Week in FX Asia – Asian Currencies get a boost from Fed Minutes

Last week some Asian currencies like the Indian Rupee touched all time lows on the back of a good employment indicator from the US. The logic being that comments made by Federal Reserve Chairman Ben Bernanke strongly suggested that the US was close to ending its quantitative easing program given the apparent recovery of the economy. One of the key triggers for the tapering of bond buying, which will automatically mean an end of low rates in the US is employment.

This week minutes of the US Fed’s; FOMC meeting were released and it showed a clear divide between members. For some it is too soon to move out of a lower rate environment given the current conditions of other large economies such as Japan, Europe and China. The minutes weakened the USD versus all currencies. The INR was able to recover some lost ground. The JPY which the Japanese government is aiming for a weakening was strengthened on the back of USD weakness.

The Bank of Japan was not able to keep the JPY low, and in fact praised the pace of economic recovery. The economic indicators in the world’s third largest economy have been positive in the last month. There are some clouds ahead such as the plans to change the inflation measures, which could make it harder for the BoJ to hit the very bold 2% inflation target in the 2 years plus timeline.

The JPY started the week at 101.28 versus the USD until the Fed Minutes were released when it dropped to below 99. The end of the week brought a slight depreciation to end the week just above 99.

The INR was coming for touching all time lows at least once in the past two weeks. The USD/INR opened the trading week at 61.05 and started to slide as the week progressed due to announcements and statements from the Reserve Bank of India that was actively lobbying to stabilize the currency. With all the effort from the RBI the INR did not go back below to 58 even after the Fed Minutes were released on July 10th.

• Japanese Industrial Output Revised to 1.9% Growth
• Singapore Economy in Q2 Grows at Fastest Pace in Two Years
• Swiss Central Bank Opens Singapore Office
• India Government Wants to Sell Overseas Debt to Strengthen Rupee
• Abenomics Bringing Civil Servant Wages Lower
• Singapore GDP Higher Than Expected on Strong Manufacturing
• China Seeks Super-Savers Wallets to Boost Economy
• Bank of Japan Optimistic About Economy for First Time in Two Years
• BOJ Delivers What’s Needed
• BOJ Policies May Shift Due to Global Economic Changes
• Japan Consumer Confidence Falls in June
• Singapore Property Market Cooling Finance Minister
• India’s 2022 Bonds Rise for Second Day
• Chinese 7 day Fixing Rate Falls to 6 Week Low
• China’s Exports Fall Sharply in June
• Indian Refiners Forced to Buy Dollars from a Single Bank
• Bankruptcies in Japan Drop to Lowest Level in 22 Years
• Japan Fin Min Says Taxes Won’t Be Raised if Economy Not Growing
• China Inflation Rises to 2.7 Percent
• Japan to Change Inflation Gage Which Could Pressure BoJ
• Asian Growth a Concern on China Slowing and Fed Plan
• China Producer Price Index Remains in Deflation
• Japan’s Registers Current Account Surplus for 4th Month in a Row
• Japanese Bank Lending Marks 4 Year High
• India’s Rupee Plunges to Record Low on U.S. Jobs Data
• Japan Sold Record U.S. Treasuries in May
• China Credit Growth Expected to Decline by $122B USD

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