Malaysia: No FX intervention after yuan policy
Bank Negara Malaysia’s governor said yesterday she did not expect to intervene in foreign exchange markets following China’s announcement of a more flexible policy on the yuan. China said over the weekend it would allow its currency greater flexibility, strengthening Malaysia’s ringgit versus the dollar, but governor Tan Sri Dr Zeti Akhtar Aziz said that Malaysia would stick to its exchange rate policy and saw limited impact in Asia. (Financial Daily)
Australia: Rudd resigns as PM, Gillard takes post
Australian Prime Minister Kevin Rudd resigned as Labor Party leader and was replaced by his former deputy Julia Gillard before a general election due to be held in the next 10 months. Rudd stood down amid signs he would be replaced by Gillard, 48, party spokesman Michael Forshaw said. Welsh-born Gillard took the leadership and needs to be sworn in as prime minister by Governor-General Quentin Bryce. Rudd’s term of two years and seven months is the shortest for an Australian leader since 1971; Welsh-born Gillard becomes the country’s first female prime minister. Treasurer Wayne Swan was elected Gillard’s deputy after abandoning Rudd, a schoolmate from Queensland. Swan will continue to serve as Australia’s treasurer, Sky News said. (Bloomberg)
UK: Banks find liabilities levy better than expected
Chancellor of the Exchequer George Osborne said lenders need to share the pain of tax increases as he announced a levy on lenders’ balance sheets. Investors and analysts say banks have dodged a bullet. Osborne told lawmakers the tax will raise GBP2bn (USD3bn) a year. The 0.07% levy on wholesale liabilities is less than half the 0.15% rate being considered by the US government. (Bloomberg)
G20: Needs ‘Growth-friendly’ budget cuts
Group of 20 nations need to cut their budgets without sacrificing the global economic recovery, South African Finance Minister Pravin Gordhan said. Spending cuts and tax increases should be “growth friendly,” Gordhan told reporters in the capital, Pretoria, ahead of his trip with President Jacob Zuma to attend the G-20 meeting in Toronto on 26-27 June. US President Barack Obama is pushing G-20 nations to do more to bolster the global economic recovery, while European governments, such as Germany and France, are focusing on slashing budget deficits, setting a course for conflict at the summit. G-20 leaders are also expected to discuss proposals for a global bank levy and a tax on securities transactions to clamp down on financial speculation. (Bloomberg)
EU: Soros says Germany ‘is the main protagonist’ in euro’s crisis
Germany “is the main protagonist” in the euro’s crisis and risks inflicting deflation on the European Union because of its insistence on budget austerity, billionaire investor George Soros said. “As the strongest and most creditworthy country it is in the driver’s seat,” Soros said in a speech at Humboldt University in Berlin. “As a result Germany objectively determines the financial and macroeconomic policies of the euro zone without being subjectively aware of it. When all the member countries try to be like Germany, they are bound to send the euro zone into a deflationary spiral.” (Bloomberg)
E.U : Manufacturing, services expansion slowed in June, adding to signs the region's recovery is cooling as the sovereign debt crisis clouds the growth outlook. A composite index based on a survey of euro-area purchasing managers in both industries fell to 56 from 56.4 in May, London-based Markit Economics said in a report. (Source: Bloomberg)
US: Fed keeps rate pledge, says markets ‘Less supportive’
Federal Reserve officials retained a pledge to keep the benchmark interest rate at a record low for an “extended period” and signaled that Europe’s debt crisis may harm American growth. “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad,” the Fed’s Open Market Committee said in a statement in Washington. Central bankers cited slowing inflation and said the recovery is “proceeding,” altering April language that the economy has “continued to strengthen,” while reaffirming they foresee a “moderate” pace of growth. (Bloomberg)
U.S : Sales of new homes plunged in May to record low after a tax credit expired, showing the market remains dependent on government support. Sales collapsed an unprecedented 33% MoM from April to an annual pace of 300,000. Demand in prior months was revised down. (Source: Bloomberg)
France : Business confidence dropped in June on concern that Europe's sovereign-debt crisis will prompt banks to reduce lending and governments to trim spending. The index of sentiment among factory executives declined to 95 from 97 in May. (Source: Bloomberg)
Iceland : Central bank cut the benchmark interest rate by half a point after international lenders said the island's efforts to rebuild its financial system were on track, supporting the krona as bailout flows resumed. The bank also cut the deposit rate to 6.5% from 7%. (Source: Bloomberg)
Singapore : Inflation holds at 14-month high in May as the island's economic rebound boosted food, housing and car prices. The consumer price index climbed 3.2% YoY, Singapore's Department of Statistics said in a statement. (Source: Bloomberg)
Philippines : Plans to increase spending, revenue to boost growth. The government raised its 2010 spending budget for public works, salaries and debt payments to a record PHP 1.62tr (USD 35b) from a previous forecast of PHP 1.58tr. Revenue, including gains from the sale and lease of assets, may climb to PHP1.32tr compared with an earlier estimate of PHP 1.28tr. (Source: Bloomberg)
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