Malaysia: Yields drop, ringgit soars to ’97 peak
Malaysian bond yields fell as local banks stepped up buying of debt anticipating a pickup in capital inflows after the central bank eased regulations on ringgit deals in trade settlements. Benchmark five year bond yields dropped to 3.32%, approaching an 18-month low of 3.29% last week. Ringgit rallied 1% to 3.1250 per USD, its highest since the 1997 Asian financial crisis and has extended its gains to 9% so far this year, making it the best-performing Asian currency. (Financial Daily)
Thailand: May increase interest rate as exports hold up economy
Thailand may raise interest rates a second straight month and report economic growth of more than 7% as surging exports drive a recovery after political turmoil prompted a crackdown on protesters last quarter. Eleven of 12 economists surveyed by Bloomberg News predict the central bank will increase its benchmark rate by a quarter of a percentage point to 1.75% on 25 Aug. (Bloomberg)
Japan: BOJ said to be still assessing economic impact of stronger yen
The Bank of Japan is still assessing the economic effect of the yen’s rise to a 15-year high, according to three people familiar with the matter, as speculation mounts that it will consider easing monetary policy. Japanese policy makers are facing pressure to support the economy after the yen’s climb to 84.73 against the dollar on 11 Aug, the highest since 1995, stoked concern that exporters’ earnings could weaken and deflation might deepen. (Bloomberg)
US: Jobless claims rise, factories slump
Claims for US jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year, indicating the economy may be slowing faster than forecast. The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended 14 Aug, Labor Department figures showed. The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling contraction. (Bloomberg)
US: Budget deficit put at USD1.066trn in 2011
The US Congressional Budget Office predicted the budget deficit for fiscal year 2011 will be USD1.066trn revised up from an estimate of USD996bn in March. The nonpartisan agency’s semi-annual budget report is likely to add fuel to the November midterm election debate over reducing the deficit at a time when the nation’s economic recovery may call for more stimulus. Report estimated that the deficit will be 7% of the nation’s GDP in 2011. (Bloomberg)
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