Philippines: Central bank cuts interest rate to a record low
The Philippines unexpectedly cut interest rates a third time this year to a record low, as easing inflation gives the central bank scope to spur growth while tempering the peso’s gains. Bangko Sentral ng Pilipinas reduced the rate it pays lenders for overnight deposits to 3.75% from 4%. “The decision to reduce borrowing costs is “a pre-emptive move against the risks associated with the global slowdown,” Governor Amando Tetangco said. At 3.75%, the benchmark rate is the lowest since central bank data started in 1990. (Bloomberg)
South Korea: Current account surplus widens to record on import decline
South Korea’s current-account surplus widened to a record in June as concern over slowing global growth capped consumer sentiment and demand for imports. The surplus was USD5.8bn, compared with a revised surplus of USD3.6bn in May. The surplus on traded goods was USD5bn last month compared with a revised USD1.7bn surplus in May. Total exports on a customs-cleared basis rose to USD47.3bn in June from USD47bn in May. Imports were at USD42.3bn, down from USD44.7bn May, partly due to falling oil prices. (Bloomberg)
Brazil: Consumer default rate falls for first time since March
Brazil’s consumer-loan default rate fell in June for the first time in three months, as the government’s drive to lower borrowing costs provides relief to indebted families. The consumer default rate declined to 7.8% from a revised 7.9% in May, while the company loan default rate slid to 4% from 4.1%. Average rates on consumer loans climbed 1.3 ppt to 37.8%, while rates on corporate loans fell 0.4 ppt to 23.4%. (Bloomberg)
EU: Draghi says ECB will do what’s needed to preserve Euro
European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, suggesting it may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. “To the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.” (Bloomberg)
US: Jobless claims in US decrease, extending July volatility
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending the period of volatility typically seen in July. Applications for jobless benefits decreased by 35,000 in the week ended 21 July to 353,000. The number of people continuing to collect jobless benefits shrank by 30,000 in the week ended July 14 to 3.29m. Those who have used up their traditional benefits and are collecting emergency and extended payments increased by about 27,000 to 2.59m in the week ended 7 July. (Bloomberg)
US stocks gain on Draghi pledge
US stocks snapped four days of losses and commodities rallied after European Central Bank President Mario Draghi pledged to preserve the euro. The Standard & Poor’s 500 Index climbed 1.7% to 1,360.02. The Dow Jones Industrial Average also rose 1.7% to 12,887.93 for the biggest gain in almost two weeks. The euro rose as much as 1.4% after touching USD1.2043 on 24 July, the lowest since June 2010. Of the 278 index members to have reported results this quarter, 72% have topped analysts’ projections. (Bloomberg)
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