Connect with us

ASIA

Mighty dollar pushes Asian governments to boost currency protection

Published

on

Asian governments are increasingly intervening in the market to stem the slide in local currencies that has been driven by the strong US dollar this year.

According to the Nikke Asia report, the relative strength of the US economy and high interest rates, which are likely to remain high for an extended period, have caused Asian currencies to weaken.

Asian policymakers are responding to the dollar’s strength with varying degrees of caution, from verbal warnings to interest rate hikes. Some are even believed to be intervening by buying local currencies from the market. The move is seen as “undermining the credibility of central banks”, says the report.

Analysts will be focusing on the US Consumer Price Index for April, which will be released on Wednesday. Last month’s data caused the Japanese yen to fall sharply against the dollar. The Japanese yen is one of the Asian currencies most affected by the stronger-than-expected US economy.

Intervention continues as yen falls in Japan

Analysts say that although official data has not yet been released, the Japanese government appears to have intervened twice on 29th April and 1st May to support the yen. Prior to the first suspected intervention, the yen had fallen to its lowest level in 34 years, breaching the 160 level against the dollar.

The yen’s decline has been driven by the almost 5 percentage point difference in bond yields between the US and Japan. According to Refinitiv, the Japanese yen is hovering around 155 against the dollar, down 9.4% this year.

According to Mizuho Securities strategist Shoki Omori, further dollar selling and yen buying intervention may be difficult for Tokyo without support from Washington.

The summary of the Bank of Japan’s (BoJ) April policy meeting released last week showed that President Kazuo Ueda struck a “hawkish tone” compared to his previous public statements. While some board members felt that rate hikes could be accelerated, many said that the BoJ should reduce bond purchases.

However, Omori believes that “short” positions against the yen will continue until fundamentals change, as there is “no magic wand” to reverse the yen’s weakness.

South Korea’s central bank ‘burns dollars’

South Korea’s foreign exchange reserves fell by around $6 billion last month from March, partly due to the country’s efforts to halt the fall of the won, according to the Bank of Korea.

The country’s central bank said in a statement that the decline in foreign exchange reserves was related to several factors, including “market stabilisation measures such as currency swaps with the National Pension Service”, which were introduced in September 2022.

According to Moon Da Woon, an economist at Korea Investment & Securities in Seoul, the markets believe that the South Korean government is helping to stem the won’s rapid decline.

South Korea’s finance ministry and central bank verbally intervened in April to warn against rapid currency movements when the won hit the 1,400 level against the US dollar for the first time in almost a year and a half.

Indonesia hikes rates

In Indonesia, the central bank unexpectedly raised its benchmark interest rate by 25 basis points to 6.25% last month in a bid to strengthen the currency.

Bank Indonesia Governor Perry Warjiyo told a press conference last week that data showed no further rate hikes were needed for now and pledged to work to strengthen the currency to below 16,000 per dollar.

The rupiah has strengthened to around 16,000 to the dollar from around 16,300 before the surprise rate hike, but has yet to recover after falling to a four-year low last month.

Indian rupee and Malaysian ringgit also fall

The Indian rupee, one of Asia’s most stable currencies, fell to an all-time low of 83.739 against the dollar last month.

The rupee has been “tightly managed” by the Reserve Bank of India almost since October and has traded in a narrow range around 83, said Rob Carnell, chief Asia-Pacific economist at ING in Singapore.

Carnell said all central and regional banks in Asia, except Malaysia, have foreign exchange reserves to cover more than six months of imports, the threshold for adequate reserves.

The Malaysian ringgit is trading at 4.737 to the dollar, having fallen to a 26-year low of 4.7965 in February.

The ringgit’s weakness is due to the strengthening dollar, a decline in Malaysia’s current account surplus and the currency’s strong correlation with the weakening Chinese yuan.

ASIA

A passenger plane travelling from Baku to Grozny crashes in Kazakhstan

Published

on

A passenger plane travelling from Baku to Grozny in Kazakhstan crashed near the city of Aktau. According to Tengrinews, the crew signaled an emergency before the crash occurred.

The Ministry of Transport of Kazakhstan confirmed that the Embraer E190 aircraft, operated by Azerbaijan Airlines (AZAL), was carrying 62 passengers and 5 crew members. Among the passengers were 37 citizens of Azerbaijan, 16 citizens of Russia, 6 citizens of Kazakhstan, and 3 citizens of Kyrgyzstan.

Rescue teams from the Kazakhstan Ministry of Emergency Situations, along with 14 ambulances, were dispatched to the crash site. Reports indicate that 28 people have been rescued, including one child. The injured passengers were transferred to Mangistau Regional Hospital in Aktau, where Kazakhstan Health Minister Akmaral Alnazarova stated that the condition of six individuals was critical.

Preliminary investigations suggest the crash may have been caused by a collision with a flock of birds. Azerbaijan Airlines reported that the aircraft crashed near Aktau Airport while attempting to land on a spare runway.

According to officials from Grozny Airport, the aircraft was initially diverted to Makhachkala due to dense fog in Grozny, the capital of Chechnya, and later rerouted to Aktau. The crew signaled an emergency at 08:35, citing a malfunction in the aircraft control system. Emergency landing permission was requested at 08:49, and the crew attempted a manual landing in direct mode. However, the aircraft struck the ground at 09:28.

Authorities, including Rosaviatsiya (Russian Civil Aviation Authority) and aviation officials from Azerbaijan and Kazakhstan, are investigating the incident. A government commission was established on the instructions of Kazakhstan President Kassym-Jomart Tokayev to determine the cause of the crash.

In response to the tragedy, Azerbaijani President Ilham Aliyev cancelled his participation in the informal CIS Summit in Russia and decided to return to Baku.

Continue Reading

ASIA

Trust issue: Pakistan and Afghanistan to boost up fraternal ties

Published

on

Pakistan’s Special Representative for Afghanistan, Ambassador Mohammad Sadiq, and his delegation, visited Kabul and held a series of talks with the top Taliban leadership, including interior and foreign ministries.

This is Sadiq’s first visit to Kabul after being assigned as Special Representative for Afghanistan and the reason for his visit was to enhance mutually beneficial cooperation in various fields and advance the fraternal ties between the two neighboring countries, Afghanistan and Pakistan.
Sadiq announced the trip on X, saying, “looking forward to meaningful discussions with Afghanistan’s interim ministers (Taliban officials) to strengthen mutually beneficial cooperation.”

During the trip, Sadiq first met with Sirajuddin Haqqani, the Taliban’s acting interior minister – who has lots of influence in Khost, Paktia and Paktika provinces. According to Pakistan, these provinces are the places of movement of Tehreek-e-Taliban Pakistan (TTP), and basically, Kabul and Islamabad relations deteriorated as Pakistan wants Afghanistan to smash on the movements of the TTP inside Afghan soil. However, the Taliban leadership says there are no TTP fighters in the country, and Taliban will not allow any group, including TTP to pose a threat to Afghanistan and to the regional countries.

During the meeting, Sadiq and Haqqani discussed a range of bilateral issues of common interest. Both sides agreed to strengthen bilateral cooperation in various fields to further enhance the fraternal relations between the two countries. The Afghan Ministry of Interior in a statement said that both sides discussed important topics for the improvement of relations between Afghanistan and Pakistan and the solution of existing problems. The Pakistani delegation also expressed their condolences on the assassination of Khalilur Rehman Haqqani, the uncle of Sirajuddin Haqqani and key member of the Haqqani network.

Sadiq first met with Interior Minister Sirajuddin Haqqain against diplomatic norms to first meet with Foreign Minister 

Khili Haqqani was the first Taliban official who entered Kabul when the Taliban overthrew the former Afghan government following withdrawal of US troops from Afghanistan after 20 years of presence. He has served as refugee minister since victory day on August 15 2021. He was killed by a Daesh suicide bomber inside his ministry compound.

Referring to the pessimism of the Taliban leader towards the Haqqani network, the former deputy of the European Union in Afghanistan, Michael Semple does not consider it unlikely that the members of the Taliban supreme leader were involved in the assassination of Khalil Haqqani. Michael Semple said that his assassination dealt a heavy blow to the Haqqani network and that the Taliban would likely pay a price for this.

The Haqqani family has denied the involvement of members of the Taliban supreme leader in the assassination of Khalil Haqqani. Haqqani family members insisted on the unity of the Taliban and the Haqqani family’s obedience to Hebatullah Akhundzadeh, the Taliban’s supreme leader. Their statements were made to deny rumors of differences or the involvement of people close to Hebatullah in Khalil Haqqanis assassination.

But Semple says that Hebatullah was particularly concerned about the Haqqani network’s contacts with Taliban opposition groups and foreign powers.

He added that Khalil Haqqani was more active in this field compared to other Taliban officials, because he had a political and social personality.

Semple said that Khalil Haqqani had connections with the Taliban opposition front and some foreign powers. According to him, although the Haqqani network, especially Sirajuddin Haqqani, have tried to convince the Taliban leader that they are aligned and united, Hebatullah has doubts about them.

He emphasized that Khalil Haqqani had contacts with Sirajuddin, which seemed “illegitimate” from Hebatullah’s point of view.” Sepmel reminded that Khalil Haqqani is not the first Taliban minister who was killed. During the first period of Taliban rule, Mullah Abdul Raqib was killed due to foreign contacts.

Former deputy of the European Union in Afghanistan underlined trust issue between Kandahar Taliban and the Haqqani’s 

The former diplomat. Sempel said that it is possible that the suicide bomber was a member of ISIS in the past, but he managed to assassinate Haqqani with the support of the Kandahar faction.

Sample clarified that the loss of Khalil Haqqani has put a serious blow to the Haqqani network, adding that Khalil Haqqani was one of the survivors of Jalaluddin Haqqani, the leader and founder of Haqqani network, who played a major role in the diplomacy of this network.

Pakistan Special Envoy Sadiq met with Foreign Minister Amir Khan Muttaqi, where they agreed to work together to further strengthen bilateral cooperation as well as for peace and progress in the region.

Meanwhile, Sadiq also met with Foreign Minister Amir Khan Muttaqi on Tuesday, where they held wide ranging discussions. “Agreed to work together to further strengthen bilateral cooperation as well as for peace and progress in the region,” Sadiq said.

The Afghan Foreign Ministry in a statement said both sides discussed bilateral relations between Afghanistan and Pakistan, enhancing diplomatic relations, trade, transit, and people-to-people relations.

Also, Sadiq met with Afghan traders and chamber representatives from across Afghanistan to discuss enhanced trade cooperation and economic ties, fostering a stronger bilateral relationship between Pakistan and Afghanistan.

The visit comes at a time where ties between Islamabad and Kabul have deteriorated in recent months, especially tensions have flared over the activities of the TTP, an armed group that has escalated attacks in Pakistan since the Taliban took control of Afghanistan in 2021.

Pakistani top officials, including Prime Minister and the country’s defense minister accused the Taliban of providing safe havens for TTP, an allegation the Taliban denied in strongest possible terms.

Pakistan says that Kabul allowed the TTP fighters to cross the border and carry attacks against the country’s security forces and border guards.

Continue Reading

ASIA

China plans $411bn private treasury bond issuance in 2025

Published

on

Chinese authorities have approved a record issuance of 3 trillion yuan ($411 billion) in private treasury bonds for 2025, according to two sources cited by Reuters. The move signals Beijing’s commitment to using fiscal stimulus to address economic stagnation.

This represents a significant increase from the 1 trillion yuan issued this year and coincides with preparations for potential tariff hikes on Chinese imports as Donald Trump is expected to reassume the U.S. presidency in January.

The proceeds will target initiatives such as consumer subsidies, business equipment upgrades, and investments in innovation-driven sectors. According to the sources, who spoke anonymously due to the sensitivity of the issue, the plan underscores China’s proactive approach to offsetting deflationary pressures.

Officials from the State Council Information Office, Ministry of Finance, and National Development and Reform Commission (NDRC) did not immediately comment on the development.

Following the announcement, yields on China’s 10-year and 30-year treasury bonds rose by 1 basis point and 2 basis points, respectively. The planned issuance, the largest on record, demonstrates Beijing’s willingness to expand borrowing to stabilize the world’s second-largest economy.

China generally reserves ultra-long-term corporate bonds for extraordinary circumstances, reflecting the significance of this initiative.

Approximately 1.3 trillion yuan from the new issuance will fund “two major” and “two new” programs: A consumer subsidy program to encourage trade-ins for new vehicles and appliances, subsidies for large-scale business equipment upgrades, and infrastructure projects in critical sectors, including railways, airports, and farmland.

The NDRC reported that 70% of the proceeds from this year’s bond issuance funded major projects, while the remainder supported new schemes.

Another significant portion, exceeding 1 trillion yuan, will drive investments in advanced manufacturing, including electric vehicles, robotics, semiconductors, and green energy. Additionally, funds will recapitalize state-owned banks struggling with shrinking margins, declining profits, and rising non-performing loans.

The issuance will account for 2.4% of China’s 2023 GDP. For comparison, Beijing’s 2007 issuance of 1.55 trillion yuan represented 5.7% of GDP at the time.

The announcement follows the annual Central Economic Work Conference, where President Xi Jinping and senior officials outlined economic plans for 2025. The state media summary emphasized “steady economic growth,” raising the fiscal deficit ratio, and increasing government debt issuance, without detailing figures.

Recent Reuters reports indicate China may raise its budget deficit to a record 4% of GDP and aim for an economic growth target of around 5% next year.

China’s economy faces multiple headwinds, including a protracted property crisis, rising local government debt, and weak consumer demand. Exports, traditionally a growth driver, risk new U.S. tariffs of over 60%, threatening another economic lifeline.

Domestic consumption remains subdued, with households grappling with falling property values and minimal social safety nets. To counter weak demand, Beijing plans to expand its consumer and industrial equipment swap programs to more products and sectors.

Continue Reading

MOST READ

Turkey