:00:00. > :00:00.Jasmine. Those are the latest headlines. Now
:00:00. > :00:17.for the latest financial news with and World Business Report.
:00:18. > :00:21.The US confirms it will financially support the Kiev government as
:00:22. > :00:25.Russia plays its trump card and threatens to stops sending cheap gas
:00:26. > :00:27.to Ukraine. Flight to safety ` investors plough
:00:28. > :00:29.their money into gold, the Japanese yen, and oil as the geopolitical
:00:30. > :00:43.tensions ratchet up. Welcome to World Business Report.
:00:44. > :00:46.I'm Sally Bundock. Also in the programme: The race to become the
:00:47. > :00:53.European hub for trade of the Chinese currency. We'll take a look
:00:54. > :00:56.at the options. First, amidst calls from the
:00:57. > :00:59.Ukrainian Prime Minister for help as his country stands on the brink of
:01:00. > :01:08.disaster, the US Treasury secretary, Jack Lew, has said he will provide
:01:09. > :01:11.as much support as Ukraine needs. Ahead of the International Monetary
:01:12. > :01:13.Fund's trip to Kiev this week, the US confirmed it was willing to give
:01:14. > :01:17.whatever financial support Ukraine needs to get its economy back on
:01:18. > :01:20.track. The G7 have since added that they will give strong financial
:01:21. > :01:22.support to the Ukraine. But while the new Ukrainian government
:01:23. > :01:25.reiterates it is willing to do whatever it takes, including
:01:26. > :01:28.economic reforms in order to secure bilateral funding. Russia still has
:01:29. > :01:30.a big trump card it started to wield over the weekend. Russia's gas
:01:31. > :01:33.export monopoly Gazprom has threatened to end its supply of
:01:34. > :01:36.discounted gas to the Ukraine, a move that would not only mean gas
:01:37. > :01:40.prices would sharply increase in the Ukraine but could also impact the
:01:41. > :01:46.supply of gas to Western Europe if a gas price dispute begins. Most of
:01:47. > :01:52.the Russian gas used in Western Europe is sent via pipes that cross
:01:53. > :01:58.the Ukraine. And America's response to this threat? So far, the US have
:01:59. > :02:01.said they could impose sanctions, refuse visas, and even freeze
:02:02. > :02:06.Russian assets. Also the UK and US have suspended preparations plans
:02:07. > :02:09.for a G8 summit in Sochi. Let's get more details on how these
:02:10. > :02:14.economic threats are playing out in Kiev. Andriy Gubachov joins me now
:02:15. > :02:25.from the city. He is a banker and Ukrainian economy expert.
:02:26. > :02:28.Thank you for being on the programme. We have not yet mentioned
:02:29. > :02:31.the military intervention in Crimea which of course adds tremendously to
:02:32. > :02:39.that pressure on this newly formed government. Give us your take on how
:02:40. > :02:43.this will play out? The economy is on the brink of bankruptcy. That is
:02:44. > :02:52.the big issue, isn't it? Yes, of course. There are have to be drastic
:02:53. > :02:56.austerity measures. They have to ask the West for financial help
:02:57. > :03:03.otherwise we will continue to see devaluation. In the long run, that
:03:04. > :03:07.brings benefits to the economy by helping businesses, in the short
:03:08. > :03:13.run, that affects the people negatively. What is the best plan
:03:14. > :03:20.for this new government in terms of trying to get the aid it requires?
:03:21. > :03:30.It is getting promises from the West and yet it is cut off from Russia?
:03:31. > :03:36.There have been requirements from the IMF regarding gas prices for the
:03:37. > :03:43.population. This can be accomplished with compensation. They should be
:03:44. > :03:51.able to achieve that. As I said, in the long run, it is for the best,
:03:52. > :03:58.especially having seen one prominent thinker and the Minister of the
:03:59. > :04:03.economy who as promised to introduce investigations into how business is
:04:04. > :04:07.conducted in Ukraine. We hope to see positive effects from that in the
:04:08. > :04:13.next few months. What happens if Russia goes ahead with the threat of
:04:14. > :04:21.intervention when it comes to the gas situation. That will clearly
:04:22. > :04:26.create massive pressure on this new government. It is tricky to fix,
:04:27. > :04:31.isn't it? I wouldn't worry too much about that actually because
:04:32. > :04:37.subterranean gas tanks are afield to the brim. We are fine for the
:04:38. > :04:43.winter. It is a clear question for the next winter. For the short term,
:04:44. > :04:51.we are fine. That is actually not a problem? You can ride that for a
:04:52. > :04:57.while in Ukraine? Yes. All right. Thank you for clarifying that. We
:04:58. > :05:00.appreciate your time. It was interesting to hear that they have
:05:01. > :05:06.gas through to the next winter. We will see how that affects the
:05:07. > :05:09.threats from Russia. This geopolitical upset is not
:05:10. > :05:14.limited to the Ukraine today. Reports are coming from South Korea,
:05:15. > :05:19.claiming that North Korea has fired two short range missiles. The
:05:20. > :05:29.markets are reacting and investors are going to safety. People are
:05:30. > :05:36.pulling out of shares and going into gold and we'll? Tell us more. That
:05:37. > :05:41.is correct. It is mainly the Ukraine which is affecting markets here. It
:05:42. > :05:46.will drop into many markets in Asia. Losses in Japan and Hong Kong
:05:47. > :05:52.currencies as well as in Australia. Investors are retreating to save
:05:53. > :05:57.havens in stocks and assets. It has driven investors to the Japanese yen
:05:58. > :06:02.which is seen as safe haven in times of turmoil. `` Japanese and Hong
:06:03. > :06:06.Kong markets. That hit Japanese exporters which are lower today. The
:06:07. > :06:13.traditional flight to safety in gold and treasury. The economy is far too
:06:14. > :06:17.small to have a direct impact on the global economy but the main risk is
:06:18. > :06:23.that it triggers this wider Russian`Western conflict. It could
:06:24. > :06:28.potentially mean disruption to gas supplies in Europe. Europe gets
:06:29. > :06:32.about 25% of the gas from Russia through Ukraine. This could affect
:06:33. > :06:37.growth in the eurozone which is a big trading partner for many Asian
:06:38. > :06:41.countries. Ukraine is also a big grain producer so weak futures are
:06:42. > :06:44.being driven higher as well. Investors are at the moment are not
:06:45. > :06:50.liking the uncertainty around the world. Before you go, tell us about
:06:51. > :06:54.China. We had factory gate over the weekend and last week, the Chinese
:06:55. > :07:00.currency was under pressure. The biggest drop in value on record last
:07:01. > :07:05.week. Tell us about that. Investors were spooked by the factory activity
:07:06. > :07:14.index from China. The official data was out on the weekend. There was an
:07:15. > :07:20.eight`month low in February. The unofficial data on the index was out
:07:21. > :07:24.of date, showing it falling to 48.5% in February. Any reading below 50
:07:25. > :07:29.signifies a contraction. Manufacturing is a key driver of
:07:30. > :07:33.Chinese growth. The date and may have been skewed by the Chinese New
:07:34. > :07:38.Year. Many factories were shut and workers went home in late January
:07:39. > :07:41.currency had the biggest one`day currency had the biggest one`day
:07:42. > :07:47.fall against the US dollar last week, nearly 1%, the biggest decline
:07:48. > :07:52.since 2005 when China introduced the currency regime and moved away from
:07:53. > :07:57.the US dollar. Analysts say that this is as expected and it does not
:07:58. > :08:02.signify much difference in how it is supposed to be trading. Thank you
:08:03. > :08:08.for that. Let's focus more on the Chinese
:08:09. > :08:11.currency suffering suffered from its biggest seven`day loss on record
:08:12. > :08:14.last week. But whether it has embarked on a steady fall lower or
:08:15. > :08:17.not, this won't make the yuan less vital to trade around the world.
:08:18. > :08:21.After being a closed currency for years, the yuan has gone from being
:08:22. > :08:24.the 20th most traded currency to the eighth in just 12 months. It will
:08:25. > :08:28.doubtless soon rival the dollar or the euro and that's why the battle
:08:29. > :08:35.is on to see where in Europe the renminbi will be hosted, London or
:08:36. > :08:37.Luxembourg? Business correspondent Joe lynam went to find out which
:08:38. > :08:48.city is set to win this competition. Thousands of dollars worth of yuan
:08:49. > :08:56.are being counted. Not in Beijing or Shanghai but in the tiny print a
:08:57. > :08:59.house in Luxembourg. The hitherto private currencies glueing `` going
:09:00. > :09:05.global. Luxembourg wants to be loved. Luxembourg is the richest
:09:06. > :09:08.country in Europe, wealth built on the back of banking. It used to be
:09:09. > :09:12.where the French and German elite hid their money but nowadays,
:09:13. > :09:16.Luxembourg has the skilled staff and the ambition and the place within
:09:17. > :09:22.the eurozone to take on London in the battle for Chinese money
:09:23. > :09:26.overseas. It is actively courting Chinese banks to set up here at
:09:27. > :09:31.conventions such as this. In future, big pension funds can invest
:09:32. > :09:37.directly in mainland China via Luxembourg. The Chinese have managed
:09:38. > :09:42.the seamless way of doing business which you can have in a single
:09:43. > :09:48.market as a key advantage. Three of the largest Chinese banks have their
:09:49. > :09:54.European bases in Luxembourg. 35% of icy BC's profits are coming from
:09:55. > :10:01.trades here. There have been here 16 years and we find that Luxembourg
:10:02. > :10:06.offers attractive legal frameworks as well as social and political
:10:07. > :10:15.stability. London is the financial centre in Europe. Why would the
:10:16. > :10:18.Chinese bank anywhere else? There is a perception that there is
:10:19. > :10:21.difficulty in the UK compared to Luxembourg. A new global reserve
:10:22. > :10:28.currency is on its way into many banking cities want a piece of the
:10:29. > :10:34.action. `` and many banking cities. It will not be long before yuan is
:10:35. > :10:38.rolling off the time as easily as the macro `` as the euro or the
:10:39. > :10:45.dollar. We will see you soon has we review
:10:46. > :10:54.the papers. Two years after the death of Daniel
:10:55. > :10:55.Pelka,