BOAO, China， (Reuters) - China will make it easier to move capital in and out of the country and promote financial market deregulation, a senior forex regulator said on Friday, as Beijing seeks to woo foreign investors amid heightened geopolitical tensions.

"We will steadily push forward two-way capital market opening, and strengthen the connectivity between domestic and overseas financial markets," Xu Zhibin, deputy head of the State Administration of Foreign Exchange (SAFE), said at the annual Boao forum for Asia.

"We will expand the variety and scope of investments to attract more investors to invest in China's financial markets."

Xu also vowed to support high-quality Chinese companies to sell shares and bonds in overseas markets, and encourage sovereign wealth funds and other institutional investors to invest offshore "in an orderly manner."

Many global investors have left, or diversified away from China over the past few years, amid concerns over China's economic health, policy orientations, and Sino-U.S. tensions.

Meanwhile, overseas listings by Chinese companies have slumped, thanks to tighter scrutiny over national and data security by both Chinese and Western governments.

By Leika Kihara

TOKYO (Reuters) -Core inflation in Japan's capital slowed in March and factory output unexpectedly slid in the previous month, heightening uncertainty on how soon the Bank of Japan can raise interest rates again after exiting its radical monetary stimulus.

Core consumer price index (CPI) in Tokyo, an early indicator of nationwide figures, rose 2.4% in March from a year earlier, matching a median market forecast and slowing slightly from a 2.5% gain in February.

A separate index that excludes the effect of both fresh food and fuel costs, viewed as a broader price trend indicator, also showed inflation slowing to 2.9% in March from 3.1% in February, data showed on Friday.

While core inflation is still above the central bank's 2% target, the slowdown underscores how price pressures in Japan are still predominantly coming from raw material costs rather than robust domestic demand.

Separate data showed on Friday Japan's factory output unexpectedly fell by 0.1% in February from the previous month, against a median market forecast for a 1.4% rise.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to increase 4.9% in March and rise 3.3% in April, the data showed.

The data may point to caution at the BOJ in implementing further interest rate hikes, after ending an eight-year negative interest rate policy last week.

The BOJ has said its decision to end negative rates last week was driven by signs that robust demand and the prospect of higher wages were prodding firms to keep hiking prices for both goods and services.

BOJ Governor Kazuo Ueda has said the central bank could hike rates again if inflation overshoots expectations or upside risks to the price outlook heighten significantly.

Big firms have offered bumper pay hikes in this year's annual wage negotiations, heightening the prospect that Japan will see inflation sustained around the BOJ's 2% target.

But consumption has showed signs of weakness as rising living costs hit households, casting doubt on the strength of Japan's economy.

Factory output also remains weak due to production and shipment disruption at Toyota Motor (NYSE:TM) and its small-car unit, which could weigh on the broader economy due to their huge presence in Japan's manufacturing sector.

Japan's economy expanded an annualised 0.4% in the final quarter of last year, narrowly averting a technical recession as robust capital expenditure offset weaknesses in consumption.

By Karen Freifeld and Alexandra Alper

WASHINGTON (Reuters) -The United States is drawing up a list of advanced Chinese chipmaking factories barred from receiving key tools, three people familiar with matter said on Thursday, to make it easier for companies to stem technology flows into China.

The list could be released in the next couple of months, one of the people said.

The commerce department in 2022 barred U.S. companies from shipping equipment to Chinese factories producing advanced chips, as the U.S. seeks to severely limit Beijing's technological advances over national security concerns.

But companies say it is difficult to pinpoint which factories in China produce advanced chips and have long urged the commerce department to publish a list.

The effort shows the United States is taking pains to strengthen its existing chips restrictions on China by making it easier for U.S. firms to comply with restrictions.

The commerce department declined to comment.

A spokesperson for the Chinese Embassy in Washington said the U.S. should "stop overstretching the concept of national security and abusing the state power to suppress Chinese companies."

U.S. officials addressed requests from companies for a list at an annual export controls conference in Washington this week.

"People are like: 'Please, just tell us which are these advanced [factories] that you really care about,'" said one official, who spoke on a panel.

"It’s probably not going to be an exhaustive listing, if we can do that. But the more that we can help identify what are these facilities that we have a concern with, hopefully that’s going to help," the official added.

By Sarah Young

NEAR LONDON (Reuters) -In an anonymous warehouse in southern England, engineers at Evolve Dynamics are working on technology that could help keep Ukraine's reconnaissance drones in the sky even after Russia tries to jam them electronically.

It is a small but important part of an international effort by Ukraine's allies to support its drone programme, which Kyiv hopes will give it the edge over a much larger enemy with many more resources at its disposal.

Companies in dozens of countries have supplied drones and drone parts to Ukraine. Some, like Evolve Dynamics, are also focusing on technological advances designed to counter Russia's powerful electronic warfare (EW) capabilities.

By developing alternative radio link algorithms, it aims to make it harder for Russia to jam the signal from its surveillance drones, rendering them useless.

Both sides have bolstered deployment of EW systems, which can disrupt the frequencies that feed commands from the pilot to the drone, making them drop out of the sky or miss their target.

"It's a constant ping-pong game between adversaries," said Mike Dewhirst, chief executive of Evolve Dynamics, who estimates there have been 85 upgrades made to the company's Sky Mantis drones over the last two-and-a-half years.

Britain, a staunch ally of Kyiv since Russia launched its full-scale invasion in February 2022, said it was the largest supplier of drones to Ukraine, and is working with Latvia to lead a European coalition to step up production.

Other allies, such as Sweden, the Netherlands and Norway, have also provided Ukraine with combat drones.

Ukraine has nurtured its own private military startups to innovate and build up their domestic industry as the war enters its third year.

In total, there are now about 200 dronemakers in Ukraine and the Strategic Industries Ministry has said the country could make as many as 2 million drones this year.

With Evolve Dynamics, whose reconnaissance drones in Ukraine spy on enemy movements, military units receive parts and software updates directly from the company, allowing them, where possible, to make the changes themselves.

"We're adding technology to existing drones, modifying them. It might be a software change, a hardware change," Dewhirst said.

RAPID CHANGES ON THE BATTLEFIELD

Some military experts said immediate communication between defence companies and soldiers may become a more common feature of warfare given the rapid technological innovation.

The trend could have implications for everything from procurement to training.

"The technology is moving very quickly. I would say maybe a six week learning cycle on the battlefield," said Nick Reynolds, Research Fellow in Land Warfare at the Royal United Services Institute (RUSI), a UK-based defence think-tank.

"Our procurement systems are not optimised for this."

Last month, a military unit in Ukraine asked Evolve Dynamics to make changes to its technology to make it safer for the pilot.

Working at the British site adorned with Ukrainian flags and messages of thanks from soldiers, staff worked out how to separate a drone's radio box from its control.

Having sent instructions, the military unit were able to adopt the change within 24 hours of the request.

Dewhirst, who travels to Ukraine each month, decided to fund the modification after hearing soldiers were going to pay for it themselves. Drone units in Ukraine often pay for their own equipment through private means or crowd-funding.

Dewhirst founded the company in 2014 when he was working with software engineers in Kyiv for a digital marketing start-up.

Evolve Dynamics now has about 100 Sky Mantis surveillance drones flying in Ukraine, making it one of between five and 10 British significant suppliers of drones to Ukraine, the company said.

Britain has pledged to spend 325 million pounds ($416 million) to send 10,000 drones to Ukraine this year, and Evolve Dynamics hopes to win more of that work.

The privately owned company has supplied Britain's Royal Navy and some police forces, along with global oil and gas and wind turbine companies.

($1 = 0.7813 pounds)

By Scott Murdoch

SYDNEY (Reuters) - India's bulging pipeline of large block trades and listings such as the $3 billion IPO of Hyundai Motor (OTC:HYMTF)'s unit will draw more funds to a market whose share of global equity capital market deals has already hit a record this year, bankers said.

A paucity of deals elsewhere in Asia will add to the impetus for capital flows into India, they added.

Higher global interest rates, geopolitical tensions as well as China's economic slowdown and its move to restrict initial public offerings (IPOs) to support its secondary markets have led to a slump in equity dealmaking across Asia.

India, on the other hand, has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States.

Indian companies raised $2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the $166.5 million raised in the same period last year, the data showed.

Total ECM deals rose 139%, making it the most active market across Asia Pacific, including Japan, where activity was down 46.8%, and accounted for 10.05% of the global total in the first three months, a record high.

"The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it's unbelievable," said Rahul Saraf, Citigroup's India head of investment banking.

"India is really coming of age in the size, scale and quality of issuers."

The National Stock Exchange, the country's largest bourse, was the third most active listing venue globally in the first quarter, behind the New York Stock Exchange and Nasdaq.

"If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan," said Saraf.

Among the large deals in the pipeline, the listing of South Korean automaker Hyundai Motor's India unit is on track to be the country's largest ever IPO as it aims to raise up to $3 billion in 2024 in a deal that would value the car marker at up to $30 billion.

Budget supermarket chain Vishal Mega Mart is also planning a $1 billion IPO that would value the company at up to $5 billion.

"In terms of upcoming deals ... the size of the deals is getting larger and more companies are lining up for listing later in the year, once elections are out of the way," said Sumeet Singh, Aequitas Research director who publishes on Smartkarma.

India's general elections will be held over almost seven weeks from April 19.

Citigroup heads the league table for Indian ECM activity, according to LSEG, ahead of Bank of America and ICICI Bank.

By Brigid Riley

TOKYO (Reuters) - The U.S. dollar received a boost against major currency peers on Thursday, as a Federal Reserve official said he wasn't in a hurry to cut rates amid sticky inflation, and as traders braced for key economic data.

Meanwhile, although still not far from the 152 mark, the yen was holding its ground against the greenback after Japan's top monetary officials on Wednesday suggested they were ready to intervene.

Speaking during late U.S. trading hours on Wednesday, Federal Reserve Governor Christopher Waller said recent disappointing inflation data affirms the case for the U.S. central bank holding off on cutting its short-term interest rate target.

"There is no rush to cut the policy rate" right now, Waller said in a speech prepared for delivery before an Economic Club of New York gathering.

The dollar index, a measure of the greenback against major peer currencies, ticked up in the wake of Waller's comments and last held mostly unchanged at 104.41. It's gained around 3% so far in 2024.

Market expectations for the first rate cut to occur at the Fed's June meeting have eased somewhat, currently pricing in a 60% chance compared to 67% around this time last week, according to the CME FedWatch tool.

Waller's speech is a "clue that the Fed is more wary of stickier inflation, perhaps even a re-acceleration in price growth, said Kyle Rodda, senior financial market analyst at Capital.com.

While the central bank has signalled willingness to look through some bumps along the way to some extent, Rodda perceives the case for rate cuts has on balance weakened.

"A strong inflation read tomorrow could throw into question whether market pricing for three cuts in 2024 is justified," which would be a positive for the dollar, he added.

Traders await key U.S. core inflation figures due on Friday, following a bigger-than-expected jump in U.S. durable goods orders on Tuesday that has already boosted the dollar against the yen.

The greenback reached 151.975 yen on Wednesday, its strongest against the yen since mid-1990.

The yen gained a little after Japanese authorities held a meeting on Wednesday on the currency's weakness, and top currency diplomat Masato Kanda said he "won't rule out any steps to respond to disorderly FX moves."

Finance Minister Shunichi Suzuki said earlier on the same day that authorities could take "decisive steps," language he hasn't used since Japan last intervened in 2022.

That's put the market on edge for any signs that authorities are backing up words with action.

"It’s unlikely anyone will pay 152.01 yen for USD/JPY today because of this risk," Ray Attrill, head of currency strategy at National Australia Bank (OTC:NABZY), wrote in a note.

"But in the absence of intervention before the weekend, we strongly suspect someone will next week."

Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards a 32-year low of 152 to the dollar.

The Japanese currency was last pinned at 151.37 against the dollar.

Meanwhile, a summary of opinions at the Bank of Japan's March meeting released on Thursday showed policymakers were divided on whether the economy was strong enough to handle an exit from ultra-easy monetary policy.

Elsewhere, the euro was down 0.11% at $1.0814.. Sterling fell 0.17% to $1.2616.

In cryptocurrencies, bitcoin last rose 1.14% to $69,648.86.

MEXICO CITY (Reuters) - Mexico's economy is seen growing between 2.5% and 3.5% this year and then expanding 2.0% to 3.0% in 2025, a draft budget from the country's finance ministry showed on Wednesday.

Inflation in Latin America's second-biggest economy is expected to tick down to 3.8% this year, according to the draft, essentially meeting the central bank's target of 3%, plus or minus one percentage point. The expected 2024 inflation rate would also signal a slowdown from the 4.40% annualized growth rate in consumer prices in February.

For 2025, the draft budget predicts that inflation will further ease to 3.3%.

The document, which is used by lawmakers to plan future spending, also sees Mexico's peso trading at 17.8 pesos per dollar this year, and slightly weakening to 18.0 versus the U.S. currency next year.

Average crude oil production this year is forecast at 1.85 million barrels per day (bpd), rising slightly to 1.86 million bpd in 2025.

While the draft budget said the estimates refer to crude volumes, the government generally combines crude with condensate liquids in its figures.

Official data shows that state-owned oil company Pemex pumped an average of 1.55 million bpd of crude in February, its lowest level since 1979.

Pemex's oil output, the sales of which are a major contributor to public finances, has been on a steady decline from its peak of 3.4 million bpd two decades ago.

Meanwhile, crude exports are expected to reach 967,600 bpd this year and drop to 958,400 bpd next year.

(Reuters) - Global ratings agency S&P affirmed its "AA+" long-term and "A-1+" short-term unsolicited sovereign credit ratings on the U.S. on Thursday, and kept the outlook on the long-term rating as 'stable'.

"A diversified and resilient economy with solid growth, extensive monetary policy flexibility, and benefits associated with the unique status as the issuer of the world's leading reserve currency underpin the U.S. sovereign rating," S&P said.

It expects the Federal Reserve System, which provides the U.S. with considerable monetary policy flexibility, to navigate the challenges of lowering domestic inflation and addressing financial market vulnerabilities.

Earlier in the month, peer Fitch affirmed United States' long-term foreign currency sovereign credit rating at "AA+" with a "stable" outlook.

By Michael S. Derby

(Reuters) -The Federal Reserve said on Tuesday that it officially saw a net negative income of $114.3 billion in 2023, a record loss tied to expenses related to managing the U.S. central bank's short-term interest rate target.

The loss last year follows $58.8 billion in net income in 2022, the Fed said. The numbers released were an audited tally following preliminary numbers reported earlier this year. The Fed has stressed repeatedly that net negative income does not impede its ability to operate or conduct monetary policy.

By law, the Fed hands over any profits after covering operational expenses to the Treasury. The Fed earns income from services it provides the financial system and from interest income on securities it owns. It has earned significant profits over recent years amid very low rates and large levels of bond holdings.

The Fed's move to aggressively boost the federal funds rate starting in the spring of 2022 has upended central bank finances. To cool inflation pressures, the Fed lifted the target from near zero levels to its current 5.25% to 5.5% range.

The Fed maintains that target by paying banks, money funds and other financial firms to park cash at the central bank, and that is meant paying out substantially more in interest.

The Fed's audited interest expenses for banks' reserve balances hit $176.8 billion last year, up $116.4 billion from 2022's level, while interest payouts from its reverse repo facility was $104.3 billion last year, from $41.9 billion the prior year.

Meanwhile, the income the Fed earned from bonds it owns was at $163.8 billion last year, little changed from 2022.

The Fed can create money to fund its operations when dealing with operating losses which means it faces no obstacles to operate. It captures its loss in an accounting device called a deferred asset.

The official level of the deferred asset stood at $133.3 billion at the close of 2023. As of March 20, it had risen to $157.8 billion and it is unclear how much larger it will get.

When the Fed returns to profitability it will use excess earnings to reduce the deferred asset and when it is extinguished the Fed will start returning excess profits to the Treasury again.

Fed officials have noted they've handed back substantial sums to the Treasury over recent years. A St. Louis Fed report last year said it could take years before the Fed is able to once again return profits to the government.

WASHINGTON (Reuters) - U.S. President Joe Biden's approval ratings ticked up slightly in the last month, according to a poll conducted by Reuters/Ipsos, as more Americans named extremism and threats to democracy as their top worry ahead of the Nov. 5 election.

Two-fifths of Americans surveyed said they approved of Biden's performance, while 56% said they disapproved. That was a slight increase from last month's poll, which showed that 37% of respondents approved of Biden, close to the lowest level of his presidency.

The online poll was conducted March 22-24, after Biden's annual State of the Union address to Congress, where he delivered an energetic speech challenging Republicans that was intended to tamp down concerns about his age and vigor.

Biden, 81, is seeking a second term in office, where he is expected to face off against former President Donald Trump, 77, in the election.

A slightly larger number of respondents also expressed concerns over political extremism or threats to democracy, with 23% of respondents saying that was their top concern, up from 21% last month.

More than a third of Democrats - 36% - said that was their top worry, while 11% of Republicans and a quarter of independent voters said the same.

Trump has claimed, without evidence, that the 2020 election was stolen from him, including in a fiery speech shortly before hundreds of his supporters stormed the U.S. Capitol in 2021. Five people died.

Trump faces several legal challenges, including some tied to his role in attempting to overturn the results of the 2020 election.

On the campaign trail, Trump has said he would release people imprisoned for their role in the Jan. 6 attack and has referred to them as "hostages." He has also made a series of racist and inflammatory statements in his latest run for office.

Other top issues for voters were the economy, which 19% of respondents said was the most important problem for the country, and immigration, with 17% of respondents citing it as the top issue.

While 32% of Republican voters said immigration was their top concern, that was a decrease from last month's poll, which showed 38% of Republicans saw it as the top issue for the country.

Voters largely disapproved of the country's institutions.

Most people surveyed had unfavorable opinions of the House of Representatives (65%), the Senate (60%) and the Supreme Court (56%).

The Federal Reserve was the only institution that a majority favored, with 53% of poll respondents saying they had a favorable view.

The U.S. central bank has raised interest rates since March 2022 in a bid to lower inflation, but has kept rates steady since July and is expected to cut rates later this year.

The Reuters/Ipsos poll gathered responses online from 1,021 adults, using a nationally representative sample, with a margin of error of about 3 percentage points.