By Leika Kihara

TOKYO -The Bank of Japan (BOJ) will not introduce a digital yen as a means to achieve negative interest rates, an idea sometimes discussed in academic circles, a senior central bank official said on Wednesday.

In upcoming experiments on issuing a central bank digital currency (CBDC), the BOJ will explore features such as setting a limit on the amount of transactions and holdings for each entity, BOJ Executive Director Shinichi Uchida said in a speech.

The central bank will also examine whether to make the digital yen interest-bearing, though doing so might be unnecessary as the CBDC could then end up being a close substitute for bank deposits, he said.

“While the idea of using such a functionality as a means to achieve a negative interest rate is sometimes discussed in academia, the Bank will not introduce CBDC on this ground,” Uchida said in a speech.

The BOJ has not decided whether to issue a digital yen but has moved to a second phase experiment from April to prepare for a possible launch in the future.

(Reporting by Leika Kihara; Editing by Muralikumar Anantharaman)

By Nichola Groom and Isla Binnie

(Reuters) – Prices for wind and solar power in major global markets have climbed nearly 30% in a year as developers have struggled with chaotic supply chains and surging costs for everything from shipping to parts to labor, according to a report published on Wednesday.

Contract prices for renewables jumped 28.5% in North America and 27.5% in Europe in the last year, according to a quarterly index by LevelTen Energy that tracks the deals, known in the industry as power purchase agreements (PPAs).

In the first quarter alone, prices rose 9.7% in North America and 8.6% in Europe, LevelTen said.

Economic, logistical and labor market disruptions during the coronavirus pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy sector.

There is a risk higher costs could slow demand growth at a time when the United Nations has called for clean energy to expand more rapidly to avoid the worst effects of a warming climate.

“We still need keep the foot on the gas here,” Rob Collier, vice president of LevelTen’s energy marketplace, said in an interview.

Aggravating challenges in North America, the sector is uncertain whether U.S. lawmakers will extend tax breaks for renewable energy facilities, part of President Joe Biden’s climate change agenda. Developers also are worried about a U.S. Commerce Department investigation initiated this year that could result in tariffs on solar panel imports from Asia, pushing up costs.

“There’s just intractable problems right now with our supply chain,” Reagan Farr, chief executive of U.S. solar developer Silicon Ranch, said in an interview.

In Europe, the war in Ukraine has led governments to try to reduce dependence on natural gas from Russia, further boosting robust demand for renewables.

The war has been “the last straw for a market where there was already a lot of price tension,” Oscar Perez, a partner at Spain-based fund manager and renewable energy developer Q-Energy, said in an interview.

Higher costs for renewables in Europe, along with the continent’s aggressive climate policies, should boost the appeal of pricier technologies like green hydrogen and biofuels, according to Raymond James analyst Graham Price.

For now, soaring prices have not slowed demand, LevelTen said. In a poll the company conducted of 21 sustainability and energy advisers, 75% said their clients have accelerated or maintained procurement plans, according to the report.

“It’s not about demand,” Luigi Sacco, head of PPA origination at Milan-based Falck Renewables, said. “Demand is there but supply is struggling a bit in several markets.”

One factor luring buyers to renewables is the soaring cost of fossil fuels.

“The ready alternative to renewable generation right now is gas, and gas prices are up 100% as well,” Farr said. “So you pick your poison.”

(Reporting by Nichola Groom in Los Angeles and Isla Binnie in Madrid; Editing by David Gregorio)

(Reuters) -Australia’s competition watchdog on Wednesday took Honda Motor Co’s local unit to court alleging the Japanese carmaker falsely claimed to its customers that two of its dealerships had stopped servicing Honda vehicles.

Between January and June last year, Honda Australia told customers of Brighton Automotive (Astoria) in Victoria and Tynan Motors in New South Wales that the dealerships would no longer service Honda vehicles, the Australian Competition & Consumer Commission (ACCC) alleged.

“The ACCC alleges that in emails, text messages and phone conversations, Honda informed Astoria and Tynan customers that these businesses had closed and directed customers to contact a Honda dealership or Honda Service Centre to book their next service,” the watchdog said.

But the dealerships continued to service vehicles, including Honda cars and operate independently after ending agreements with Honda Australia in January 2021 following a restructuring of the carmaker’s unit in May 2019, the ACCC said.

The regulator accused Honda Australia of causing “harm” to the business of Astoria and Tynan by falsely claiming they had closed or would close, resulting in lower customer footfall, and sought penalty against it in the court.

Honda Australia declined to comment on the claims as it was reviewing the filing, but said in an email to Reuters it has cooperated with the ACCC’s investigation.

(Reporting by Sameer Manekar in Bengaluru; Editing by Arun Koyyur)

By Kantaro Komiya

TOKYO – Japan’s core machinery orders posted their biggest monthly fall in nearly two years in February, official data showed on Wednesday, dragged down by a steep drop in demand from IT and other service firms to extend their decline into a second month.

The data added to concerns that Japanese firms are holding off on investments due to rising energy and raw materials costs, fuelling fears about the pace of economic growth as the world’s third-largest economy tries to recover to pre-pandemic levels.

“Companies are worried about surging costs due to raw material price inflation that could damage profits. The risk of capital expenditure slowdown ahead is huge,” said Kota Suzuki, economist at Daiwa Securities.

Core machinery orders, a highly volatile leading indicator of capital spending in the coming six to nine months, fell 9.8% in February from the previous month, the Cabinet Office data showed on Wednesday, the biggest drop since April 2020.

It was far larger than a fall of 1.5% forecast by economists in a Reuters poll and January’s 2.0% decrease, and prompted the government to downgrade its assessment of machinery orders, saying a recovery was stalling.

Core orders from non-manufacturers excluding ships and electrical utilities fell 14.4% in February, led by a 36.9% fall in orders from information technology service firms, the biggest drop since January 2006.

“The information service sector has been aggressive in buying computers for IT systems and data centre facilities since last October, and the movement appears to have stalled,” a government official told a media briefing.

“It was a surprising, mixed result that highlighted weakness across non-manufacturers,” said Yasunari Ueno, chief market economist at Mizuho Securities, who also noted weak demand from the transport and financial sectors.

Orders from manufacturers fell 1.8%, hurt by soft demand from chemicals and other material industries. Orders from electric machinery firms grew 13.8% as they ramped up investments in semiconductor-making equipment.

On a year-on-year basis, core orders rose 4.3% in February, the data showed, much weaker than a 14.5% rise expected by economists.

“In March and beyond, companies could turn more cautious and reduce machinery orders on the Ukraine crisis-caused slowdown in the global economy and commodity rally,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

Rattled by supply disruptions and soaring production costs, Japanese business confidence worsened in the first quarter for the first time in nearly two years, a Bank of Japan survey showed this month.

Managers of major Japanese firms expected the near-term recovery outlook to stay modest at best, on uncertainties such as the Ukraine crisis and its impact on commodity inflation, a Reuters poll showed on Wednesday.

Economists have cut projections for Japan’s growth, in view of the heightening inflationary pressures on households and businesses.

“The rebound in April-June consumption may not be as strong as expected on rising energy and food prices,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Companies, too, could limit spending.”

(Reporting by Kantaro Komiya; Editing by Shri Navaratnam and Richard Pullin)