The Bank of Japan dominated last week in Asia after it decided to add 10 trillion yen to its credit program, in an attempt to cool financial conditions, and buoy confidence among investors and let them know Japan is taking the proper measures to face the crisis.

The BOJ decided to double its credit program to 20 trillion yen, besides keeping interest rates at the low record of 0.10%. The bank's program valued $222 billion of short term loans for commercial banks at 0.1%, and the bank accept commercial papers, Japan government bonds, and corporate bonds as collateral.

Moreover, the BOJ is working to stabilize financial conditions in the world's second largest economy. The bank's decision is a response to the government's pressures to fight deflation that continued to weigh on economic activity.

Expanding the credit program will help pump more liquidity into financial markets, which is going to accelerate inflation. The bank will keep buying government bond to pressure yields lower over the long term, increase the value of assets and circulated liquidity.

However, one of the main reasons behind expanding the credit program is lowering the yen's value. The yen is trading around the 90.00 levels against the dollar since two weeks, while any forecasts for a surging yen will increase fears in equity markets and affect corporate earnings that depend on exports, which is threatening the recovery in Japan.

The BOJ also released its monthly report this week, keeping its assessment for the economy unchanged at "the economy is picking up" for the fourth straight month. The bank signaled recovery resulted from improving exports and recovering demand, wasn’t reflected on domestic spending as it remains weak, in other words, the economy is missing a main pillar of economic growth.

The Reserve Bank of Australia released the minutes for the March 02 meeting when policy makers decided to raise interest rates by 25 basis points to 4.00%. This came alongside increasing inflationary pressures as economic growth is accelerating, which forced the RBA board members to raise borrowing costs for the fourth time in five meetings, in order to control inflation.

The bank's decision was inline with analysts' forecasts, especially after improvements witnessed in the labor market and the mining sector that rebounded in the last few months. Such improvements were backed by increasing demand from China, Australia's main trading partner, besides higher raw materials prices that helped mining companies to realize better earnings, worth mentioning that policy makers said the mining sector will lead the recovery.

The RBA board members said they are worried about the tough situation in Europe that may lead to further unrest in markets and weaken the global economy, while they ensured that such unrest will affect the Australian economy.

The MSCI Asia Pacific Index ended Friday’s trading rising 0.6% to 125.02. Nikkei 225 ended Friday’s trading by rising 0.75% to close at 10824.72. The S&P/ASX 200 closed on Friday at 4872.20 after rising 0.19%. Hang Seng ended Friday’s by rising 0.19% to close at 21370.82.

As we recapped the Asian week, India decided to add its own flavor of surprise to the market. Late Friday, India’s central bank decided unexpectedly to raise interest rates for the first time since July 2008. Their decision was a month before the scheduled policy meeting.

The Reserve Bank of India increased the benchmark reserve repurchase rate to 3.5% by 25 bp from the record low of 3.25%; and increased the repurchase rate by the same amount to 5.0% from 4.75%.

The bank cited inflationary pressures as the driving reason for the decision; where they stated that controlling price-gains has become “imperative” following the acceleration of inflation to a 16-month high. The surprise decision pushed U.S indices lower and fueled renewed fears over the downside effects of withdrawal on stimulus measures on the global economic recovery.