China’s No 2 official, Li Qiang, began his first overseas trip since becoming premier. German President Frank-Walter Steinmeier told Li in Berlin on Monday that Beijing was in a position to use its influence on Russia for a just peace, according to Steinmeier’s office.

The UN has so far been refused access by Moscow to Russian-occupied areas in Ukraine to deliver humanitarian aid to people affected by the destruction of the Kakhovka dam, according to a statement by Denise Brown, the UN’s humanitarian coordinator for Ukraine.

Latest developments

• Chinese premier discusses Ukraine, US with German president
• Putin meets African leaders on their Ukraine peace plan
• Ukraine’s Sense Bank owner would litigate nationalisation

Putin foe Navalny faces 30 more years in jail at new trial

A Russian court opened a new trial of jailed opposition leader Alexei Navalny on Monday that he and his supporters say could add another 30 years to his prison sentence.

A judge began the hearing inside the strict-regime prison colony where Navalny is already serving a nine-year term for fraud and contempt of court. Russian prosecutors have now charged him with founding an “extremist” group and six other related criminal counts.

Journalists who travelled to the prison about 100km east of Moscow were barred from the courtroom and permitted to watch proceedings only via a video link in a separate building. Navalny’s parents were also refused entry to the court, the Mediazona news website reported.

Later, the judge declared the entire trial closed and cut off the live broadcast, it said.

Navalny (47) had already been in detention for almost half a year when authorities outlawed his organisation as “extremist” in mid-2021 and crushed his network of activists.

“The Prosecutor-General’s Office has officially provided me with 3,828 pages describing all the crimes I’ve committed while already imprisoned,” Navalny said on his Twitter account on 26 May, adding that he’s “facing up to 30 years or more” under the charges.

Most of Navalny’s top aides fled Russia to avoid arrest. They accuse officials of trying to destroy his health by repeatedly locking him in a tiny cell for alleged violations of prison rules.

Navalny, who survived a chemical poisoning in August 2020 that he and Western governments blamed on the Kremlin, became popular through a series of anti-corruption investigations. In 2011-2012, he led the largest anti-Putin protests of the president’s long rule.

Russia raises crude oil processing to highest in more than two months

Russian refineries have raised their crude-processing volumes to the highest levels in nine weeks as the nation’s downstream maintenance season is nearing an end.

Russia’s refining facilities processed 5.49 million barrels a day in the week ending 14 June, according to a person familiar with the matter. That’s nearly 194,000 barrels a day more than the week before and the country’s highest processing rate since the second half of April, historical data show.

“Russia is restoring its daily refinery throughput as the spring maintenance season is largely over,” said Viktor Katona, head of oil analytics at research firm Kpler. “We will see the last key facilities, including Surgutneftegas PJSC’s Kirishi, coming back online in the first days of July. Then the refinery runs will fully return to pre-maintenance volumes.”

Chinese premier discusses Ukraine, US with German president

China’s No 2 official, Li Qiang, began his first overseas trip since becoming premier, as the government of the world’s second-largest economy attempts to prevent ties with Europe from deteriorating to lows reached with the US.

Li held talks in Berlin on Monday with German President Frank-Walter Steinmeier, who, according to his office, told the Chinese premier that the government in Beijing was in a position “to use its global political clout and its influence on Russia to work toward a just peace” in Ukraine.

The two leaders also discussed China’s relations with the US and Steinmeier “stressed the special importance of relations between the two countries for global security and cooperation”, the German president’s office added. “He called for the strengthening of communication channels between the two countries,” it said, in comments coinciding with the final stages of a trip to China by US Secretary of State Antony Blinken.

Emerging market currency volatility erases wartime spike

Options traders have cut their expectations of currency volatility in emerging markets to levels seen before Russia invaded Ukraine in February 2022.

The JPMorgan Emerging Market Volatility Index, an indicator of foreign-exchange swings three months ahead, fell to 8.86% on Friday. That was the first time since the war began that the measure closed below 9%, marking the lowest gauge level since October 2021.

The lowering of traders’ anxiety about emerging-market currencies signals optimism the US dollar’s downward trend this year will continue. As the Federal Reserve takes a mini pause in interest rate hikes, and some developing nations halt them, money managers expect the global tightening cycle that began more than two years ago to peak and reverse.

“This is a sign of the times where interest rates are converging to or at the terminal levels,” said Simon Harvey, Head of FX Analysis at Monex Europe Ltd. “At high nominal levels and against a backdrop of cooling inflation conditions, the probability of larger-than-expected rate hikes or an upwards reassessment in terminal rates is dramatically lower. And this lower rates volatility is mapping into currency markets.”

Though 2023 was expected to be a year of high volatility, it’s turning out to be anything but. Realised swings in the MSCI Emerging Markets Currency Index are coming in at 3.3% on a 66-day rolling basis, corresponding to the three-month tenor. That compares with a high of 6.6% in December. This reduction in realised volatility is also a factor in improving sentiment in the options market.

Underpinning this move is a near 2% drop in the dollar this year as US Treasuries increasingly price in a less hawkish Fed. The two-year US yield has risen only 29 basis points even though the Fed has raised its benchmark rates by 75 basis points. The gains are being consolidated in June after policymakers halted a run of 10 rate hikes that began in March 2022.

The emerging market currency index is up 2% in 2023, driving a carry return of about 6% when combined with interest rate differentials. It fell by 0.3% Monday, still on course for a monthly gain. DM