At its monetary policy meeting on 30–31 January, the Bank of Japan announced that it would continue its “qualitative and quantitative monetary easing with yield curve control” program. The central bank stated that the domestic economy is expected to continue to grow above its potential through fiscal year 2018, supported by the government’s stimulus measures, highly accom

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News Highlights - Week of 30 January - 3 February 2017

At its monetary policy meeting on 30–31 January, the Bank of Japan announced that it would continue its “qualitative and quantitative monetary easing with yield curve control” program. The central bank stated that the domestic economy is expected to continue to grow above its potential through fiscal year 2018, supported by the government’s stimulus measures, highly accommodative financial conditions, and moderate growth in the global economy. The People’s Bank of China raised by 10 basis points (bps) the rate on its 7-day, 14-day and 28-day repurchase agreements to 2.35%, 2.5% and 2.65%, respectively. The rate on its Standing Lending Facility was also raised by 35 bps to 3.1% from 2.75%.

*     Consumer price inflation in Indonesia rose to 3.5% year-on-year (y-o-y) in January from 3.0% y-o-y in December. Consumer price inflation in the Republic of Korea accelerated to 2.0% y-o-y in January from 1.3% y-o-y in December. Based on data from the Ministry of Commerce, Thailand’s inflation rose to 1.6% y-o-y in January from 1.1% y-o-y in December. Viet Nam’s inflation rate climbed to 5.2% y-o-y in January from 4.7% y-o-y in December.

*     Industrial production in Japan increased 0.5% month-on-month in December. Industrial production growth in the Republic of Korea eased to 4.3% y-o-y in December from 5.3% y-o-y in November, led by slower growth in the manufacturing index. Industrial production growth in Viet Nam eased to 0.7% y-o-y in January from 8.3% y-o-y in December.

*     The Republic of Korea’s exports rose 11.2% y-o-y to USD40.3 billion in January, while imports expanded 18.6% y-o-y to USD37.1 billion, resulting in a trade surplus of USD3.2 billion. Thailand’s merchandise exports rose 5.6% y-o-y to USD18.1 billion in December and merchandise imports surged 10.5% y-o-y to USD16.0 billion. The trade surplus in December stood at USD2.1 billion. For full-year 2016, Thailand’s total trade surplus stood at USD35.8 billion, up from USD26.8 billion in 2015. In Viet Nam, a trade deficit valued at USD100 million was recorded in January, down from USD494 million in December.

*     The Republic of Korea’s current account surplus narrowed to USD7.9 billion in December from USD8.9 billion in November. A current account deficit of USD98.7 billion was logged in full-year 2016, down from USD105.9 billion in 2015.

*     The People’s Republic of China’s (PRC) Purchasing Managers’ Index (PMI) fell slightly to 51.3 in January from 51.2 in December. Singapore’s manufacturing PMI showed expansion for the fifth consecutive month in January with a reading of 51.0, up from 50.6 in December. (A PMI reading above 50 indicates that the manufacturing economy is generally expanding.)

*     The Bank of Thailand plans to introduce a post-auction option for successful competitive bidders of bonds with maturities of at least 1 year, beginning in the second quarter of 2017. A new issue of the 3-year floating-rate bond will be opened in February.

*     For the past week, local currency government bond yields rose for most tenors in Indonesia and Philippines. While bonds yields were all down in Singapore, and mostly down in Hong Kong, China; the Republic of Korea, Thailand and Viet Nam. Bond yields were mixed in Malaysia, and mostly unchanged in PRC. The 2-year versus 10-year yield spread widened for all emerging East Asian markets except Philippines and Singapore.

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