On August 2015, the People’s Bank of China devalued the yuan with the aim of appreciating the currency against the US dollar. On October 2015, the European Central Bank signaled the intention to pump more liquidity into the Eurozone economy. On October 2015, the Federal Reserve postponed its intention to conduct tapering on its monetary policy.
As Vietnam suffers its worst drought in nearly a century and Cambodia faces a water shortage that could jeopardise the livelihoods of 1.5 million people, debates have been reignited over the mega dams built along the Mekong.
When a coal-fired plant in India destroyed the health, livelihoods, and property of farmers and fishermen in the region, they turned to international interest groups for help. Those interest groups, in turn, devised the strategy of taking the matter to court.
Of course, the plant itself had no real assets, but the institutions that provided their financing might. Therefore, they decided to take the International Finance Corporation (IFC), a private lending arm of the World Bank Group, to court in the US District Court in Washington D.C.
Asia’s recent decades of economic growth have depended, among other things, on a remarkable period of regional peace and stability. The region will only keep growing if that can be sustained. We cannot take this for granted. The peace we have known has resulted from an unusual situation that emerged in the early 1970s, when China decided to follow Japan in accepting the United States as the primary strategic power in Asia. That has meant that US primacy has been uncontested by any major regional power in Asia, eliminating major-power rivalry as a source of tension and conflict.
It is widely recognized that the sharp depreciation of the Japanese yen has not lifted Japanese export volumes. In December 2015, Japanese export volumes had fallen 4.4% year-over-year after rising 3.9% in December 2014 and 2.5% in December 2013.
These are a number of explanations for this counter-intuitive result given the yen’s past depreciation. First, global demand is weak. Second, has adopted a direct investment strategy rather than an export-orientation.
The conflict in the Middle East has displaced millions, cost the world economy billions, and taken thousands of lives. While most of the solutions to these problems suggested in the media tend to focus on military action, the World Bank is taking steps to deal with the aftermath of these conflicts.
The US dollar is mostly lower as the North American session is set to begin. The holiday in many centers, especially in Europe, has limited activity, and a few orders seemed to drive prices, which remain within the recent ranges.
Four events will shape market psychology in the week ahead. They are Yellen’s speech to the NY Economic Club, US jobs data, Eurozone March CPI and PMI, and Japan’s Tankan Survey.
The broad backdrop is characterized by the rebuilding of risk appetites since the middle of February, though the MSCI emerging market equity index put in its low on January 20, as did the CRB Index. The price of oil appeared to bottom then as well, but it retested the lows in mid-February and made a marginal new low.
In February 1987, a pair of junior American diplomats arrived in pre-democratic Mongolia to lay the groundwork for establishing a US embassy — no simple task in Ulaanbaatar, the world’s coldest capital. When the embassy opened a year later, its American staff resided in a ramshackle apartment building that they nicknamed ‘Faulty Towers‘. Much has changed since then.
Mongolia is now home to Australia’s newest embassy, housed in a modern complex in central Ulaanbaatar, whose skyline today boasts gleaming office towers erected by the nouveau riche.
The holiday shutters most markets today. Several Asian markets were open, and equities were narrowly mixed, with Japan and China posting small gains. Most of the other local markets, including Australia, Korea and Taiwan slipped.
The US dollar is trading with a firmer bias, but mostly, as one would expect, within yesterday’s ranges. Three observations are worth sharing.
