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Oil reaches its highest level for over two years

November 2017

The price of oil reached its highest level since the middle of 2015 in November, following a sudden anti-corruption purge in Saudi Arabia – one of the most influential members of OPEC. The price of Brent crude oil rose above US$64 per barrel during the month. At the end of November, OPEC extended previously agreed curbs on output until the end of 2018.

  • Credit ratings agency Moody’s upgraded India’s sovereign rating from “Baa3” to “Baa2
  • China announced an easing of limitations on foreign ownership in the financial sector
  • Brazil’s Selic interest rate has fallen from 14.25% to 7.5% since October 2016

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The price of oil reached its highest level since the middle of 2015 in November, following a sudden anti-corruption purge in Saudi Arabia – one of the most influential members of the Organisation of Petroleum Exporting Countries (OPEC). The price of a barrel of Brent crude oil rose above US$64 during the month. At the end of November, OPEC – alongside other oil-exporting countries that are not members of the cartel – announced that previously agreed curbs on production would be extended until the end of 2018. The output limits were originally introduced in December 2016 in a bid to support the oil price by cutting oversupply. 

“Brazil’s rate of inflation rose to its highest level since June”

Brazil’s rate of inflation rose to its highest level since June during November, driven up by a sharp increase in electricity tariffs. Consumer prices rose at an annualised rate of 2.77%. The country’s target rate of inflation still stands at 4.5% (plus or minus 1.5 percentage points), and central bank policymakers are widely expected to implement another cut in its key Selic interest rate, which has been slashed by 6.75 percentage points since October 2016 to reach its current level of 7.50%. The Bovespa Index fell by 3.1% over November. 

Share prices in China generally declined during November, dampened by some lacklustre economic data, and the Shanghai Composite Index fell by 2.2% over the month. In a move designed to relax restrictions on market access to China’s financial sector, the country’s Government announced that it would ease limitations on foreign ownership in the financial sector, including the banking, securities, fund and insurance industries. The Government also intends to reduce tariffs on cars “gradually and properly”. 

Credit ratings agency Moody’s upgraded India’s sovereign rating from “Baa3” to “Baa2” during November. Moody’s cited economic and institutional reforms implemented by the Government of Prime Minister Nahendra Modi, which are expected to support long-term economic growth and stabilise high levels of government debt. In its report, Moody’s acknowledged India’s substantial debt burden, but believes that recent reforms have boosted confidence that high levels of public debt – “one of India’s principal credit weaknesses” – will remain stable and eventually decline. In contrast, ratings agency Standard & Poor’s (S&P) reaffirmed its “BBB-/A-3” rating and highlighted India’s “sizeable fiscal deficits, high net general government debt burden, and lower per capita income”. Over November as a whole, the CNX Nifty Index fell by 1.1%.


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