27 June 2022 Currency Chaos won't Push EM Asia to Faster or Bigger Rate Hikes

Currencies in EM Asia are tanking, with interest rate differentials moving hugely in favour of the dollar...

...But we doubt that central banks in the region will be forced to match Fed rate action like-for-like.

Reserves remain ample, and are likely to continue to be used to lean against excessive currency volatility.

Miguel Chanco (Chief EM Asia Economist)Emerging Asia

14 Feb 2022 BI Shouldn't Lose Much Sleep Over the Size of the Fed Hike in March

• BI is becoming more worried about imminent Fed hikes, but currency stability looks secure...
• ...The IDR is close to fair value, foreigners hold only a small share of bonds, and FX reserves are ample.
• We'll be upgrading our Q4 growth forecast for India, but the IP data broadly show an end-year stall.

Miguel Chanco (Chief EM Asia Economist)Emerging Asia

21 Jan 2022 Omicron Poses Short-Term Worries, but BI Normalisation is Coming

• Bank Indonesia is more than ready to unwind Covid support, looking at the full reversal of RRR cuts...
• ...But rate hikes are unlikely until mid-year, in spite of BI's hawkish view on the Fed; thank Omicron.
• Loan growth will surpass BI's 2022 forecast soon, and inflation is unlikely to stay a non-issue for long.

Miguel Chanco (Chief EM Asia Economist)Emerging Asia

20 Dec 2021 Bank Indonesia's "Pro-Stability" Stance for 2022 Means Rate Hikes

• BI's "pro-stability" mantra for 2022 implies that it'll also act if things get too hot; watch credit growth.
• A prolonged pause would be pro-cyclical and risk IDR stability; we still see two 25bp rate hikes in H2.
• Retail sales growth is back in the black, and the surge in confidence implies this is no one-off.

Miguel Chanco (Chief EM Asia Economist)Emerging Asia