INSIDE ASIA: NZD Gains Leave Wheeler Defending Rate Cut Scope
(Bloomberg) -- Kiwi rallies as RBNZ disappoints investors with a 25 bps cut, leaving Governor Wheeler defending his decision not to slash further. China’s central bank raises yuan reference rate by the most since before Brexit, one year after a shock devaluation roiled markets.
- Kiwi surges as much as 1.9%, with RBNZ’s Wheeler saying even if the central bank had cut rates by 50 bps, the market would still want more
- Wheeler says in briefing that RBNZ hasn’t run out of ammunition, but the central bank doesn’t want to join a race to the bottom
- RBNZ’s use of the phrase “easing will be required” is a powerful signal, and a Sept. rate cut is more likely than the market expects: Imre Speizer, markets strategist at Westpac
- New Zealand 10-year bond yield drops 2 bps to 2.153%, same tenor yield in Australia falls 2 bps to 1.855%
- Yuan gains on one-yr anniversary of FX reform, with PBOC raising fixing by 0.4%, the most since June 23. Central bank yesterday said it wants to increase global use of currency
- Stronger reference rate was largely based on spot price move yesterday from 4pm to 4.30pm local time: ANZ
- PBOC intends to demonstrate RMB strengthen on anniversary of FX reform: Mizuho Bank. Yuan timeline here
- Official bad-loan ratio held at 1.75% in 2Q, halting almost three years of increases, according to data yesterday
- Mixed Asian trading today, with ringgit leading decline
- Ringgit underperforming because of selloff in oil: Stuart Allsopp, head of financial market strategy at BMI Research
- Korean won pares losses after BOK Governor Lee says he’s not worried about herd behavior in the FX market though the central bank is closely monitoring speculative moves
- Lee says BOK still has policy room after holding rates today
- Singapore dollar slips as country cuts the top end of its 2016 growth forecast, while central bank says monetary policy remains appropriate
- Singapore’s 2Q GDP +0.3% q/q vs estimate +0.8%, while it narrows 2016 growth range to 1.0%-2.0% from 1.0%-3.0%
- MAS may stay on hold in October, while easing “down the road” after October, says RBS economist Vaninder Singh
- Baht heads for first drop in four days
- Govt asks state enterprises to accelerate spending in final three months of fiscal 2016, Deputy PM Somkid said yesterday
- Data for 2Q suggest govt spending and tourist arrivals supported the economy, Goldman Sachs said Aug. 10
- Peso advances before BSP rate decision due today
- Central bank is forecast to keep overnight borrowing rate unchanged at 3.00%, according to all 19 economists in Bloomberg survey
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Imre Speizer (Westpac Banking Corp)
Stuart Allsopp (Business Monitor International Ltd)
Vaninder Singh (Royal Bank of Scotland Group PLC)
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