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Afghan money exchangers on strike after licence fee hike

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Afghanistan's money exchangers play a key role in meeting the financial needs of 38 million citizens mired in humanitarian crisis
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Thousands of money exchangers shut shop across Afghanistan on Sunday after Taliban authorities imposed a steep hike in licence fees, the brokers’ commission said, in a bid to slow down money laundering and terrorism financing according to financial analysts. 

Afghanistan’s formal banking system collapsed when the Taliban swept back to power in August last year, ending two decades of US-led military intervention in the deeply impoverished nation. 

Since then money exchangers — who swap currencies, make informal cash transfers and even give loans — have played a key role in meeting the financial needs of 38 million citizens mired in humanitarian crisis. 

“Thousands of money exchangers are shut in most parts of the country to protest against the central bank’s conditions,” Abdul Rahman Zeerak, spokesman for Afghanistan’s Money Exchange Commission, told AFP.

He said the central bank had raised licence fees to five million Afghanis ($56,000) from around 300,000. 

Zeerak also claimed the bank is insisting transactions are conducted online under new licences and brokers must have a minimum of 50 million Afghanis to operate. 

“This is a lot of money,” he said. “Money exchangers are not that strong financially.” 

The brokers’ commission said currency traders in the capital Kabul and cities such as Herat and Kunduz were shut as part of the strike. 

Meanwhile, Afghanistan’s central bank — Da Afghanistan Bank — warned that exchangers operating without a licence “will face legal action”. 

Spokesman Mohammad Sabir Momand said in a statement that the institution was “committed to transparency and security” in the financial sector. 

While informal money exchangers provide a vital service, they also lack oversight and analysts say their system can be used to launder money and finance militant organisations. 

Afghanistan central bank’s former deputy governor Khan Afzal Hadawal said the Taliban’s new initiative was motivated by a desire to demonstrate to the international community that it is stymying terror groups in the nation. 

“The easiest way for money launderers and terrorists was to go through the money exchangers,” Hadawal told AFP. 

“What they (Taliban government) have done is they have increased the requirements, so that those who cannot qualify … by default they will be shut down.”

After making a hasty withdrawal, the US seized billions of dollars in Afghan assets and international donors suspended the massive influx of aid money which was propping up the Afghan economy. 

Many foreign nations have made assistance to the nation conditional on the Taliban regime guaranteeing human rights and preventing international terror groups from organising in Afghanistan.

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UK scraps subsidies for electric plug-in cars

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Britain's Department for Transport said it will end the current £1,500 ($1,800) subsidy for buyers of new plug-in cars as it focuses on other types of electric vehicles, such as taxis and trucks
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Britain on Tuesday axed its £1,500 ($1,800) subsidy for buyers of new plug-in cars as it focuses on other types of electric vehicles, but the news drew anger from the auto sector.

“The government is today closing the plug-in car grant scheme to new orders after successfully kickstarting the UK’s electric car revolution,” the Department for Transport (DfT) said in a statement.

The grant was launched in 2011 to help encourage Britons to ditch high-polluting diesel and petrol cars.

It has since supported the sale of almost half a million electric cars, the DfT added, stressing that the subsidy was always a “temporary” policy.

Sales of fully electric cars rocketed from less than 1,000 in 2011 to almost 100,000 vehicles in the first five months of this year alone.

However, the government is now switching its focus to offer subsidies on sales of new plug-in electric taxis, motorcycles, vans, trucks and wheelchair-accessible vehicles.

Britain plans to ban new sales of diesel and petrol cars in the UK from 2030, as part of its goal to reach net zero carbon emissions by 2050.

Tuesday’s announcement drew stark criticism from industry body the Society of Motor Manufacturers & Traders (SMMT).

“The decision to scrap the plug-in car grant sends the wrong message to motorists and to an industry which remains committed to government’s net zero ambition,” said SMMT boss Mike Hawes.

“Whilst we welcome government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers.”

Britain’s automobile sector had stalled last year on pandemic fallout including a semiconductor shortage.

However, greener electric vehicles now account for one in six new car sales.

That rises to just over half of all new car sales, if hybrid vehicles are included.

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Fed begins meeting with massive hike possible amid price surge

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Federal Reserve Chair Jerome Powell will have to balance inflation risks with a desire to avoid tipping the US economy into recession
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US central bankers opened their two-day policy meeting Tuesday amid a blistering inflation surge that has ignited predictions the Federal Reserve will approve the biggest interest rate hike in more than 27 years.

Fed Chair Jerome Powell has signaled that policymakers were poised to implement another half-point increase in the benchmark borrowing rate this week and another next month.

But a growing number of voices are now calling for a more aggressive three-quarter point hike in response to the big, unexpected jump in the consumer price index in May, which defied widespread expectations the data would show inflation pressures easing.

A Fed spokesperson confirmed the meeting of the policy-setting Federal Open Market Committee began as scheduled at 1500 GMT. Markets will get the rate decision on Wednesday at 1800 GMT.

Officials will debate how high to raise borrowing costs amid surging prices and fears of a bout of 1970s-style stagflation if their efforts to cool the economy clamp down on growth as well.

After dropping the rate to zero since March 2020 in a successful bid to help the world’s largest economy avoid a devastating downturn and recover quickly from the impact of the Covid-19 pandemic, the Fed has raised rates twice, including a big, half-point increase last month.

Low lending rates and the boost from massive federal stimulus caused demand to outstrip supply amid global supply chain snarls, pushing prices higher, and the Russian invasion of Ukraine added more fuel to the inflation fires, sending food and fuel prices soaring.

– Credibility boost or negative surprise? –

Economists thought March was the peak of CPI, but the rate spiked in May, jumping 8.6 percent in the latest 12 months.

“Given the latest information on inflation, we believe that risk-management considerations call for aggressive action to reinforce the Fed’s inflation-fighting credibility,” Barclays analysts said in a commentary.

If policymakers decide on a giant step, it would be the first 75-basis-point increase since November 1994.

But other analysts say the massive step would be unnecessary and could be viewed as panicky, and instead project an additional half-point hike in September.

“With supply improving and demand for goods falling relative to services, margins will compress and inflation will fall much faster than markets and the Fed expect,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis.

He noted that many of the factors driving the price spikes are “outside the Fed’s control, like oil prices.”

The consensus remains for policymakers to stick to the plan, and central bankers are typically loath to surprise markets, although they insist their decisions are “data dependent” and will adjust to evolving situations.

Karl Haeling of LBBW said markets are pricing in at least one 75-basis-point increase in the next three meetings, but chances of that happening this week are “50-50.”

“We believe they will probably avoid raising by 75 bps to reduce risk of an even bigger stock market plunge. But the coming barrage of Fed officials giving public comments after Wednesday will probably suggest that 75 bps is certainly possible at July’s FOMC,” he said.

Barclays said despite the element of surprise, “an aggressive move in June would provide the committee with the biggest bang for its buck, sending a resounding signal of the Fed’s resolve to guide inflation back to its 2 percent target.”

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Musk to face Twitter employees at meeting

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Elon Musk is due to address Twitter employees over his takeover bid
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Billionaire Elon Musk will address Twitter employees at a meeting this week, the company confirmed Tuesday, in a first since launching his troubled $44 billion bid for the social media platform.

The meeting is set for Thursday and comes as Musk is in a standoff with Twitter’s leadership over the service’s user numbers that have put the buyout in doubt.

Twitter, referring to the gathering, said “We can confirm this is true and happening.”

Since Musk’s takeover move became public in April, Twitter has been roiled by uncertainty over its future but also by concerns about being led by the mercurial Tesla chief.

Musk has advocated a less restrictive approach to what users can post on Twitter and is on record saying he would lift the ban the platform slapped on former US president Donald Trump — a highly polarizing decision.

The idea of Musk taking over Twitter has also stoked protest from critics who warn his stewardship will embolden hate groups and disinformation campaigns.

Musk has threatened to withdraw his bid, accusing Twitter of failing to provide data on fake accounts, but the company has since reportedly agreed to provide him access.

Some observers have seen Musk’s questioning of Twitter bots as a means to end the takeover process, or to pressure Twitter into lowering the price.

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