In a meeting held on 19–20 July, Bank Indonesia’s Board of Governors decided to keep the 7-day reverse repurchase rate unchanged at 4.75%, the deposit facility rate at 4.00%, and the lending facility rate at 5.50%. At its monetary policy meeting on

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News Highlights - Week of 17 - 21 June 2017

In a meeting held on 19–20 July, Bank Indonesia’s Board of Governors decided to keep the 7-day reverse repurchase rate unchanged at 4.75%, the deposit facility rate at 4.00%, and the lending facility rate at 5.50%. At its monetary policy meeting on 19–20 July, the Bank of Japan announced that it would continue its “qualitative and quantitative monetary easing with yield curve control” program. The central bank raised its gross domestic product forecast to 1.8% for fiscal year 2017 and 1.4% for fiscal year 2018, and lowered its inflation forecast to 1.1% for fiscal year 2017 and 1.5% for fiscal year 2018.

*     The People’s Republic of China’s (PRC) gross domestic product grew 6.9% year-on-year (y-o-y) in the second quarter (Q2) of 2017, the same rate of increase as in the first quarter (Q1) of 2017. Industrial production in the PRC grew 7.6% y-o-y in June, up from 6.5% y-o-y in May. The higher y-o-y growth was driven by gains in the manufacturing sector.

*     Hong Kong, China’s consumer prices grew 1.9% y-o-y in June, down from 2.0% y-o-y in May. The government expects inflation to remain tame this year given limited pricing pressures. In Malaysia, consumer price inflation moderated to 3.6% y-o-y in June after increasing 3.9% y-o-y in May as both food and nonfood price inflation slowed.

*     Exports from Indonesia fell 11.8% y-o-y to USD11.6 billion and imports contracted 17.2% y-o-y to USD10.0 billion in June. As a result, a trade surplus amounting to USD1.6 billion was recorded in June, up from USD578 million in the previous month. Based on preliminary data from the Ministry of Finance, Japan’s exports rose 9.7% y-o-y to JPY6.6 trillion and imports increased 15.5% y-o-y to JPY6.2 trillion in June, resulting in a monthly trade surplus of JPY439.9 billion.

*     Singapore’s non-oil domestic exports (NODX) rose 8.2% y-o-y in June, backed by growth in both electronic NODX (5.4% y-o-y) and non-electronic NODX (9.3% y-o-y). On a month-on-month seasonally adjusted basis, NODX declined 2.7% in June.

*     Personal remittances from overseas Filipino workers reached USD2.6 billion in May, growing 7.1% y-o-y and recovering from a contraction of 5.2% y-o-y in April. The May tally pulled cumulative personal remittances to USD12.6 billion in the first 5 months of 2017.

*     On 19 July, Fitch Ratings affirmed Indonesia’s long-term foreign currency and local currency issuer default ratings at BBB–. The ratings were each given a positive outlook.

*     Last week, China Life Insurance (Overseas) issued USD250 million worth of subordinated 10-year bonds. The bonds are callable after 5 years and were issued at a coupon rate of 3.35%. The Development Bank of Singapore Group Holdings debuted the first offshore green bond offering by a Singaporean company. The 5-year floating-rate green bonds are expected to be issued on 25 July and will have a quarterly coupon rate eqaul to the 3-month USD LIBOR plus 0.62%.

*     Local currency government bond yields fell for all tenors in the Republic of Korea, Malaysia, and Viet Nam, and for most tenors in Hong Kong, China; Indonesia, the Philippines, and Thailand, mostly tracking the decline in US yields. Yields were mixed in the PRC and Singapore. The spread between the 2- and 10-year maturities narrowed for most markets except for the PRC, Indonesia, and Thailand.

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