Business News This Week #18 | NF World Latest News
Renault-Nissan Stake | Philips Layoffs | India’s Forex Reserve Increase | Cryto benefits in Indian Economy | US Economy Status – Business News this week
Check out the Top 5 Prime Business News this week in the NF World Latest News section below. This section covers the weekly summary of Economic, Stocks, Industry and Cryptocurrency related Business News.
Renault to Reduce Nissan Stake to 15%, Strengthening Ties in Rebalanced Alliance
French automaker Renault has announced plans to reduce its stake in Nissan from 43% to 15%. This move is part of an effort to rebalance the rocky alliance between the two companies.
Renault currently holds a 43% stake in Nissan but will transfer 28.4% of its shares into a French trust instead of selling them immediately as the current market value is lower than that registered in Renault’s accounts.
The 15% stake will be the same size as Nissan’s stake in Renault. The companies are expected to sign the new agreement next week following board approval from both sides.
The decision to reduce Renault’s stake in Nissan is aimed at addressing a long-standing source of friction and helping both companies remain competitive in an industry that is moving towards electrification and automation.
Nissan will invest in Renault’s new electric vehicle business Ampere, though the size of the stake has not been revealed.
Philips to Cut 6,000 Jobs Worldwide to Improve Profitability and Product Safety
Dutch health technology firm Philips will be cutting an additional 6,000 jobs worldwide as the company works to restore profitability and improve product safety following a recall of respiratory devices that resulted in a 70% decrease in its market value.
Half of the job cuts will occur this year and the other half will be completed by 2025. CEO Roy Jakobs has now announced a total of 10,000 job cuts in recent months, which is around 13% of Philips’ current workforce.
The company is joining a growing number of tech firms making layoffs, including Google, Microsoft, Amazon, and SAP, in response to the economic conditions.
Philips shares rose 5.5% due to better-than-expected fourth-quarter earnings. Jakobs, who took over the company in October, is addressing the challenges head-on and believes the new plan will secure the future of Philips.
India’s Forex Reserves Up $1.7 Billion, Second Week of Increase
India’s foreign exchange reserves rose by $1.7 billion in the week ending January 20th, according to the Reserve Bank of India (RBI), reaching a total of $573.7 billion.
This marks the second consecutive increase, after reaching a five-month high in the previous week. The growth was due to an increase in foreign currency assets by $839 million and an increase in gold reserves by $821 million.
As of January 20th, the foreign currency assets stood at $506 billion and gold assets at $43.7 billion. In comparison to March 31st, the reserves have decreased by $33.6 billion, but over the past 10 weeks, there has been a net increase of $29 billion.
RBI Governor Shaktikanta Das stated that the size of forex reserves is comfortable, as there have been strong net FDI flows and foreign portfolio flows since July 2022.
The forex reserves are affected by fluctuations in the dollar and the purchase or sale of dollars by the RBI. The rupee has shown resilience during the pandemic and Ukraine war, only depreciating by 7% during the initial stages of the pandemic and 9% against the US dollar during geopolitical tensions.
The RBI also intervened in the currency market to prevent market volatility, with the rupee’s 1-month implied volatility reaching a high of 25% in 2008 and 20% in 2013, but peaking at 10% in March 2020 and remaining well anchored.
RBI ED Outlines Key Benefits of Digital Currency for India’s Digital Economy
The Reserve Bank of India (RBI) is actively exploring the issuance of a Central Bank Digital Currency (CBDC), known as the “E-rupee”, in an effort to bolster the country’s digital economy, reduce the costs associated with physical cash management, and promote financial inclusion.
According to the RBI’s Executive Director, Ajay Kumar Choudhary, the E-rupee is designed to complement, not replace, existing forms of currency and payment systems.
He explained that the E-rupee will have the same features and characteristics as physical currency, including safety and settlement of transactions.
Choudhary also noted that offline functionality is one of the key considerations for the design of the E-rupee, as it would make it easier to use in remote locations.
Over the course of 2022, the development of digital currencies has gained significant momentum, with 115 countries representing 95% of the global GDP exploring the possibility of CBDCs. Choudhary said that 18 of the G20 countries are exploring the use of digital currencies, with 7, including India, already in the pilot phase.
The RBI ED concluded that the launch of the digital rupee marks a historic milestone in the evolution of money.
US Economy Shows Momentum with 2.9% Annual Growth in Q4 2022 Despite Slowdown Concerns
The US economy saw a 2.9% growth from October to December 2022, ending the year with some positive momentum despite challenges like high-interest rates and fears of a possible recession.
Despite the deceleration from the previous quarter’s 3.2% growth, consumer spending and restocking by businesses helped boost the economy, while federal government spending also contributed.
However, rising mortgage rates impacted residential real estate, causing a 27% decline in housing investment for two consecutive quarters.
The overall GDP for 2022 was 2.1%, after growing by 5.9% in 2021. The slowdown of the economy in the upcoming months is a deliberate result of the Federal Reserve’s series of interest rate increases, aimed at reducing growth, spending and inflation.
Last year, the Fed raised its benchmark rate seven times and is set to do so again next week, albeit with a smaller increase.
Despite the job market showing resilience with 4.5 million jobs added and an unemployment rate of 3.5% matching a 53-year low, the future for workers may not be as optimistic with higher rates making borrowing and spending more expensive.
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