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BOGOR, Indonesia — In a small, farming district in Indonesia's West Nusa Tenggara province, thousands of women leave home each year to cook, clean and take care of children for families in the Middle East.

The migrant domestic workers of Sumbawa district, with about 400,000 residents, sent home nearly $100 million over the past five years, paying for new, modern homes and mobile phones, as well as education and healthcare, researcher Gregory Randolph indicated.

Yet for all the money pumped into Sumbawa district by generations of people who have left to work abroad over the past half century, people continue to leave for lack of opportunities at home, Randolph said at the launch of his study on migrants' communities of origin.

"Labour migration simply is not delivering economic development to communities of origin," Randolph added on Wednesday at the close of a three-day conference on migrant labour in Bogor.

"Whatever benefits migration and remittances might deliver ... they have not included the type of development that creates good jobs. This was confirmed time and time again in the interviews I did in West Nusa Tenggara," he elaborated.

The province lies in the south and centre of the Indonesian archipelago.

There are an estimated 250 million migrant workers globally, who are expected to send home about $440 billion in remittances this year, according to the World Bank.

Remittances remain a key source of funds for developing countries, far exceeding official development assistance and even foreign direct investment, the World Bank says.

In the 1980s Indonesia even began including migration in its economic plans, putting "manpower services export" as one of its top priorities in its 1994-1999 plan, Randolph wrote in his study.

Between 2006 and 2013, more than 50,000 people from Sumbawa left for jobs overseas, Randolph wrote, almost all of them women leaving for domestic work.

He found that migrants' greater spending on education and healthcare for their families had not created stable local jobs, or shifted better-educated young people towards high-skilled migration.

"Remittances do not positively impact anyone except the migrant and his or her family, and even then, the impacts do not alleviate the need for future generations to migrate," he said in the report.

The problem, he indicated, is that there is no effort to channel remittances into the economic development of home communities.

"Governments are more likely to see migrants as consumers in their origin communities... they send money back that can be spent, or they bring money back and spend it. Governments for the most part cannot imagine that migrant workers can also be producers in most communities," he added.

In addition to focusing on migrant labour exploitation and protection, Randolph urged the 200-plus migration and labour experts at the conference to consider economic development in the migrants' origin communities.

"We really need new models and new ways of imagining how the hard work that migrants do abroad can bear fruit in their home communities," he said.

"We could help migrant workers pool their resources and set up cooperatives or producer companies... they might actually be able to lead the effort to replace the old broken paradigm of development... with a new one that empowers migrant communities and makes migration a choice rather than a compulsion," he added.

He pressed the government to train migrants in management and investment of their remittances, and to develop models of collective investment by which migrants can pool savings to start small- and medium-sized enterprises.

In the report, Randolph proposed that Sumbawa, which has seen a tenfold increase in corn yields over the past decade, might develop agro-processing businesses, rather than shipping out its raw crops for processing elsewhere in Indonesia.

Separately, Indonesian President Joko Widodo on Friday called on bureaucrats and politicians to set aside their egos and work together to revive an economy whose growth has slumped since he took office last October.

In a state-of-the-nation address, he took a swipe at bickering across government agencies and political parties that has hamstrung his administration and disappointed both investors and voters who had high hopes he would turn the economy around.

"To overcome the issues this country is currently facing we have to work shoulder to shoulder. We should not be divided by political or short-term interests," he told parliament in a speech.

"The erosion of a culture of mutual respect and tolerance in official institutions such as law enforcement agencies, communities, media and political parties, is causing this country to be caught in a web of egos," the president said.

Widodo also unveiled in a separate speech his proposed budget for 2016, in which he promised 5.5 per cent growth, which was seen by economists as overly optimistic.

"It's hard to see Indonesia getting close to growth of 5.5 per cent next year, given that commodity prices are likely to remain low and monetary policy relatively tight," said Dan Martin at Capital Economics.

"The main hope is that the infrastructure drive takes off, but implementation and bureaucratic problems will inevitably stand in the way," he added.

Widodo, whose government has struggled to disburse funds for roads, ports and power stations, pledged an 8 per cent increase to 313.5 trillion rupiah ($22.74 billion) in spending in infrastructure in the hope that it would have a knock-on effect on investment and consumption growth.

Economic growth slipped to 4.67 per cent, its slowest pace in six years, in the second quarter amid drooping domestic demand and sliding prices for coal and commodities, key earners for the country. 

The rupiah has dropped nearly 10 per cent against the dollar this year to trade at 17-year lows and is Southeast Asia's worst performer after Malaysia's ringgit.

The first Indonesian president to come from outside the military or political establishment, the former furniture businessman won last year's election in large part because he was seen as someone who cared for issues facing ordinary people.

But after 10 months in office, many of Widodo's economic programmes have struggled to get off the ground.

The 54-year-old president last week hit the reset button on his government, replacing two key economic ministers and installing two experienced technocrats who are expected to improve policy coordination and dispel concerns that Indonesia is taking a protectionist turn to shield its economy.

However, some analysts doubt that Widodo is willing to embrace radical reforms that could prove unpopular.

"Prospects for some economic reforms do now exist to some extent with the new Cabinet... but he's not inclined to institutional reform because he's still not emphasising issues such as land acquisition and civil service reform," said political analyst Kevin O'Rourke.

"With worsening economic conditions and continued neglect of reforms, I think the outlook remains grim," he added.

Tel Aviv — The Israeli government Sunday approved a major deal with a consortium including US firm Noble Energy on natural offshore gas production in the Mediterranean, the prime minister's office said.

The agreement, which was announced on Thursday and is expected to face a parliamentary vote, aims to end months of uncertainty and set a framework for the exploitation of gas discoveries.

It is expected to raise major new government revenues and could provide Israel with strategic leverage in the region if it begins to export gas.

"This money will benefit education, health, social welfare and other national needs," Prime Minister Benjamin Netanyahu said ahead of the cabinet vote, which passed 17-1.

Noble and locally based firm Delek have since 2013 produced gas from the Tamar field off the Israeli coast.

They have also teamed up to develop the offshore Leviathan field, considered the largest in the Mediterranean.

The agreement approved Sunday contains amendments to an earlier version, such as linking the price of gas to an energy index, which is meant to lower costs for consumers.

The consortium committed to invest $1.5 billion to develop the Leviathan field over the next two years.

Israel has agreed not to change fiscal and regulatory rules related to the gas industry for a decade as long as the consortium abides by its commitments.

The talks have been controversial, with many fearing the deal would overly favour the companies involved.

The agreement notes that Israel's anti-trust authority objects to it on the grounds that it does not allow for sufficient competition. 

To circumvent that obstacle, Netanyahu's inner cabinet in June declared gas production to be linked to national security, thus allowing the government to override laws related to monopolies. 

Netanyahu has pushed hard to speed up gas production in the Mediterranean, drawing criticism from political opponents who accuse him of not ensuring sufficient benefits for the Israeli public in the negotiations.

LONDON — Asking outside auditors to vouch for the accuracy of a bank's key measure of health could help restore investor trust in the sector, according to a London-based accounting body.

The Institute of Chartered Accountants in England and Wales (ICAEW) kicked off a public consultation on how accountants could check on bank capital ratios, a measure of capital a lender holds in relation to risky assets such as loans.

The ICAEW was asked by the Britain's banking supervisor, the Bank of England's (BoE) Prudential Regulation Authority (PRA), to examine how independent scrutiny could work in practice.

"We need capital ratios to be credible," PRA Chief Executive and BoE Deputy Governor Andrew Bailey said in a statement from the ICAEW.

"We are interested in understanding whether audit of these measures could help contribute to a process of assurance that enhances their credibility," Bailey added.

Although external accountants audit a bank's financial statement, capital ratios included in them are not checked in the same fashion and fully audited ratios would be a world first.

"Capital ratios are probably the most looked-at numbers that banks produce, and yet they are not audited," said Iain Coke, head of ICAEW's financial services faculty. "We need a consistent way to deliver this that meets different users' various needs."

Britain's big banks are audited by one of the Big Four accounting firms, KPMG, EY, Deloitte and PwC, which also sell other services to lenders.

The auditors themselves have come under intense scrutiny from policymakers since they gave banks a clean bill of health just months before many lenders had to be rescued by taxpayers in the 2007-09 financial crisis.

Regulators have uncovered large variations in how much capital banks set aside to cover similar assets, meaning consistency in auditing may also be challenging.

Separately, with reputations tarnished by the financial crisis and a string of scandals, Britain's top banks are trying to adapt and move ahead by embracing mobile technology.

Four years ago, Lloyds Banking Group did not have a single customer accessing services via a smartphone, but today there are five million using such apps — and counting.

"This provides huge opportunities for how we serve our customers," said Nick Williams, consumer digital director at Lloyds.

The trend is echoed across the industry. In 2015, Britain's banking industry body BBA expects 427 million branch transactions for the whole sector, compared to 895 million transactions on mobile phones.

British consumers are now among the top users of banking smartphone applications in developed nations.

"UK consumers were relatively slow in their adoption of online banking, but have embraced mobile banking thanks to the ease and convenience of managing your money on the move," said Philip Benton, an analyst at Euromonitor International.

"It's understandable that the UK retail banking sector is betting on these new technologies," he added.

A recent Euromonitor survey found 36 per cent of British consumers have used a smartphone to access banking services in the past month.

That compares with 44 per cent in the United States, 39 per cent in Australia, 32 per cent in France and 19 per cent in Germany and Japan.

"It's an important evolution of the relation between banks and their customers. This could be the future of retail banking," BBA spokesman Robert Watts told AFP.

Branch closures 

The financial crisis, scandals over rigging the inter-bank and foreign exchange markets and consumer challenges of mis-sold financial products have undermined trust in Britain's top banks — and hit their balance sheets.

Lloyds and other lenders have spent about £26 billion (37 billion euros, $41 billion) alone on compensation for having wrongly sold Payment Protection Insurance (PPI).

The four main banks — Barclays, HSBC, Lloyds and RBS — still dominate the market, holding about three quarters of all current accounts in 2014, according to the Competition and Markets Authority.

But their hold is being challenged by foreign rivals, notably the Spanish banking group Santander, and newer establishments such as Metro Bank, Tesco Bank, Virgin Money or upstarts like Atom and Fidor.

Some of these newer rivals have been quick to use mobile technology to win over customers, notably young people accustomed to shopping and buying music on their phones — forcing the big lenders to innovate.

Mobile banking offers flexibility for users as well as a new market for products that analyse their spending to help them manage their finances, with no need for expensive branches.

Branch transactions are predicted to fall by 37 per cent by 2020, while mobile ones are set to rise by 162 per cent, according to the BBA.

There are about 10,000 bank branches in Britain, but there were almost 500 closures in 2014 as big banks streamline their services and cut jobs.

Critics say the major banks still maintain a structure that is much more expensive than their newer competitors.

"The transmission of data is crucial between the bank and its customers. The big banks are too big to do that" in an innovative and efficient way, said Edward Twiddy, chief operating and innovation officer at Atom Bank, a purely online business run by a staff of about 100 people.

There are still major challenges in shifting to digital banking, however, suggesting lenders have some way before they can dispense with their old operating systems.

Royal Bank of Scotland, for example, has experienced a number of IT problems, including earlier this summer, when almost 600,000 payment orders were affected. The bank recommended clients call customer services — or visit a branch.

TORONTO — Global food shortages will become three times more likely as a result of climate change and the international community needs to be ready to respond to price shocks to prevent civil unrest, a joint US-British taskforce warned on Friday.

Rather than being a once-a-century event, severe production shocks, including food shortages, price spikes and market volatility, are likely to occur every 30 years by 2040, said the Taskforce on Extreme Weather and Global Food System Resilience.

With the world's population set to rise to 9 billion by 2050 from 7.3 billion today, food production will need to increase by more than 60 per cent and climate-linked market disruptions could lead to civil unrest, the report indicated.

"The climate is changing and weather records are being broken all the time," said David King, the UK foreign minister's Special Representative for Climate Change, in the report.

"The risks of an event are growing, and it could be unprecedented in scale and extent," he added.

Globalisation and new technologies have made the world's food system more efficient but it has also become less resilient to risks, King elaborated.

Some of the major risks include a rapid rise in oil prices fuelling food costs, reduced export capacity in Brazil, the United States or the Black Sea region due to infrastructure weakness, and the possible depreciation of the US dollar causing prices for dollar-listed commodities to spike.

Global food production is likely to be most impacted by extreme weather events in North and South America and Asia which produce most of the world's four major crops — maize, soybean, wheat and rice.

But such shocks in production or price hikes are likely to hit some of the world's poorest nations hardest such as import dependent countries in sub-Saharan Africa, the report indicated.

"In fragile political contexts where household food insecurity is high, civil unrest might spill over into violence or conflict," the report said.

"The Middle East and North Africa region is of particular systemic concern, given its exposure to international price volatility and risk of instability, its vulnerability  to import disruption and the potential for interruption of energy exports," it added.

To ease the pain of increasingly likely shocks, the report urged countries not to impose export restrictions in the event of wild weather, as Russia did following a poor harvest in 2010.

The researchers said agriculture itself needs to change to respond to global warming as international demand is already growing faster than agricultural yields and climate change will put further pressure on production.

"Increases in productivity, sustainability and resilience to climate change are required. This will require significant investment from the public and private sectors, as well as new cross-sector collaborations," the report concluded.

MADRID — Reforms in Spain have helped the economy rebound, the International Monetary Fund (IMF) said on Friday, but it warned more needed to be done to bring down high unemployment and correct other imbalances to boost long-term growth.

Spain must also keep trying to cut its deficit and not roll back existing reforms, the IMF said in its yearly country assessment for Spain. Those include a labour market shake-up  brought in by the current centre-right government, which made it easier to hire and fire staff.

The report comes before a general election expected around November, which is likely to result in a much more fragmented political landscape and spell a new, uncertain era of coalitions.

"We see the potential of doubt about what will happen to the reforms that are helping currently with the recovery in Spain as a key domestic risk," said Helge Berger, the IMF's mission chief for Spain.

The IMF expects Spain's economy to grow 3.1 per cent this year, below government forecasts for 3.3 per cent growth. It also projects the rebound will "fade out" to lower levels in the longer term.

Low global oil prices and a weaker euro have so far helped Spain, though their effects may dwindle. The country is also still vulnerable to aftershocks from any problems affecting debt-laden Greece, the IMF said.

Labour market reforms, lower wages and easing lending conditions after an overhaul of once-fragile banks have helped Spain's recovery after a prolonged downturn, the IMF added.

But over 5 million people are still unemployed and although jobs were now returning, too many were temporary or part-time, the IMF said. Such positions are usually less well paid than others.

Spain must try and fix this two-tier labour market, the IMF added, by closing the gap in dismissal costs for temporary and permanent hires for instance.

"Deep structural problems remain and vulnerabilities persist," the IMF said in the report. "As the recovery matures and tailwinds dissipate, growth is bound to decline to levels closer to Spain's still very low rate of potential growth of less than 1.5 per cent."

The IMF, which called on Spain to keep cutting public debt and better coordinate spending policies across its 17 autonomous regions, sees the country's deficit falling to 4.4 per cent of output this year. That is still higher than the 4.2 per cent Spain has agreed with Brussels.

TEL AVIV — Israeli Prime Minister Benjamin Netanyahu on Thursday announced a major deal between his government and a consortium including US firm Noble Energy on natural gas production in the Mediterranean Sea.

The agreement is aimed at ending months of uncertainty and setting a framework for the exploitation of gas discoveries that are expected to bring major new government revenue.

Political risks however remain, including a possible vote in parliament, where Netanyahu holds only a one-seat majority.

"The agreement will bring in hundreds of billions of shekels [tens of billions of dollars] to Israeli citizens over the coming years," Netanyahu said in a televised statement, without providing details.

"I shall bring this agreement to the Cabinet on Sunday. I'm sure it will pass by a large majority of votes," he added.

Noble and locally based firm Delek have since 2013 produced gas from the Tamar field off the Israeli coast. They have also teamed up to develop the offshore Leviathan field, considered the largest in the Mediterranean.

Previous agreements have been criticised by anti-trust authorities, leading to the opening of new talks under intense political pressure. Critics have feared regulations would overly favour the companies involved.

In May, antitrust commissioner David Gilo said he was resigning over his opposition to the dominant position of Noble and Delek in the Leviathan and Tamar fields.

Criticism of existing agreements had unnerved foreign investors eyeing the development of Leviathan, one of the largest offshore gas discoveries worldwide in the last decade. Political and regulatory uncertainty have also been major concerns.

Production at Tamar is destined for the domestic market, aimed at guaranteeing energy independence for Israel, which is isolated in the region.

Further production could also provide the country with strategic leverage if it becomes a supplier to the Palestinian Authority as well as countries such as Jordan and Egypt.

Cost of living 

Discussions between the government and the consortium have centred on natural gas pricing for Israeli reserves and future production.

Local media have reported that, under the deal, the price of gas will be linked to an energy index, which will result in rates lower than in previous agreements.

The consortium is also said to have agreed to invest $1.5 billion to develop the Leviathan field over the next two years. Failing to meet the requirement would allow the government to back out of a commitment not to alter fiscal and regulatory terms for the gas industry until 2025.

Netanyahu has pushed hard to speed up gas production in the Mediterranean, drawing criticism from political opponents who accuse him of not ensuring sufficient benefits for the Israeli public in the negotiations.

His inner Cabinet in June took the rare decision of declaring gas production to be linked to national security, allowing the government to override laws related to monopolies.

The talks have occurred at a time of serious concern over the cost of living in Israel, with the issue a major topic of debate in the run-up to elections last March.

LONDON — Iran could raise its oil output by as much as 730,000 barrels per day (bpd) from current levels fairly quickly after sanctions are removed, the International Energy Agency (IEA) said this week.

The West's energy watchdog estimated that Iranian oilfields, which pumped around 2.87 million bpd in July, could increase production to between 3.4 million and 3.6 million bpd within months of sanctions being lifted.

"While significantly higher production is unlikely before next year, oil held in floating storage, at the highest level since sanctions were tightened in mid-2012, could start to reach international markets before then," the IEA said in a monthly report.

Iranian Oil Minister Bijan Zanganeh has said Iran expects to raise oil output by 500,000 bpd as soon as sanctions are lifted and by a million bpd within months.

Iran's July production figures were 50,000 bpd higher than in June, the IEA remarked.

The report by the Paris-based IEA suggested any increase in output would probably be more modest than Iranian estimates, and said the Islamic republic would require massive investment to raise output capacity.

Iran has said it hopes to secure nearly $200 billion worth of oil and gas projects with foreign partners by 2020.

Iran and six world powers agreed a deal in July to curb Tehran's nuclear programme, but sanctions imposed in 2012 will not be lifted until Iran has complied with all the terms of the pact, and the agreement has to be ratified by the US Congress.

This is not expected before the end of December and analysts say they may still be in place at the end of the first quarter of 2016.

"My sense is that really long-term contracts still won't be in place until maybe mid-2016," Richard Nephew of the Centre on Global Energy Policy at Columbia University, New York, told Reuters Global Oil Forum.

Iran's economy contracted 6.6 per cent in 2012 and 1.9 per cent in 2013, after new rounds of economic sanctions were imposed, according to World Bank data.

The World Bank expects Iran's economy to grow 5 per cent in 2016 after a 3 per cent increase this year.

SHUBRA KHEIT, Egypt — Standing waist deep in a cotton field, Egyptian farmer Mohammed Khalil cannot mask his anger,

After the agriculture ministry banned cotton imports to help local producers, the cabinet abruptly vetoed the idea, the latest in a series of economic policy U-turns and delays under President Abdul Fattah Al Sisi.

"I can't believe this. Just weeks ago they said we wouldn't have to worry about imported cotton," said the white-turbaned farmer, who rents a plot from the state to grow high-quality cotton at the Nile Delta village of Shubra Kheit.

Such schizophrenic decision-making is also a symptom of wider policy problems affecting Egypt, which is struggling to re-energise its economy and attract foreign investment after years of turmoil since 2011.

Sisi has imposed some tough reforms such as reducing fuel subsidies which swallowed up huge parts of the state budget, winning praise from the International Monetrary Fund. 

But he has focused much of his economic policy on mega-projects like extending the Suez Canal and a planned new capital city.

Meanwhile, other state initiatives have run into trouble. The government backtracked on plans to implement a capital gains tax in May, a central component of its reform agenda, after stock market players complained it would hamper investment.

It has also delayed the roll out of a fuel smart card system meant to cut the government's energy bill, as well as the introduction of a value-added tax.

Cotton illustrates the problem well. 

In July, the agriculture ministry banned imports in order, it said, to boost local production. Egypt grows a high-quality and extra long staple cotton, once known as "white gold", but output has been shrinking for years.

"The ministry is keen on Egyptian cotton regaining its glory on all levels," it added in announcing the ban. Eight days later, the cabinet reversed the decision, giving no reason beyond saying that this was in the context of "developing cotton farming and supporting its farmers".

The about-face has cast doubt on the government's commitment to reviving a sector that once produced Egypt's most prized export and still accounts for much of the superior cotton used to weave luxury fabrics throughout the world.

"[The cotton policy] adds to a general sense that Egyptian policy-making doesn't seem to be subject to too much analysis before implementation," said William Jackson at Capital Economics, adding that "erratic policy-making" made it difficult for investors to plan ahead.

A commodities trader also questioned the agriculture ministry's move. 

"The ministry can't unilaterally impose something like that without having the data showing that it is going to help more than it hurts," the trader said.

The agriculture ministry did not respond to requests for comment. However, alarmed textile manufacturers had campaigned against the ban, which would have deprived them of cheap imported cotton supplies.

Egypt's high council for cotton, made up of government ministries and industry bodies, said on Monday it would work to harmonise cotton policy taking into account foreign and domestic demand, according to a statement from the prime minister's office.

Exasperation

In Shubra Kheit, about 150 kilometres north of Cairo, extra-long "Giza 88" cotton is the only variety planted. There, farmers like Khalil feel betrayed by promises that their crops would replace the imports.

They had already suffered a blow in January when the government said it would no longer pay a subsidy of 350 Egyptian pounds ($45) per qintar, a unit that equates to 160 kilogrammes, of high quality cotton.

Liberalisation of Egypt's cotton sector in 1994 exposed farmers to volatile global prices and rising fertiliser costs. Cotton acreage has fallen dramatically since the heyday of the 1960s, when Egypt grew cotton on up to 2.2 million feddans (924,000 hectares), helped by fixed state prices.

A quarter century ago, Egypt produced 2.4 million bales of cotton but the US Department of Agriculture expects this season's output to be just 340,000 bales.

Competition from the high-quality US Pima variety has hurt the industry. Farmers have also turned to more lucrative crops and local textile firms have shifted their focus to creating low-quality products with cheap raw cotton imports.

"Now what do I do with this?" Khalil asked, waving a work-worn hand at the extra crop he planted after hearing there would be an import ban.

About half a million workers are involved in cotton production and manufacturing, indicated Gamal Siam, an agricultural economist at Cairo University. This makes the industry still one of the largest employers in Egypt, a country of nearly 90 million where poverty levels hover at around 40 per cent.

Strains mixing

Nevertheless, Siam, a farm owner himself, questioned the wisdom of a ban. 

"The original idea was very bad," he told Reuters. "It had sent local textile manufacturers into a panic because Egyptian millers consume nearly twice as much cotton as local farmers produce."

The biggest threat to local cotton was low productivity on Egyptian farms, which the import ban would not have addressed, said Siam. 

A lack of government investment in research to improve the cotton crop had also hurt productivity, he added.

Decades of sloppy crop handling has led to strains mixing, watering down the pedigree of Egyptian cotton.

But local officials point to recent improvements.

In Shubra Kheit, officials say no cotton is allowed to be grown in the village or surrounding areas except for Giza 88, to avoid mixing.

But between lower prices and the removal of subsidies, observers see a tough road ahead. 

"It seems like the government is ready to give up on Egyptian cotton," Siam said.

SHANGHAI — China's yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it, and sources said clamour in government circles to help struggling exporters would put pressure on the central bank to let it drop lower still.

Spot yuan in China slid to as low as 6.4510 per dollar, its weakest since August 2011, after the central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday's devaluation.

The currency fared worse in international trade, touching 6.59 to the dollar.

The central bank, which had described the devaluation as a one-off step to make the yuan more responsive to market forces, sought to reassure financial markets on Wednesday that it was not embarking on a steady depreciation.

The devaluation had sparked fears of a global currency war and accusations that Beijing was unfairly supporting its exporters.

"Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the People's Bank of China (PBoC) said.

Foreign exchange traders later said state-owned banks were selling dollars on behalf of the PBoC, and the spot market ended at 6.3870, after rallying strongly towards the close, which will influence Thursday's midpoint.

"Apparently, the central bank does not want the yuan to run out of control," said a trader at a European bank in Shanghai.

Analysts at BMI downgraded their year-end forecasts for the currency to 6.83, down 10 per cent from pre-devaluation levels.

The yuan has lost 3.5 per cent in China in the last two days, and around 4.8 per cent in global markets.

Its slide pulled down other Asian currencies on Wednesday, with Indonesia's rupiah and Malaysia's ringgit  hitting 17-year lows, and the Australian and New Zealand dollars touching six-year lows.

Indonesia's central bank pinned the rupiah's fall directly on the yuan devaluation, and said it would step into the foreign exchange and bond markets to curb volatility.

The Russian ruble hit a six-month low, tracking a fall in the price of oil, of which Russia is a major producer. Crude fell on Tuesday on questions over Chinese demand.

Stocks fell again in Asia and Europe. The pan-European FTSEurofirst 300 losing 2.3 per cent, with German carmakers BMW and Daimler down even more.

Wall Street also opened lower.

Investors sought safety in top-rated government bonds, driving yields on German two-year bonds to a record low and pushing US Treasury yields down as some analysts said a long-awaited Federal Reserve interest rate hike may be delayed.

Poor economic data

Tuesday's devaluation, the biggest one-day fall since 1994, followed a run of poor economic data and raised market suspicions that China was embarking on a longer-term slide in the exchange rate that would make Chinese exports cheaper.

Last weekend, data showed an 8.3 per cent drop in exports in July and that producer prices were well into their fourth year of deflation.

China's ministry of commerce acknowledged on Wednesday that the depreciation would have a stimulative effect on exports.

In an early sign of its impact, some Chinese steel producers have already cut export prices in response to the lower yuan.

Sources involved in the policy-making process said powerful voices within government were pushing for the yuan to go still lower, suggesting pressure for an overall devaluation of almost 10 per cent.

Data on Wednesday underlined sluggish growth in the world's second-largest economy. Factory output growth slipped to 6 per cent in July from a year earlier, missing market forecasts, while fixed asset investment and retail sales were also lower than expected.

There was also a jump in fiscal expenditure of 24.1 per cent in July, which reflects Beijing's efforts to stimulate economic activity.

Playing to the IMF?

The International Monetary Fund (IMF) said China's move to make the yuan more responsive to market forces appeared to be a welcome step and that Beijing should aim for an effectively floating exchange rate within two to three years.

Beijing has been lobbying the IMF to include the yuan in its basket of reserve currencies known as Special Drawing Rights, which it uses to lend to sovereign borrowers, a major step in terms of international use of the yuan.

"Greater exchange rate flexibility is important for China as it strives to give market forces a decisive role in the economy and is rapidly integrating into global financial markets," an IMF spokesperson said.

The devaluation was decried by US lawmakers from both parties on Tuesday, as a grab for an unfair export advantage, and could set the stage for testy talks when Chinese President Xi Jinping visits Washington next month, given acrimony over issues ranging from cybersecurity to Beijing's territorial ambitions.

However, William Dudley, head of the New York Federal Reserve, said an adjustment to the yuan was probably appropriate if the Chinese economy was weaker than the authorities had expected.

Growth in China has slowed markedly this year and will hit a 25-year low even if it meets its official 7 per cent target.

Some economists believe China's economy is already growing only half as fast as official data shows, or even less.

Not all countries consider the devaluation a threat, however. 

Korea's Finance Minister Choi Kyung-hwan said, it would be positive for Korean exports to China, much of which were intermediate items and not in direct competition with Chinese products.

While a weaker yuan will not cure all the ills of China's exporters, it will help relieve deflationary pressure.

Falling commodity prices have been blamed for producer price deflation, putting China at risk of repeating the deflationary cycle that blighted Japan for decades.

SAN FRANCISCO — Google Inc.  announced a surprise overhaul of its operating structure on Monday, creating a holding company called Alphabet to pool its many subsidiaries and separate the core web advertising business from newer ventures like driverless cars.

The move appeared to be an attempt by the search engine giant to focus on its more creative and ambitious projects, while investors cheered the potential for more financial disclosures of its disparate business segments.

“It suggests that in all likelihood, Google is not going to slow the pace of their experimental processes like self-driving cars,” said Michael Yoshikami, head of Destination Wealth Management, which has $1.5 billion under management.

The surprise news sent shares of Google up as much as 7 per cent to $708 in after hours trading.

The new structure could also give Wall Street better insight into Google’s investment in moonshot projects like Google X, a secretive lab that produced the unpopular Google Glass wearable device.

“They are aware that they’ve got this hodgepodge of companies,” said Roger Kay, an analyst at Endpoint Technologies Associates. 

“Maybe it’s better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets,” he added.

The Mountain View-based company co-founded by Larry Page and Sergey Brin in 1998 has grown from an Internet search engine to a far-reaching conglomerate that employs more than 40,000 people worldwide.

Google’s planned structure resembles the way companies like Berkshire Hathaway and General Electric are organised, with a central unit handling corporate-wide activities such as finance and relatively independent business units focused on specific areas.

Under the new corporate structure, the Google unit will encompass the core search engine as well Google Maps and YouTube.

In addition to Google X, the company’s new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately. Other units that are part of the new structure include Fiber, for its high-speed Internet efforts, venture capital arm Google Ventures, and Google Capital, which invests in larger tech companies.

New structure

Alphabet Inc. will replace Google as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all the same rights.

“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google,” Page, the current chief executive officer of Google, said in a blogpost. Page will become CEO of Alphabet.

Analysts said the new structure could herald a new era of fiscal discipline and transparency in some of Google’s more experimental and opaque business units.

In a filing with the Securities and Exchange Commission, Google said the new arrangement will take effect later this year and that it will likely result in two reportable, financial segments.

“For example, if a unit is doing well or badly they can dial it up or down, they can form partnerships or different companies,” said Kay.

Some other analysts were cautious, saying the new holding company would need to provide more details on cash flow of the experimental business segments.

“Breaking up into two different segments — well, it’s not a terrible thing. It’s better than not doing it but on the other hand, you’re going to have a tonne of businesses buried inside of a legacy Google,” said Brian Wieser, an analyst for Pivotal Research Group.

The shuffle also looked to have the markings of Ruth Porat, who joined Google as its chief financial officer in March from Morgan Stanley. In Google’s recent quarterly conference call, Porat, will serve as CFO of both Alphabet and Google, repeatedly emphasised keeping expenses under control.

With Page heading up Alphabet, Sundar Pichai, a long-time Google executive who most recently served as the company’s senior vice president of products, will head Google. 

Pichai, a well-liked executive who oversaw Google’s Android and Chrome units, is respected in Silicon Valley for attracting top engineers.

Google co-founder Brin will become president of Alphabet, and Eric Schmidt, chairman of Google, will be executive chairman. The company’s current directors will become directors of Alphabet.

Analysts said the move could be followed by more structural changes in the future.

“This may be step one of several steps,” said Morningstar analyst Rick Summer.