MARSEILLE, France (Reuters) – The yen took a back seat at the Group of Seven finance ministers’ meeting, which grappled with Europe’s debt crisis and global economic slowdown, but Japan said it met little resistance to further intervention.

The G7 economic powers gave a muted reaction to Japan’s call to endorse its right to unilateral action against speculators pushing up its currency, but Japanese officials and some analysts said the subdued response suggests the G7 could let Japan intervene in the market again if needed.

“We intervened in August and I told the (G7) that we will continue to watch the situation closely and flexibly, and take decisive steps against speculative moves,” Finance Minister Jun Azumi told a news conference late on Friday after the G7 talks.

“No countries voiced opinions against our explanation. I believe we gained understanding toward our view on currencies.”

A senior finance ministry official said the G7 had not ruled out the chance of solo intervention by Japan.

In the run-up to the meeting, Japanese officials vowed to seek G7 understanding on Tokyo’s intentions to counter yen rises that threaten to derail a recovery from the March earthquake which tipped the world’s No. 3 economy into recession.

“Japan could not ask for more as it just avoided blunt criticism from other countries against its past intervention,” said Masafumi Yamamoto, Japan chief forex strategist at Barclays Capital in Tokyo.

On Saturday, Azumi told reporters that U.S. Treasury Secretary Timothy Geithner had not voiced opposition in an early morning bilateral meeting.

“He was smiling but did not refute. He appears to understand the situation,” Azumi said.

LITTLE CHANCE OF CONCERTED INTERVENTION

Japan has conducted three currency interventions over the past year — one rare co-ordinated action with the G7 shortly after the March 11 disaster and two solo moves.

Yamamoto said further intervention to curb excess volatility

may not meet international opposition as long as it was not done frequently or aimed at guiding currency rates toward specific levels as Switzerland did this week by setting an exchange cap on its soaring currency.

Japan’s economy is now recovering from recession, while Europe and the United States face a slowdown, so Tokyo has been having a hard time convincing its G7 counterparts of the need for intervention.

European Central Bank President Jean-Claude Trichet said early last month that currency interventions “have to be made on the basis of a multilateral consensus,” signaling displeasure at Japan’s solo action on August 4.

In Marseille, Japanese officials including Bank of Japan Governor Masaaki Shirakawa blamed the yen’s rise on global economic woes that have been amplified by Europe’s debt crisis — the central topic of debate at the G7 talks.

“Such an argument may have discouraged Europe from being critical of Japan’s intervention. As a result, Japan may have gained a free hand in intervening in the currency market,” said Takahide Kiuchi, chief economist at Nomura Securities.

Japan faces higher hurdles persuading the G7 of the need for a joint intervention, which is seen as more effective in curbing excess currency moves.

On Friday, the G7 issued a statement that said exchange rates should be determined by markets and pledged: “We will consult closely in regard to actions in exchange markets and would cooperate as appropriate.”

“The G7 is not in a situation where it needs to do something about currencies as it focuses on how to balance public finances while facing slowing economy,” said Barclay’s Yamamoto.

“The foreign exchange market is reflecting debt problems in the West but it is not causing problems. So G7 must be feeling there’s no use dealing with currencies to resolve the market situation.”

(Editing by Catherine Bremer/Mike Peacock)

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MARSEILLE, France (Reuters) – The United States pressed Europe’s strongest economies on Friday to give “unequivocal” financial support to weaker euro zone states to overcome a debt crisis that threatens the world economy.

“It is completely within the capacity of the stronger members of the euro area to absorb these costs,” U.S. Treasury Secretary Timothy Geithner said as G7 finance chiefs gathered in Marseille to discuss how to revive a stalling recovery.

“Those costs would be much, much greater for them and their economies if they sit here and do nothing, and they recognize that,” Geithner told Bloomberg Television in comments that appeared aimed primarily at EU economic powerhouse Germany.

With markets looking to the Group of Seven major industrial economies for some sign of a policy shift to help faltering growth, a G7 source said the meeting might after all issue a communique, which G7 chair France had said was not planned.

Ministers and central bankers were under pressure to calm the biggest confidence crisis in financial markets since the 2007-8 global credit crunch.

But a shock announcement that the top German official at the European Central Bank is leaving early in disagreement with the bank’s policy of buying euro zone government bonds to support the likes of Italy and Spain laid bare deep rifts over how to manage the debt crisis.

The ECB confirmed that chief economist Juergen Stark would retire nearly three years before his term is due to expire. His decision means Bank of Italy governor Mario Draghi will start his term at the ECB helm in November with a mountain to climb to restore its credibility in Germany, Europe’s biggest economy.

France has called for a coordinated response from the Group of Seven industrialized nations after mounting anxiety over Europe’s debt crisis and the fragility of its banks caused a big fall in world stock markets in recent weeks.

Differences between the economic problems facing the euro zone, Britain and the United States — which unveiled a $447 billion jobs package on Thursday — are complicating the task though, meaning one-size-fits-all solutions will not work.

IMF chief Christine Lagarde said in London before boarding a flight for Marseille that policymakers in advanced economies should use all available tools to boost growth and called for bold action to weather a “dangerous new phase” of recovery.

She also cautioned against too much fiscal consolidation in a climate of sputtering growth.

But a G7 source told Reuters a unanimous agreement at the Marseille talks on coordinated monetary easing was unlikely.

A source in Brussels has said the G7 would likely agree to keep monetary policy accommodative, slow fiscal consolidation in states where that is possible, and implement structural reforms.

Fears the global economy may be in its most difficult period since the collapse of investment bank Lehman Brothers have added significance to Friday’s talks but there has been little evidence of the unity of purpose shown in 2008 and 2009.

U.S. President Barack Obama’s new package of tax cuts and spending could lift U.S. growth by one to three percentage points in 2012 and add more than a million jobs.

But in debt-ridden Europe, there is little scope for fiscal stimulus, and where there is some wiggle-room — in Germany and Britain — there is no political appetite for it.

In an indication of the conflicting positions on policy, Canadian Finance Minister Jim Flaherty told Reuters TV decisive moves were needed to restore market confidence and said slowing fiscal consolidation too much would be foolish.

“I hope we would all agree we have to stay the course, that we have to go through the pain of fiscal consolidation. It’s not easy, it creates stresses in some countries, but it’s necessary, we have to get through this rough patch,” Flaherty said.

G7 finance ministers and central bankers trickled into the sunlit Mediterranean port city of Marseille around lunchtime and talks were due to start at 4:00 p.m. (1400 GMT).

A working dinner will be followed by briefings from around 9:15 p.m. local time (1915 GMT) by the French, German, Canadian and Japanese delegations and European Central Bank President Jean-Claude Trichet. The United States plans no briefing.

ASIA AS CONCERNED AS U.S.

With Asian economies deeply worried about the West’s debt crisis and slow growth, Japan said it will voice its concern on the euro zone debt crisis and seek support for its right to unilateral action over safe-haven buying pushing up the yen.

Bank of Japan Governor Masaaki Shirakawa told reporters in Marseille he hoped the talks would share frank views on the crisis and said it was vital that G7 finance chiefs came up with a “firm stance” to stabilize the world economy.

“There are various factors behind the world economy’s uncertainty but Europe’s debt problem is one major factor. It is important for Europe to tackle its debt problems for its own sake but it would also indirectly bring positive effects on Japan’s economy,” he said.

Finance Minister Jun Azumi said Japan would ask the G7 for its understanding on its intentions to counter yen rises.

Lagarde said policymakers must act now, “and boldly,” giving her blessing to more quantitative easing by central banks and saying the challenge was to find a pace of adjustment that was neither too fast nor too slow.

She said countries facing market pressures must push ahead with urgent fiscal consolidation, while there was scope for slower action in countries not at the mercy of market forces.

“If growth continues to lose momentum, balance sheet problems will worsen, fiscal sustainability will be threatened, and the scope for policies to salvage the recovery will disappear,” she said.

Decisions by the European and British central banks this week to keep interest rates unchanged accentuated the gloom in Europe but neither indicated that a cut was imminent, while Federal Reserve Chairman Ben Bernanke gave no hint of new stimulus to boost the economy in a keenly awaited speech.

“Despite speculation about new coordinated forex intervention, a standard final statement remains the most likely outcome,” Unicredit said in a research note.

The Organization for Economic Co-operation and Development says growth across the G7 could slow to an anemic 0.2 percent in the last quarter of 2011. Its chief economist Pier Carlo Padoan urged the G7 to send a clear signal it is ready to take action if growth slows further.

(Additional reporting by Daniel Flynn and Claire Watson in Marseille, John Irish in Paris, Keith Weir in London, David Lawder in Washington and Leika Kihara in Tokyo; Writing by Catherine Bremer, editing by Mike Peacock)

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Financial Times said the Irish budget deficit for 2010 will be higher than the latest estimates, while Nobel Prize-winning economist Joseph Stiglitz said European common currency future is under risk.

Pressure increase on the euro ahead of the Greek plans to outweigh sluggish revenue growth when the Greek Finance Minister announces the 2011 budget later on today.

However, the relative improvement in European fundamentals may help the euro to advance again, especially with the expected pumping of money by central banks, which aim to bolster recovery.

The dollar rebounded from eight-month low to a high of 78.43 from the day’s opening at 78.00, as depicted by the dollar index, which tracks the performance of the dollar versus a basket of major currencies.

The greenback managed to do an upside correction after being overbought, where it may change its direction after the release of US pending home sales for August which are expected to show decline to 3.5% from 5.2% and factory orders which are predicted to drop to -0.4% in August from 0.1%.

Worries in markets enhanced demand on refuges such as dollar and yen at the expense of risky assets such as stocks where European shares failed to follow the suit of its Asian peers as it dropped during early trading.

Concerning the euro-dollar pair, it plunged on the daily charts as the pair is currently trading at 1.3685 after touching a high of 1.3805 and a low of 1.3664, whereas the trading range for today is among the key support at 1.3570 and the key resistance at 1.4000.

Moving to the sterling-dollar pair, it opened on a gap today then it touched a high of 1.5825 before it slipped to a low of 1.5747 after Osborne has said that delaying the cuts may affect UK top credit rating, while the it pared some of the losses as PMI construction unexpectedly rose to 53.8 in September from 52.1.

Meanwhile, the pair is trading at 1.5794, whereas the trading range for today is among the key support at 1.5620 and the key resistance at 1.6260.

With regard to the dollar-yen pair, it climbed to a high of 83.86 but slipped in an attempt to do an upside correction after being oversold, but the pair failed to continue as it retreated to 83.26.

BoJ policy makers in their two-day meeting are expected to increase the 30-trillion yen credit program for lenders to encourage bank lending.

The dollar may rebound as it seems that the BoJ will not tolerate another fall to 83 where they may intervene in market again as what happened on September 15.

The trading range for today is among the key support at 81.60 and the key resistance at 85.40.

Published on Mon, Oct 4 2010, 11:09 GMT

fxstreet.com

The following is a summary of the main economic events of October 4th, 2010:

• U.S. pending home sales climb 4.3% in August, better than the +2.5% expected. The July reading is revised lower to +4.5% from 5.2%. USD gains.
• U.S. factory orders fall 0.5% in August compared to -0.4% in July. Prior revised to +0.5% from +0.1%.
• USD/CHF falls to fresh record low of 0.9705.
• CHF and GBP are top performing majors while EUR and AUD lag
• EUR falls due to warnings of terror attacks in continental Europe.
• Chinese Premier Wen Jiabao tells reporters “I have made clear that China supports a stable euro…We will not reduce the holdings of European bonds in our foreign exchange portfolio,” he said, adding that the nation will buy Greek debt.

The Day Ahead- Asia/ Pacific

• It’s a big day in the Asia-Pacific region due to central bank decision in Australia and Japan.
• Australia’s trade balance data is the first release at 8:30 p.m. ET. Economists expected a surplus of A$2.3 billion in August after a $1.888 billion surplus a year earlier.
• Australian retail sales data will also be released at 8:30 p.m. and economists expect a 0.4% month-over-month rise after a 0.7% increase in July. A weak reading could spook AUD traders just a few hours before the RBA decision but we don’t expect this figure to affect policymakers.
• At 11:30 p.m. ET the Reserve Bank of Australia is expected to hike interest rates to 4.75% from 4.50%. OIS traders are pricing in an 80% chance of an increase. Expect the AUD to rally 30 pips on the hike but to fall more than 100 pips if there is no hike.
• The outlook from the RBA will also be important. Any indication that rate hikes have come to an end will hurt AUD. The market is pricing in two more rate hikes in the coming year.
• The focus shifts north to the Bank of Japan’s rate decision. There is no set time
  for the release but it’s generally between 11 p.m. and midnight. No change in the 0.10% target rate is expected but some action to weaken the yen or embark on further quantitative easing is probable.

The Day Ahead- Europe

• At 3:15 p.m. ET European Central Bank President Jean-Claude Trichet speaks on EU-China talks. FX levels may be a topic of conversation.
• At the same time, Swiss CPI for September is expected at +0.3% year-over-year, the same as the month before. This release will prompt fears of FX intervention if the release falls toward zero and will see the CHF slump.
• At 4:30 a.m. ET, Eurozone retail sales for August are expected to rise 0.2% in August after a 0.1% rise in July. This isn’t typically a market mover.
• At 6 a.m. there will be comments from the ECB’s Ordonez and Kranjec.

The Day Ahead- North America

• At 10 a.m. ET, the U.S. ISM non-manufacturing survey for September is expected at 52 after a 51.5 reading in August. A fall to 50 or lower will prompt a sharp sell-off in USD. A rise above 54 will spark a rally, especially against EUR and JPY.
• At 1 p.m. ET, Bank of Canada Deputy Governor Tiff Macklem speaks in Montreal. Macklem may dampen hopes for further rate hikes and that could hurt CAD.

• 

  Download the full report

Published on Mon, Oct 4 2010, 22:09 GMT

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Euro – Following a gentle slide on Monday the euro rallied from $1.3650 after a pair of Eurozone PMI reports for September showed economic activity in the area was gaining traction. The PMI Services and Composite readings for last month both rose to 54.1 with individual readings for Germany rising by a greater amount, while the French reading dipped slightly but maintaining a far stronger pace of expansion than in any other Eurozone nation. Investors are clearly far more motivated to own the euro than the dollar with lesser prospects for further quantitative easing in the background. A separate report showing retail sales dipped during August across the Eurozone was largely overlooked in the context of today’s survey data. The euro rallied against the yen where it stands at ¥114.75.

British pound – Another positive surprise for the British economy came in the form of jump in the PMI Services reading for September when analysts had expected a fall. The index rebounded from a slip towards a standstill for the sector and improved to 52.8 from 51.3. The pound shot up from $1.5750 to $1.5914 on the strength of today’s data, which economists reckon now reduces the likelihood of further quantitative easing. Last week MPC member Adam Posen launched further interest in that notion by proposing a debate on the issue.

U.S. Dollar – The dollar soured at the hands of a double-fisted assault from the European duo and the index appears to be on the verge of further decline. The dollar faces its own services PMI index reading later this morning. Fed Chairman Bernanke made remarks overnight to defend previous rounds of bond purchases and said that there is a role for more bond buying to help revive the economy.

Japanese yen – The Bank of Japan maintained its benchmark interest rate but reduced its target lending range to between zero and 0.1% at today’s policy meeting. It also announced the launch of a ¥5 trillion ($60 billion) fund to be used for buying government paper and other assets that would stimulate the economy. The expansion of the balance sheet is in addition to a target monthly purchase amount of ¥ 1.8 trillion and a credit program of some ¥30 trillion. In addition the central bank has attempted to sour dealers’ appetite for the yen by proving that it is willing to intervene and weaken its currency. So far it has performed this task on a single occasion and on a unilateral basis. Following today’s policy announcement the yen slumped against the dollar and fell to ¥84.00 before recovering to ¥83.31.

Aussie dollar – The RBA’s decision to maintain its benchmark interest rate at 4.50% today outsmarted dealers apparently craving a higher yield for the Australian dollar. The failure to budge on account of signs that policy is already biting in the nation’s housing market led to sale of the Aussie unit dragging it all the way back to 95.42 U.S. cents. It later recovered to 96.27 cents but still carries a daily loss of 0.5%.

Canadian dollar – The Canadian dollar could conceivably suffer from its affinity with the commodity-sensitive Aussie unit, but given its narrower yield gap above the greenback, it didn’t suffer much as a result of the Reserve Bank’s inaction. Indeed the loonie appears to be finding the sailing pretty good supported by the tailwinds of a rising price of crude oil, one of the nation’s largest exports. Dealers are less inclined to price in aggressive rate hikes from the Bank of Canada following last week’s warning from Governor Carney that future decisions on monetary policy need to be carefully weighed in light of what’s happening outside the economy.

Published on Tue, Oct 5 2010, 12:51 GMT

fxstreet.com

The easier policy stance from the BoJ and RBA taken together with firmer service sector purchasing managers indices – including the September US ISM non-manufacturing survey, which came in at 53.2 from 51.5 – gave risk appetite a solid lift. Even the AUD which dropped sharply following the RBA decision, managed to recoup all of its losses and more overnight.

Japan’s decision could have set the ball rolling for a fresh round of quantitative easing (QE) from central banks as they combat sluggish growth prospects ahead and ongoing deflation risks. The US Fed as has been much speculated on and the Bank of England (BoE) are likely candidates for more QE. Whilst the European Central Bank (ECB) is unlikely to adopt such measures there are reports that board members are split over the timing of exit policy. The BoE decision on Thursday may provoke more interest than usual against this background although the Bank is unlikely to act so quickly. The Fed on the other hand appears to be gearing up for a November move.

Growing prospects of fresh QE looks likely to provide further impetus for risk trades. Notably commodity prices jumped higher, with the CRB commodities index at its highest level since the beginning of the year. Although there is plenty of attention on the gold price which yet a fresh record high above $1340 per troy ounce as well as tin which also hit new highs, the real stars were soft commodities including the likes of sugar, coffee and orange juice up sharply.

The main loser once again is the US dollar and this beleaguered currency appears to be finding no solace, with any rally continuing to be sold into, a pattern that is set to continue. Although arguably a lot is in the price in terms of QE expectations, clearly the fact that the USD continues to drop (alongside US bond yields) highlights that a lot does not mean that all is in the price.

The USD is set to remain under pressure against most currencies ahead of anticipated Fed QE. The fact that the USD has already dropped sharply suggests a less pronounced negative USD reaction once the Fed starts buying assets but the currency is still set to retain a weaker trajectory once the Fed USD printing press kicks into life again as a simple case of growing global USD supply will push the currency weaker.

USD weakness will only spur many central banks including across Asia to intervene more aggressively to prevent their respective currencies from strengthening. A “currency war” looms, a fact that could provoke some strong comments at this weekend’s IMF and World Bank meetings. In the meantime intervention by central banks will imply more reserves recycling, something that will continue to benefit currencies such as EUR and AUD.

Published on Wed, Oct 6 2010, 06:53 GMT

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• 

  Download Full Euro Inflation Update

Published on Mon, Oct 4 2010, 08:33 GMT

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The JPY advanced against all 16 major counterparts before reports this week forecast to show US existing home sales fell and Japan’s export growth slowed in July. Australia’s currency weakened after the election failed to deliver a majority government for the first time in 70 years. The EURUSD traded near a five-week low ahead of European data that may show growth in the EU’s services and manufacturing industries fell to 56.3 (prev. 56.7). The EURJPY dropped to 108.50, USDJPY fell to 85.36 and EURUSD traded at 1.2711 after it reached 1.2664 on Friday, the lowest since July 13, AUDUSD slipped 0.3% to 0.8911 and AUDJPY dropped 0.6% to 76.08. Sales of US existing homes probably dropped 12.9% to 4.68 million annual pace, Japan’s exports probably advanced 21.8% (prev. 27.7%) slower than last month according to data to be released on Aug. 25. Gains in the JPY were sustained after reports said currency intervention wasn’t discussed between Prime Minister Naoto Kan and BOJ Governor Masaaki Shirakawa in their telephone conference today. The Nikkei 225 retreated 0.8% to 9,108.58, the lowest since November, MSCI Asia Pacific Index fell 0.1% while S&P 500 Index futures climbed 0.2%.

The EURGBP declined to a seven-week low after France’s government last week cut its forecast for economic growth next year as President Nicolas Sarkozy prepares for the biggest budget squeeze in at least two decades. France will probably grow 2% (prev. 2.5%) in 2011, slower than previous forecast. France has pledged to cut the budget deficit to 6% of the GDP next year and to 3% by 2013 from about 8% in 2010. Europe’s sovereign risks may re-emerge amid lingering concerns about its fiscal health, giving further strength to a case of a weak EUR. ECB council member Axel Weber said on Aug. 20 that the ECB should help banks through end-of-year liquidity tensions before deciding when to withdraw emergency lending measures triggering concern about Europe’s recovery.

Currency Tech

EURUSD
R 2: 1.3250
R 1: 1.3000
CURRENT: 1.2725
S 1: 1.2680
S 2: 1.2540

USDJPY
R 2: 87.20
R 1: 86.80
CURRENT: 85.37
S 1: 85.00
S 2: 84.50

GBPUSD
R 2: 1.5925
R 1: 1.5750
CURRENT: 1.5608
S 1: 1.5525
S 2: 1.5350

AUDUSD
R 2: 0.9200
R 1: 0.9070
CURRENT: 0.8925
S 1: 0.8810
S 2: 0.8725

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

Published on Mon, Aug 23 2010, 09:14 GMT

fxstreet.com

The yen rose against the dollar in Asia Monday as Japan’s prime minister and top central banker limited their dialogue on foreign-exchange matters to a telephone conversation. This lead investors to think that Tokyo may not take immediate action to tame the yen’s recent strength.

Bank of Japan Gov. Masaaki Shirakawa and Prime Minister Naoto Kan on Monday morning discussed recent foreign exchange market movement as well as economic conditions at home and abroad.

A stronger yen is considered negative for the export-reliant economy because it deflates exporters’ profits overseas when repatriated.

As a result, the dollar fell to JPY85.35 as of 0450 GMT, down from JPY85.77 in New York Friday.

The euro, meanwhile, was at JPY108.55 and USD1.2718 from JPY108.71 and USD1.2676 last Friday. Investors said the European unit’s outlook depends on share price moves. If shares decline, the euro should extend losses against its major rivals.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.954 from 83.237 Friday.

The British pound extended its decline against the US dollar as concerns of a faltering global economic recovery boosted safe-haven currencies. Despite positive UK retail sales figures, the sterling continued to be pressured by the probability of further austerity measures implemented by the Bank of England.

The Australian dollar traded lower in Asia Monday after the country’s general election on the weekend left it unclear who will govern, though the currency gained as the session wore on.

Market expectation

Dealers said investors may resume buying the yen actively if share prices deteriorate in Europe and the U.S. later in the day.

European stocks are expected to open higher Monday, managing a positive start after Wall Street closed off its session lows Friday and boosted by the mining sector, which rallied after the Australian general election result at the weekend.

EURCHF is set to test its all-time low of 1.3072 reached in July, though it should find psychological support at around 1.3000, say analysts. This is important support and should hold the currency pair, say technical analysts. If not, the longer-term 100% Fibonacci extension at 1.2997 will probably be reached.

GBP up slightly as short-term-focused investors take advantage of somewhat calm Asian session to square short positions they made recently; Japanese share prices managing to limit losses also a plus for GBP, say dealers. GBPJPY rises to JPY133.15 from JPY132.73, GBPUSD up at USD1.5595 from USD1.5553. Tips GBPJPY resistance at JPY133.30, GBPUSD may raise to USD1.5620. Investors will pay attention to euro-zone August PMI data due later in day for further trading cues; Economists tips headline figure to log 56.7; data due at 0800GMT.

Investors are likely to push the euro down further against the franc, said analysts, testing whether the Swiss central bank will intervene to stem its currency’s strength, as had been the bank’s recent practice.

Most important events of the day

Published on Mon, Aug 23 2010, 07:37 GMT

fxstreet.com

Data concerning the Taiwan’s economy released today noted the economic expansion during the second quarter, where the GDP index has recorded a growth of 12.53% compared to the expected growth of 10.15%, where as the previous reading showed a growth of 13.27% and this reading has been modified to 13.71%.

The first factor behind the growth in Taiwan was the increase of exports, although there was a weakness in the level of demand from the American and Chinese economy lately.

It was released besides today’s report that expectations points out to that the Taiwanese economy is on its way to record a growth of 8.24% during 2010 and a growth of 4.64% during the next year. It should be noted that Taiwan has been a victim of the economic recession during 2009, but it managed to record a fast growing pace since 1978 during the first quarter of this year.

The stable level of exports expansion points to the flexibility enjoyed by the Asian economies especially when it comes to facing the global financial crisis, Taiwan has joined Malaysia that has announced an expansion in growth beside Hong Kong that might exceed economists’ expectations.

Taiwan’s exports to china and Hong Kong represent 40% of the total Taiwan’s exports which increased by 3.8% during the month of July. Expectations points out that the total export level will increase by 33.2% during this year, which is higher previous expectations which noted an increase of 24.5%

The stable economic conditions in Taiwan encouraged the Taiwan’s central bank to take an unexpected decision during June’s meeting to increase the interest rates to 1.375% after it was 1.250%. On the other hand fears of increased inflation rates could persuade the central bank to keep sticking to the policy of increasing interest rates, especially that consumer prices has increased by 1.31% during the month of July, for the seventh consecutive month.

Published on Fri, Aug 20 2010, 06:24 GMT

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