Last week saw many events in the Asian region from the economic data and decisions of central banks along with strong movements in the FOREX markets and stock market.
Reserve Bank of Australia issued a decision this week regarding the benchmark interest rates leaving rates steady for fourth consecutive month at its highest level of 4.75%, after sluggish inflation rates. RBA kept borrowing costs at their levels as the natural disaster will contribute to disrupt the economic growth in Australia.
On the other hand, RBA noted that higher currency value supported the economy to contain inflation rates at secure levels during the first three month of the year, also stating that current natural disasters have significantly affected Japanese output.
At the meantime, the flooding in January followed by the Yasi cyclone in February have negatively affected the steelmaking coal production, disturbing coal shipments to major importing countries like China which backfired on Australian export rates. Analysts estimate that the damage to the economy's coal industries from these disasters is approximately around A$9 million.
The Australian Trade balance has recorded its first trade deficit in almost a year. The major fact behind this unexpected surprising trade deficit were the natural disasters that hit Australia specifically the flooding that struck Queensland in January.
The Australian trade balance recorded a deficit of A$205 million during the month of February, compared to a previous surplus of A$1875 million in January, which was revised to A$1433 million, while analyst's forecasts referred to A$1200 million.
As for the Japanese economy, amid the Japanese government's efforts to help the economy to exit from its worst phase, the Bank of Japan has released its decision about the overnight cash target rate, where the Bank has left the rates unchanged at the lowest level, to help stimulate the economic recovery.
Moreover, the Bank has offered 1 trillion yen in 1 year loans for the companies that hurt by the devastating earthquake that hit the nation on March 11.
Mr. Shirakawa, governor of the Bank of Japan and his board, decided to keep the benchmark interest rate to "virtually zero" a range of 0.0% to 0.10%, after the meeting of the bank, while this decision came inline with anticipations which noted that.
The leaders of BOJ decided to leave the amount of asset-purchase fund at 10 trillion yen (120 billion American dollars) along with keeping the credit-loan program unchanged at 30 trillion yen to encourage the banks lending.
The Chinese economy has announced its decision also about the interest rates, where the PBOC has decided to raise the overnight cash target rate for a fourth time since October 2010 by 25 basis points to 6.31%, as the nation try to cool down inflation rates during the first half of the year.
The People’s Bank of China raised its interest rates for the fourth time Since October, as China continues its battle to control rising inflation, where the People’s Bank of China said on Tuesday that the benchmark 1-year deposit rates will be hiked by a quarter percentage points to 3.25 percent, and 1-year lending rates will be also hiked by 25 basis points to 6.31 percent.
Chinese economy increased interest rates for the fourth time since the end of the global financial crisis to restrain inflation and limit the risk of asset bubbles in the fastest-growing major economy.
China’s inflation accelerated to 5.2% last month, the fastest pace since July 2008, and consumer price index increased to 4.9% in February, as the increase in politically sensitive food costs that account for half or more than household spending along with the millions of Chinese who have seen little benefit from three decades of economic reform.