INSIDE ASIA: Won Rises to 5-Mo. High as Oil Rebound Aids Risk
(Bloomberg) -- South Korea’s won lead gains among Asian currencies, climbing to its strongest level since November as a rebound in oil boosted risk sentiments.
- Gains in oil and in equity markets boosting EM, according to Tae-Shin Park, an FX & bond trader at Societe Generale
- Bank of Korea cuts GDP forecasts to 2.8% for 2016, down from previous prediction of 3% after leaving its policy rate unchanged at 1.50% Tuesday; BOK says current rate is supportive of economy
- BOK is unlikely to be able to hold rates as economy still fragile, with exports remaining weak: Capital Economics Krystal Tan writes
- Aussie rises for fourth day against dollar, with oil’s rebound also helping ringgit advance
- Appropriate for monetary policy to be “very accommodative,” RBA says in minutes of April 5 meeting released today, and reiterates continued low inflation would provide scope to ease policy further
- Federal budget to be announced May 3 will save A$16 billion over four years, Sky News reports Tuesday
- Kiwi strengthens for a third day; New Zealand’s services grew at slowest pace in 16 months in March at 54.8 versus 56.7 prior month
- Central bank rejected a request to release a summary of the advice Governor Wheeler receives before making interest-rate decisions, saying it has limited value and may be misinterpreted
- Yen declines; appreciation in recent months could undermine Bank of Japan’s efforts to raise inflation rate to 2% and lead toward more easing measures, BOJ Governor Kuroda told the WSJ in interview published today
- Finance Minister Aso says will take various measures on abruptly strong or weak yen; also says sales tax should be raised unless big economic shock hits
- Intense criticism of negative rate policy will probably keep BOJ on hold this month before a possible expansion of stimulus in July, says Hayakawa, former chief economist at BOJ; some asset managers to start reflecting cost of keeping customers’ funds in cash in the net asset value of investment trusts sold to customers, Nikkei says, without attribution
- USD/JPY layered with large exporter sell orders in 109.50/80 zone, according to an Asia-based FX trader
- China raises yuan reference rate for second day, spurring currency gain; though Maybank expects RMB index to weaken further as investors consider if the 97-level is a floor
- Stronger dollar allows PBOC to adjust CNY REER, deemed as overvalued via its daily cross CNY fixings: Maybank
- Some investors are selling 1-year and 2-year USD/CNY NDFs while buying same-tenor USD/CNH forwards, continuing an arbitrage strategy seen in Europe and North American sessions yesterday, say FX traders in North Asia
- Bond market may grow to 90t yuan ($13.9t) by 2020: Financial News; nation shouldn’t swap bad debt for equity to avoid passing on risks to the financial system, China Business News cites IMF deputy managing director Zhu Min as saying
- U.S. Treasuries fall, with yield on 10-year bonds rising 1 bp to 1.787%; Boston Fed President Rosengren says “very shallow” path of rate increases implied by futures market would likely result in “overheating” U.S. economy that would require faster hikes
- Data today may say housing starts in the world’s largest economy dropped 1.1% in March from month earlier when they increased 5.2%: Bloomberg survey
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers 1206Z KS (Bank of Korea/The)
People Tae-Shin Park (Societe Generale SA)
Eric Rosengren (Federal Reserve Bank of Boston)
Zhu Min (International Monetary Fund)
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