The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Malaysia's ringgit climbed on Monday, reaching its highest level in over three years, boosted by additional Chinese stimulus measures that lifted sentiment for regional currencies. The ringgit rose as much as 0.6%, making it the best performer among emerging Asian currencies, trading at 4.099 per US dollar. China's stimulus has had a positive effect, as it remains a significant trading partner for the region.
The ringgit’s stellar quarterly performance, with an impressive 12.6% gain, makes it the top-performing currency in emerging Asia, driven by factors like foreign investor inflows, economic growth, and political stability. OCBC currency strategist Christopher Wong expressed optimism for the MYR outlook, citing strong economic fundamentals, a current account surplus, and foreign inflows.
Chinese stocks surged 6% following the stimulus announcements, which are expected to halt the economic downturn. China's central bank announced it would lower mortgage rates for existing home loans before the end of October, aiming to support the country's struggling property market.
Other Asian currencies, like the Thai baht, Taiwan dollar, and South Korean won, rose modestly, while the Singapore dollar and Philippine peso remained flat.
Investors will focus on upcoming inflation data from South Korea, Indonesia, and the Philippines, as well as a crucial US jobs report, which could influence the Federal Reserve's next move regarding rate cuts.
Meanwhile, Taipei stocks fell by 1.7%, with TSMC dropping 2.5%, and Japan's Nikkei slumped by 4.5% as investors awaited policy direction from incoming Prime Minister Shigeru Ishiba. Shares in Seoul, Manila, and Jakarta also saw declines between 1% and 1.2%.
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