02/01/2017

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:00:00. > :00:12.Now on BBC News all the latest business news live from Singapore.

:00:13. > :00:19.With India still reeling from the government's demonetisation drive,

:00:20. > :00:24.Prime Minister Narendra Modi has plans for a new India. And slowing

:00:25. > :00:31.the flow, as cuts take effect in production, we ask if it will take

:00:32. > :00:39.oil prices out of the year-long slump. Good morning, and Happy New

:00:40. > :00:45.Year. Welcome to Asia Business Report live from Singapore. In a New

:00:46. > :00:48.Year is addressed to the nation the Indian Prime Minister Narendra Modi

:00:49. > :00:54.announced measures to help those hardest hit by the cash ban he

:00:55. > :00:58.imposed a month ago. It is his first televised address since he announced

:00:59. > :01:03.the controversial decision. The move caused panic across India and many

:01:04. > :01:09.ATMs and banks are still short of new cash.

:01:10. > :01:13.More than 50 days after the government withdrew 86% of currency

:01:14. > :01:17.notes in circulation, India is still reeling under the impact of that

:01:18. > :01:22.decision. New notes had been introduced but the pace at which

:01:23. > :01:27.they are coming to the system is low and the shortage is affecting the

:01:28. > :01:33.informal sector which generates 80% of employment in India. And so job

:01:34. > :01:38.losses have been mounting, farmers have been finding it difficult to

:01:39. > :01:42.access money to pay for seeds and labourers and so in an attempt to

:01:43. > :01:47.soften the blow and help those worst affected, the Prime Minister

:01:48. > :01:52.announced a number of measures in a televised speech in New Year's Eve,

:01:53. > :01:58.offering discounts on interest rates for small home loans, incentives for

:01:59. > :02:02.small businesses, waivers for farmers who took loans to sow crops

:02:03. > :02:06.and incentives for pregnant women and the elderly, and measures to

:02:07. > :02:11.encourage people to make digital payments rather than use cash. He

:02:12. > :02:14.defended the government decision to withdraw currency notes and said it

:02:15. > :02:19.would root out corruption and illegal cash holdings called black

:02:20. > :02:24.money in India. In his speech there were no details of how much black

:02:25. > :02:27.money has been unearthed so far. Analysts have been asking how the

:02:28. > :02:32.government wants to pay for the handouts. This year India has

:02:33. > :02:36.committed to narrowing the gap between how much it spends and how

:02:37. > :02:40.much it earns. In less than a month from now the national budget will be

:02:41. > :02:45.announced and maybe they will have some idea of how the government is

:02:46. > :02:51.managing India's finances. Well, the rupee may have stolen the

:02:52. > :02:55.spotlight at the end of 2016 but through the year almost all major

:02:56. > :03:00.currencies were on a rollercoaster ride of their own. Our correspondent

:03:01. > :03:05.looks at where they will be starting off in 2017.

:03:06. > :03:10.At the start of 2016 it was all about the Japanese yen. The hardest

:03:11. > :03:15.working central banker in Asia did everything to weaken the yen but

:03:16. > :03:20.nothing, not even negative interest rates, worked. 2016 everyone said

:03:21. > :03:27.would be tough for the yen and as it was going on the Chinese one was

:03:28. > :03:30.falling. As the economy became uncertain Chinese companies and rich

:03:31. > :03:36.individuals sent more cash overseas. Then came the first big shock, the

:03:37. > :03:40.vote for Brexit. The Sterling slumped against the US dollar after

:03:41. > :03:46.the UK and expected leave voted to leave the EU in June. It has lost

:03:47. > :03:50.about 15% of its value. All that uncertainty led to more money

:03:51. > :03:56.flowing into the safe haven Japanese yen which kept rising and all he

:03:57. > :04:01.could do was wring his hands. All this while the Chinese yuan kept

:04:02. > :04:06.falling. And then trumped inflation hit, winning the White House, so the

:04:07. > :04:10.US dollar soared, which was good for the US dollar but bad for emerging

:04:11. > :04:15.market currencies like the Malaysian ringgit which hit lowest level since

:04:16. > :04:19.1998's financial crisis. Through it all the Chinese yuan kept falling

:04:20. > :04:26.even as the government pumped cash to prop it up. So, where are we at

:04:27. > :04:29.the beginning of 2017? Well, the US dollar is that it strongest level in

:04:30. > :04:33.years and looks set to stay that way. The British pound has lost a

:04:34. > :04:38.fifth of the value since Brexit, which might be a new normal, and the

:04:39. > :04:45.Japanese yen, what negative interest rates couldn't do Mr Trump did and

:04:46. > :04:49.finally the yen is weakening. What about the Chinese yuan? It is

:04:50. > :04:53.continuing a slow march downwards against the US dollar, for now at

:04:54. > :04:57.least. Because of the falling yuan, China

:04:58. > :05:03.has increased scrutiny of people buying foreign money. The foreign

:05:04. > :05:07.exchange regulator said as of one January people converting yuan into

:05:08. > :05:12.foreign currencies will have to provide more information on why they

:05:13. > :05:16.are doing so. Currently people can exchange the equivalent of $50,000 a

:05:17. > :05:20.year. Authorities are stepping up punishment for any illegal money

:05:21. > :05:26.outflows. The New Year also marks the start of

:05:27. > :05:32.production cuts by the world's biggest oil producers in an unusual

:05:33. > :05:35.move. Members of OPEC and other oil producing countries are slashing

:05:36. > :05:40.crude oil output by nearly 1.8 million barrels per day. Will the

:05:41. > :05:45.agreement stick, and what impact will it have on oil prices? I put

:05:46. > :05:49.that question to a resource analyst from Sydney.

:05:50. > :05:54.Certainly when you look at the commercial decision that OPEC made

:05:55. > :05:57.late last year there was one difference we have seen compared to

:05:58. > :06:03.all the other decisions they have made and never followed through with

:06:04. > :06:07.and that is that they bought in outside non- OPEC members, so we

:06:08. > :06:13.think that gives this opportunity for OPEC and non- OPEC members to

:06:14. > :06:18.ensure that going forward we will see the production cuts of about 1.8

:06:19. > :06:22.million barrels stick more so than we have seen in any other time than

:06:23. > :06:27.in OPEC history. What about Russia? Some seem sceptical it will stick to

:06:28. > :06:35.the cuts, at which it hasn't agreed to in 15 years. They will pull out

:06:36. > :06:41.300,000 barrels per day. If you look at the broader production of a are

:06:42. > :06:47.significantly a big producer, in the ten millionplus arena, so 300,000

:06:48. > :06:51.barrels is fairly small. Given they have the advantage of higher prices

:06:52. > :06:55.on the massive amount of production they would still be producing, we

:06:56. > :07:01.think they will certainly cap 300,000 barrels. If you look

:07:02. > :07:07.overall, we believe the market is in a surplus of over 1 million barrels,

:07:08. > :07:13.so cutting out 1.8 will reduce the market from a surplus to a deficit,

:07:14. > :07:17.and that allows for some creeping of members either cheating or perhaps

:07:18. > :07:23.US production to increase over the course of 2017. Oil prices rose

:07:24. > :07:28.since the announcement, double of the load from a year ago. What is

:07:29. > :07:35.your outlook for the price is? If we look at 2017 we think we will see a

:07:36. > :07:47.moderate rise in oil prices probably for WTI of $65 - $75 at the end and

:07:48. > :07:51.four Brent crude, $67- $77, so we see modest increases because of tail

:07:52. > :07:58.winds and we believe some strong headwinds. The massive inventory

:07:59. > :08:02.that still hangs in the US of 480 million barrels plus will act as a

:08:03. > :08:10.headwinds and we suggest we will see US production increase in. There is

:08:11. > :08:14.no Jetson style flying cars or Star Trek style teleportation yet but

:08:15. > :08:18.this year's Consumer Electronics Show in Las Vegas will showcase a

:08:19. > :08:22.huge range of new innovations, one of which is a virtual reality booth

:08:23. > :08:27.for people to play videogames without having to a headset. Chris

:08:28. > :08:33.Fox has a look. I am moving forward, I have to shoot

:08:34. > :08:40.that, how can I do that? Oh, wow. This is surprisingly scary. I have

:08:41. > :08:47.walls and pins coming at me. Oh, I have to avoid the dogs now. I am

:08:48. > :08:52.really scared of dogs, so this isn't fun. Whoever designed this is very

:08:53. > :08:58.sadistic. Everyone is talking about virtual reality, why is this version

:08:59. > :09:02.better? This is totally different usage because you are free to move

:09:03. > :09:08.and you don't have any wire. You can still see your body. It means that

:09:09. > :09:13.you are not unconnected from reality. Will people pay to use our

:09:14. > :09:19.game like this at a cinema or entertainment complex when they can

:09:20. > :09:23.do virtually he on their phone? This is a very different experience

:09:24. > :09:28.because in this set up we re- the player to move, which makes

:09:29. > :09:31.something possible for sports -- require the player to move. We can

:09:32. > :09:35.measure the difference for the people playing. We use this

:09:36. > :09:41.technology where it is more relevant, you need to move, you need

:09:42. > :09:45.to play, you need a fast set up, if you have the glasses you just put

:09:46. > :09:52.them on. A centuries-old tradition of sending new years cards into

:09:53. > :09:54.Japan gets a modern twist. Let's take a look. We will be back in the

:09:55. > :09:59.next hour.