Argentina’s economy minister resigns as peso sheds value

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Nicolas Dujovne
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Nicolas Dujovne resigned on Saturday after a week of economic turmoil

Argentina’s economy minister Nicolas Dujovne has resigned amid a financial crisis exacerbated by the president’s defeat in a primary poll.

The country’s peso shed 20% of its value against the US dollar after President Mauricio Macri suffered the resounding loss last Sunday.

In a letter to the president, Mr Dujovne said he had given his all.

Mr Macri was beaten in the primary elections by his left-wing rival Alberto Fernández.

Mr Fernández’s running mate is former president Cristina Fernández de Kirchner who presided over an administration remembered for a high degree of protectionism and heavy-handed state intervention in the economy.

He won the primary with 47.7% of the votes with Mr Macri receiving 32.1%.

Following the primary result, credit-rating agencies Fitch and Standard & Poor’s downgraded the country’s debt rating amid concerns about a possible future default.

Days after the defeat, Mr Macri announced a series of measures  including income tax cuts and increases in welfare subsidies. Petrol prices will also be frozen for 90 days.

Mr Dujovne said that the government’s economic team needed “significant renewal”.

“I believe my resignation is in keeping with my place in a government that listens to the people and acts accordingly,” he wrote.

He will be replaced by Hernan Lacunza, the current economy minister for Buenos Aires province.

A cabinet shuffle has been rumoured for several days.

Mr Macri was elected in 2015 on promises to boost Argentina’s economy with a sweep of liberal economic reforms.

After taking power, he sought to restore international trust in the economy with budget cuts and the elimination of subsidies.

In May 2018, he announced the country would be asking for a “preventative credit line” of $50bn (£41bn) from the International Monetary Fund. The deal was negotiated by Mr Dujovne.

Argentina is currently in recession and posted 22% inflation for the first half of the year, one of the highest rates globally.

More than a third of the country’s population is currently living in poverty, according to official figures.

Asian shares are mostly lower as investors awaited developments on the trade friction between the U.S. and China at the Group of 20 meeting of major economies in Japan later in the week.

The Associated Press

OKYO (AP) — Asian shares were mostly lower Wednesday as investors awaited developments on the trade friction between the U.S. and China at the Group of 20 meeting of major economies in Japan later in the week.

Japan’s benchmark Nikkei 225 slipped 0.5% to finish at 21,086.59, while Australia’s S&P/ASX 200 fell 0.3% to 6,640.50. South Korea’s Kospi stood virtually unchanged at 2,121.85. Hong Kong’s Hang Seng edged up 0.1% to 28,221.88, while the Shanghai Composite lost nearly 0.2% at 2,976.29.

On Wall Street, discouraging economic data and cautionary remarks from the head of the Federal Reserve weighed on the market.

The sell-off marked the third straight loss for the market and the biggest drop this month for the Dow Jones Industrial Average and the S&P 500 index, which hit an all-time high only last week.

In an early afternoon speech, Fed Chairman Jerome Powell noted that the economic outlook has become cloudier since early May amid uncertainty over trade and global growth. Earlier Tuesday, reports showed a decline in consumer confidence and more weakness in the housing market.

The S&P 500 index fell 27.97 points, or 1%, to 2,917.38. The Dow dropped 179.32 points, or 0.7%, to 26,548.22. The Nasdaq composite, which is heavily weighted with technology stocks, slid 120.98 points, or 1.5%, to 7,884.72.

The Russell 2000 index of smaller company stocks gave up 9.05 points, or 0.6%, to 1,521.04.

Trade policy remains the biggest source of uncertainty looming over the market. Investors are worried about the trade dispute between the U.S. and China and its potential impact on global economic growth and corporate profits.

Presidents Donald Trump and Xi Jinping will meet this week at the G-20. The world’s two largest economies spent much of the current quarter escalating their trade war and giving global markets jitters over prospects for economic growth.

“To a large extent, any further deterioration in trade relations is expected to guide expectations here so the focus remains up ahead with the G-20,” said Jingyi Pan, market strategist at IG in Singapore.

ENERGY:

Benchmark crude oil rose $1.22 to $59.05 a barrel, amid worries about tensions in the Middle East, centered around concerns about Iran, and industry data that showed a decrease in U.S. crude oil inventories. It fell 7 cents to settle at $57.83 a barrel Tuesday. Brent crude oil, the international standard, rose $1.05 to $65.33 a barrel.

CURRENCIES:

"Echo Dots" are pictured at Amazon Headquarters in 2018
Image copyrightGETTY IMAGES
China Labor Watch say “interns” made up 20% of a factory’s workforce

Amazon has pledged to investigate allegations that hundreds of teenagers are working illegal hours at a Chinese factory producing its Echo devices.

The report alleges the so-called interns are paid as little as $1.42 (£1.18) an hour, or about $248 (£205) a month, for their time. The teenagers were reportedly expected to work 10 hour shifts, including two hours overtime, six times a week.

 

China Labor Watch say many students sleep in shared dormitories and face pressure from teachers, who are also recruited, to work hours that violate labour regulation.

“If interns were unwilling to work overtime or night shifts, the factory would arrange for teachers to pressure workers,” the report says. “For interns who refuse to work overtime and night shifts, the factory requests teachers from their schools to fire them.”

Activists also make allegations of physical and verbal abuse by teachers at the site. The intern’s schools are compensated financially for their time, the report adds.

One student, a 17-year-old named as Xiao Fang, was quoted by China Labor Watch describing her role putting protective film over about 3,000 Echo Dot devices a day.

The report says she found working in the “very bright” and “hot” factory very tiring and she did not want to work overtime.

“The teacher went to speak to Xiao Fang and said that if she doesn’t work overtime, she can’t intern at Foxconn and this will affect her graduation and scholarship applications at the school etc,” the report says.

“With no choice, Xiao Fang could only endure this.”

What has the response been?

Amazon, owned by the world’s richest man Jeff Bezos, said in a statement to the BBC it does not tolerate violations to its supplier code of conduct.

“We are urgently investigating these allegations and addressing this with Foxconn at the most senior level,” the statement said. “Additional teams of specialists arrived on-site this wee k to investigate, and we’ve initiated weekly audits of this issue.”

The BBC has approached Foxconn for comment. In a statement to the Guardian newspaper, the company said it had “doubled the oversight and monitoring”of its school programme.

“There have been instances in the past where lax oversight on the part of the local management team has allowed this to happen and, while the impacted interns were paid the additional wages associated with these shifts, this is not acceptable and we have taken immediate steps to ensure it will not be repeated,” they said.

Foxconn also reportedly pledged to review salaries and increase regular worker levels.

Media captionAmazon’s head of Alexa, Dave Limp, on privacy concerns

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