:00:17. > :00:19.financial news with Sally Bundock and World Business Report.
:00:19. > :00:24.Crisis talks in Portugal as politicians try to keep the
:00:24. > :00:27.coalition government together - amid rising opposition to austerity.
:00:27. > :00:32.Also, why exchange rate tensions between the US and China could be
:00:32. > :00:42.easing. We'll have the latest in our series
:00:42. > :00:43.
:00:43. > :00:45.Welcome to World Business Report. I'm Sally Bundock - also in the
:00:45. > :00:48.programme: Portugal's president is holding emergency meetings later
:00:48. > :00:58.today with the country's prime minister and members of parliament
:00:58. > :01:01.
:01:01. > :01:03.to try and settle a growing political crisis. Two top ministers
:01:03. > :01:06.have already resigned this week over increasingly unpopular austerity
:01:06. > :01:09.reforms tied to Portugal's $100 billion bailout - raising fears the
:01:09. > :01:12.governing coalition will collapse - and the country will be pushed back
:01:12. > :01:21.towards bankruptcy. Those fears were clearly felt on financial markets on
:01:21. > :01:30.Wednesday. The yield on Portugal's 10-year bond, in other words the
:01:30. > :01:37.return investors demand to hold the Portuguese debt, soared above 8%.
:01:37. > :01:45.The country's main share index the PSI 20 slumped to close down 5.3%.
:01:45. > :01:52.Here's the BBC's Alison Roberts in Lisbon.
:01:52. > :01:55.By two's president is calling on representatives of all the political
:01:55. > :02:01.parties that sit in Parliament for talks on the ongoing political
:02:01. > :02:06.crisis. He has the power to dissolve Parliament, but will be reluctant to
:02:06. > :02:10.call early elections if there are any chances that the coalition can
:02:10. > :02:18.be patched together. The talks come at against a backdrop of slumping
:02:18. > :02:27.markets. Investors reactions were a clear sign that they are losing
:02:28. > :02:33.confidence in Portugal's commitment. We need to find a
:02:33. > :02:37.solution to the crisis. It increases the pressure to find a solution to
:02:37. > :02:46.fund Portugal further if by the end of the year we are still in this
:02:46. > :02:50.situation weather is no possibility for the summer in to plug the hole
:02:50. > :02:56.in its funding needs. Despite his two most senior ministers having
:02:56. > :03:01.tendered their resignations, the prime Minister continued in office.
:03:01. > :03:06.He said the lasting Portugal needed a political crisis. He said he had
:03:06. > :03:11.not accepted the resignation of the Foreign Minister, but there has been
:03:11. > :03:16.no sign of that resignation being withdrawn. The resignation on Monday
:03:16. > :03:21.of the Finance Minister shook the government. He cited public
:03:22. > :03:27.weariness with to make of austerity, missed deficit targets and a lack of
:03:27. > :03:32.political backing for his policies. The public mood had already turned
:03:32. > :03:39.sharply against austerity. Last week saw a general strike called by both
:03:39. > :03:47.the main unions. Now, anti- austerity campaigners have called
:03:47. > :03:53.for a protest outside the president's Palace.
:03:53. > :03:58.Bill Blain is strategist at Mint Partners. There is a political
:03:58. > :04:04.crisis in Portugal. Ali on the edge of a new eurozone crisis? It does
:04:04. > :04:09.look that way. We have this crisis in Portugal the way that bond
:04:09. > :04:13.markets had a very steep sell-off. We have other problems in the rest
:04:13. > :04:19.of Europe. The interesting thing is they all boil down to the same
:04:19. > :04:24.thing. It is about politics. In Portugal, politicians have realised
:04:24. > :04:29.it is unsustainable. Initially, we have the ongoing political
:04:29. > :04:34.uncertainty. The row still things going on in Greece that could result
:04:35. > :04:39.in them defaulting. The interesting element is that the common
:04:39. > :04:43.denominator is politics. Many of these countries have been bailed out
:04:43. > :04:50.or ironic brink of being bailed out. They have some quite weak coalition
:04:50. > :04:55.governments. So far, all of these economies have tried their hardest,
:04:55. > :05:02.especially Portugal. Portugal has been successful in making cuts. They
:05:02. > :05:07.have done what they can. The result has been economic death. All of
:05:07. > :05:13.these countries are contracting. The Portuguese economy is still going
:05:13. > :05:17.down. The Spanish economy is flatlining. That is the best
:05:17. > :05:26.economic performance in Europe. Politicians look and say, I will not
:05:26. > :05:29.get elected. The creditors always argued that the austerity had to be
:05:29. > :05:39.pushed through to come pushed through the Canadian side with a
:05:39. > :05:43.
:05:43. > :05:48.more reform, agile can be. -- pushed through the other side. They had to
:05:48. > :05:52.restructure to remain competitive. It has taken so long that
:05:52. > :05:59.politicians and the electorate have lost patience. That is why we'll
:05:59. > :06:05.have a summer of discontent. Bill will be back to review the papers.
:06:05. > :06:07.Portugal features in the headlines today. We will discuss it further in
:06:07. > :06:10.five minutes. All this week we've been looking at
:06:10. > :06:13.the impact of the recent wild swings in the currency markets. The US and
:06:13. > :06:19.China have long accused each other of being currency manipulators with
:06:19. > :06:29.an agenda to boost their own economy at the expense of the other. Here's
:06:29. > :06:31.
:06:31. > :06:36.our correspondent John Sudworth in Shanghai. It is a decade-long
:06:36. > :06:43.stand-off. Two of the world 's biggest economies face to face over
:06:43. > :06:51.the issue of currency cheating. Back in 2003, when $1 bought eight
:06:51. > :06:57.Chinese renminbi, the US began to complain. Despite the rate falling
:06:57. > :07:00.to less than six renminbi, the complaints continue. The central
:07:00. > :07:07.charges that a weaker currency helps China's exporters, like this
:07:07. > :07:10.hydraulic lift factory, because it makes their goods cheaper to buy.
:07:10. > :07:20.After ten years of steady exchange rate strengthening, some in China
:07:20. > :07:28.
:07:28. > :07:35.think enough is enough . This year alone, the renminbi is up 3%. She
:07:35. > :07:39.says. The US poised to the ever widening trade gap as proof that
:07:39. > :07:43.China is manipulating its currency. China retorts that it is America
:07:43. > :07:48.that is now the manipulator, weakening the dollar by keeping
:07:48. > :07:52.interest rates low and giving US exporters a boost. American
:07:53. > :07:58.politicians have a point in one sense. China still tightly
:07:58. > :08:04.controlled its currency. The more interesting question is, why is it
:08:04. > :08:09.that China is allowing its currency to strengthen, but as far and fast
:08:09. > :08:16.as some would like, but strengthened none the less. The answer may well
:08:16. > :08:21.be that the two sides are locked in a mess of a battle. As exports
:08:21. > :08:28.become more expensive, imports become cheaper, boosting domestic
:08:28. > :08:31.consumption, which just happens to be China's new number one priority.
:08:31. > :08:37.One of the ways in the breeze into these salaries by appreciating the
:08:37. > :08:40.currency. That reduces the cost for the household sector. It increases
:08:40. > :08:47.the real value of their income and increases their share of the whole
:08:47. > :08:57.GDP. That reason, renminbi may be allowed to continue, steadily
:08:57. > :09:00.appreciating. The great US /China currency battle may be over. Oil
:09:00. > :09:03.prices are staying stubbornly high today following the military coup in
:09:03. > :09:12.Egypt. Sharanjit Leyl is at our Asia
:09:12. > :09:21.business hub in Singapore. We would not expect oil to come down just
:09:21. > :09:25.yet, given the situation in Egypt? You said it. It is a 14 month high.
:09:25. > :09:32.The crisis in Egypt has exacerbated concerns over oil supply. Prices
:09:32. > :09:37.have shot through the $101 mark the concerns of possible disruptions to
:09:37. > :09:40.Middle East supplies. Traders in crudely worried that the volatile
:09:40. > :09:50.situation could interrupt oil flows through this was canal and the wider
:09:50. > :09:52.
:09:52. > :09:56.Middle East, which accounts for around 25% of output. The Suez Canal
:09:56. > :10:00.authority, which operates the waterway, said it had all the
:10:00. > :10:03.authorities needed for running the canal without being limited by the
:10:03. > :10:09.laws and the systems of the Egyptian government. Alongside those worries
:10:09. > :10:18.in Egypt, the world's largest oil consumer saw a huge decline this
:10:18. > :10:27.week. The availability supplies fell by 10 million barrels. The largest
:10:27. > :10:35.decline in 30 years. It has exacerbated concerns. Central banks
:10:35. > :10:40.are meeting in Europe today. The meetings. Neither are expected to