21/03/2014 World Business Report

capital, Kabul. A deputy Interior Minister said four foreign Nationals

and two Afghani children were among those killed. Those are the latest

headlines from BBC World News. Now for the latest financial news with

Alice. Stepping up sanctions ` EU leaders

meet in Brussels to discuss Russia's annexation of Crimea.

And 'Significant progress' ` that's how the International Monetary Fund

describes progress in Ukrainian talks over the resumption of a

support programme. Welcome to World Business Report.

In a minute we'll talk to Singapore about why China's Yuan is at a 13

month low. It is a crisis that is shaking the

foundations of international order. European Union leaders meeting in

Brussels have stepped up sanctions against Russia following the

annexation of Crimea. The leaders added twelve more names to an

existing list of twenty`one Russian and Crimean officials subject to

visa bans and asset freezes. The meeting also asked the EU's

executive, the European Commission, to prepare for broader economic

sanctions if the crisis escalates. Earlier, the United States announced

sanctions against twenty Russians, all of whom are close to President

Vladimir Putin. The Western aim is to ratchet up the costs for Putin's

annexation of the Crimean Peninsula and to head off any further Russian

military inroads into Ukraine. Our Europe Editor Gavin Hewitt who is in

Brussels, sums up the tightrope Europe's leaders are walking. What

is taking up the time here is what Europe or how Europe would respond

if there is an escalation to the crisis. And some, like Angela

Merkel, very firmly believe that Europe would have to embrace

economic sanctions. Some, like the Prime Minister David Cameron leaves

that Europe needs to begin setting out what it would do in the

circumstances. There are other countries here who are very wary of

going down the road of trade restrictions against Russia. Some of

those countries are dependent for their energy. The key thing for

Europe, it is felt very strongly here, they need to display eight

United front over all this. Lets take a look at those trade numbers

Gavin was referring to. You'll see that the Europeans have much closer

trade ties with the Russians, compared with the Americans. Last

year, the trading of goods between Russia and the EU totalled almost

450 billion US dollars. As for the United States, the same sort of deal

was worth nearly just forty billion dollars. Most of what Russia sells

is gas, and most of what it buys is machinery. But can these sanctions

actually make any difference to Russian policy? Will it actually

squeeze wealthy Russians and force a change in Putin's position? With me

is Tim Ash, who is an Analyst, at Standard Bank. Talk me through the

kind of sanctions that have been imposed. They are fairly limited and

are aimed at people around President Putin more to signal than have

affected. There are different ways that the west can impose sanctions.

The report mentioned that trade restrictions, there is a reluctance

in Europe to go down that path. The financial route is the most

effective. The US could be highly effective if it wanted to buy in

forcing existing regular tea environment more vigourously. That

would close of global financial markets to Russian banks. They are

highly dependent on international markets. There is a lot of

refinancing that needs to be done. Are we seeing a reflection of the

sanctions? I think it was SNP. Initially, a couple of weeks ago

there was some shock in Russia that the Westwood go down the sanctions

route. They were scurrying around to adopt measures. Russian market

traded off initially but have come back because they don't really think

the west will go down this route. It could be potentially damaging. Is it

really Vladimir Putin's inner circle that is being targeted? That is what

a lot of the headlines are saying. The first round of sanctions was the

meaningless. The second round, particularly from the US, these are

high`level people and very close. For years, there have been pretty

close to him. The Americans have a right to the bone, not particularly

to Putin himself but the guys around him. Will it have much impact? It is

signalling without much impact. We will await and see. Many thanks. Our

Moscow correspondent got a brief interview with one of Russia's most

powerful businessmen. He has banking and newspaper interests. He has

given us a view of what is at stake in this escalating drama. He said

the only effective way of hitting Russia was to stop businesses from

being able to borrow. You lack the stopping of Russia's access to world

capital markets. That would mean of 750 billion Russian state government

world. This will be good. That will mean Russia will have to use their

reserves which is just under 500 billion. If you eat out the reserves

to change Western state corporations, the prices will go up.

Financial sanctions would be the best way forward? For that, you need

reactions from investors. Meanwhile, the International

Monetary Fund says that "significant progress" has been made in talks

with Ukraine's new Western`backed government over the resumption of a

support programme for the crisis`hit ex`Soviet state. The IMF team

arrived in Kiev on March four for what had been meant to be a 10`day

mission aimed at examining the new government's books. But the Fund

decided to extend its stay in what analysts are seeing as a sign it's

moving ahead with the approval of a vital assistance programme. Talks

are now expected to continue until March 25th. We'll be talking to an

expert in an hours time. Living away from the situation in

Ukraine. The value of the Chinese yuan has fallen to its lowest level

in almost a year. Here to explain all is Sharanjit Leyl is in

Singapore. What is happening to the Yuan? It is at a low. A 13 month

low. That is after the Central Bank though it the midpoint of its

trading range. It is a daily rate setting that is a sign of how

comfortable the Central Bank is with the currency 's recent losses. We

saw it fall to a low of 6.2374 against the dollar today. All that

following the move by the Central Bank last weekend. They widened the

trading band to allow it to move up to 2% from that daily midpoint rate.

There is speculation that the bank is trying to keep the currency weak

to try and boost the country's economic growth. That is something

the US has accused it of doing for many years. An analyst I spoke to

said these moves are ineffective. They had of Asian currency trading

said these moves to weaken the Yuan will only last another week or two

and it is against the long`term strategy to move away from being

exported a light and boost domestic demand. We know the Yuan has been

down 3% against the US dollar this year. There has also been pointing

data showing China's economy is showing weaker growth. We have seen

the Premier stressing that China will try and speed up investment and

construction plan is to ensure that domestic demand continues to grow.

That is what they want to emphasise. Thanks for talking us through those

fluctuations. Let's have a look at how Asian markets are getting on

this Friday. Market found their footing after Wall Street shook off

concerns about Federal Reserve policy. The spike in US yield the

dollar at that level. From me and the team, that is all for this hour.

I will be back for a look at the newspapers.

Many thanks to Alice for that. An official report has concluded that

children's services in Coventry are inadequate and leave youngsters at

the risk of harm. Inspectors are critical of a local board that was

responsible for the series case review into the death of a

four`year`old. Two years ago Daniel was murdered by his mother and

step`father in Coventry.