- "The past week’s economic news across Asia has been dominated by China’s announcement to allow greater exchange rate flexibility. Markets welcomed the announcement and stock markets and currencies initially rallied, although euphoria soon faded on realization that any appreciation will be limited and gradual through the year. The RMB appreciated for the week by about 0.5%, a small move in absolute terms, but relatively large given the de facto peg that had been in place since July 2008. And certainly large enough for China to successfully fend off criticism at the G20 meeting that concluded over the weekend in Toronto."
- "The week ended with a surprise interest rate hike in Taiwan (see highlights), a signal of the authorities’ growing confidence in the economic outlook. Adding to optimism was the announcement that Taiwan and China have concluded their historic trade agreement, ECFA, to remove barriers to cross-strait trade and investment ties. Korea’s government also significantly upgraded its growth outlook and signaled a more aggressive implementation of its exit strategy. Elsewhere in the region, CPI figures show that inflation remains under control, although it is gradually rising (outliers are India and Vietnam with relatively high inflation, and Japan with deflation) except in India and Vietnam). For further confirmation of the outlook, Markets this week will be awaiting important PMI data in China, and trade, production, and inflation data for June in Korea."
- "Australia provided a political surprise for the region, with Prime Minister Kevin Rudd resigning, as his popularity had fallen in recent months. The new PM, Ms. Julian Gillard, has signaled more flexibility in negotiating and formulating Australia’s new mining tax. For the region, the fallout of Australia’s integration with Asia will be watched, as Kevin Rudd had been known as a keen promoter."
BBVA Asia Weekly Watch 20100628
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