shekels, up from 8 million shekels a year earlier. Revenue grew 11.5% to 437 million shekels driven by recovery in roaming revenues, growth in 5G plans and total subscribers.

Shares of Bezeq were up 2.65% in Tel Aviv but are down nearly 1% this year.

Pelephone’s subscriber base rose to 2.583 million – 624,000 of them connected to its 5G network – from 2.492 million a year ago.

The company said its new fibre network now reaches 1.25 million households and it has 143,000 subscribers.

Bezeq’s satellite TV unit Yes posted a net profit of 10 million shekels compared to breaking even a year earlier, as it added new subscribers while transitioning to Internet-based broadcasts.

“Bezeq delivered a solid set of results, driven by key performance indicator improvements across all business segments,” said Barclays analyst Tavy Rosner.

($1 = 3.3529 shekels)

(Reporting by Ari RabinovitchEditing by Steven Scheer and Susan Fenton)

By Gayatri Suroyo and Fransiska Nangoy

JAKARTA – Indonesia’s central bank announced on Tuesday more aggressive hikes in the reserve requirement ratio (RRR) for banks, expecting inflation to rise slightly above its target band this year, but kept interest rates unchanged at a record low.

Bank Indonesia (BI) announced a quicker pace in RRR hikes, ordering banks to park 7.5% of their reserves starting July and 9% from September. This compared with BI’s previously announced policy path, in which BI had set three staggered RRR hikes this year from 3.5% to 6.5% in September.

BI left the benchmark 7-day reverse repurchase rate at a record low of 3.50%, as expected by 25 of 27 economists polled by Reuters. Its two other main rates were also unchanged.

During the pandemic, BI cut interest rates by a total of 150 basis points and injected billions of dollars into the financial system and the RRR hikes were its first move to normalise monetary policy.

Governor Perry Warjiyo said inflation will be slightly higher than BI’s 2% to 4% target range this year, but will come down to within target next year, which he described as “manageable”.

The inflation outlook “reduces the need to respond through interest rates like other central banks,” Warjiyo said.

“The acceleration of liquidity normalisation is a step for BI to maintain stability, while continuing to support growth and loans to the business world,” he said in an online news conference.

The additional RRR hikes are set to mop up 110 trillion rupiah ($7.51 billion) of liquidity from the banking system, but Warjiyo said this should not affect lenders’ ability to loan.

He has previously said BI would maintain interest rates at record lows until it sees signs of pressure on core inflation. April’s annual inflation hit 3.47%, a two-year high.

The government last week obtained parliamentary approval to boost energy subsidies by $24 billion to keep most energy prices unchanged in a bid to curb accelerating inflation.

Radhika Rao, senior economist at DBS Bank in Singapore, said in an email energy subsidies had dampened inflation risks.

“This coupled with limited rupiah depreciation versus regional peers lowered the urgency for Bank Indonesia to normalise policy,” said Rao, noting how “non-rate levers” like RRR were being used to absorb liquidity.

The rupiah has come under pressure in recent weeks amid expectations for faster U.S. rate hikes, but its falls have been more limited than some other Asian emerging market currencies.

However, Myrdal Gunarto, Maybank Indonesia’s economist, predicted BI will start raising interest rates at the June policy meeting, with inflation seen exceeding the benchmark rate level. He expects a total of 75 basis points of rate hikes this year.

Indonesia’s economy grew 5.01% in the first quarter, helped by a boom in commodities’ exports and the reopening of the economy from COVID-19 curbs.

BI kept its 2022 GDP outlook at 4.5% to 5.3%.

($1 = 14,655.0000 rupiah)

(Reporting by Gayatri Suroyo, Stefanno Sulaiman and Fransiska Nangoy; Editing by Ed Davies and Sonali Desai)

By Sheila Dang

(Reuters) -Snap Inc said the economy had worsened faster than expected in the last month and the social media company slashed its quarterly forecast, triggering an after-hours sell-off.

Since late April, “the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range,” the company said in a U.S. securities filing.

Shares of Snap fell 31%, Alphabet dropped 3.6% and Amazon dropped 2.2%. Nasdaq futures also fell, with traders blaming Snap.

U.S. stocks had ended higher on Monday, led by gains from banks and tech, but the rise follows Wall Street’s longest streak of weekly declines since the dotcom bust more than 20 years ago and many investors remain on edge.

Snap Chief Executive Evan Spiegel told employees in a memo seen by Reuters that the company will slow hiring for this year and laid out a broad slate of problems.

“Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,” he wrote.

Last month, Snap forecast second-quarter revenue growth of 20% to 25% over the previous year.

The news follows statements by companies including Uber Technologies Inc and Facebook-owner Meta Platforms Inc earlier this month that they would rein in costs and hiring.

In the memo, Spiegel said Snap would evaluate the rest of this year’s budget and “leaders have been asked to review spending to find additional cost savings.”

Some planned hiring will be pushed into next year, though the company still expects to hire more than 500 people by the end of this year, he said.

(Reporting by Sheila Dang in Dallas; Editing by Richard Chang, Peter Henderson and Kim Coghill)