- BOJ Keeps Policy Unchanged, Up Economic Outlook
The Bank of Japan (BOJ) on Tuesday upgraded its economic assessment, citing improvement in exports and better business sentiment than previously envisaged. Both the yield-curve and asset-purchase programs were left unchanged.
However, inflation expectations remain weak and risks to the outlook abound, ranging from developments in the Chinese and U.S. economies to Brexit and geopolitical uncertainties.
Most analysts had already adopted the view that the BOJ would stand pat in coming months with its targets for short- and long-term interest rates, even before Trump’s election victory sent the yen tumbling, easing any pressure for additional action to stoke inflation. After the shock of negative rates in January, a comprehensive policy review midyear and new direction since September, a majority of economists surveyed by Bloomberg don’t expect any additional easing before Governor Haruhiko Kuroda steps down in 2018.
“In the spirit of the holiday season Kuroda delivered on cue with no surprises,” said Stephen Innes, a Singapore-based senior trader at foreign exchange firm Oanda Corp. While the upgrade of the economic assessment may further damp domestic easing expectations, “Trumpflation” is likely to see the dollar strengthen further against the yen, said Innes.
The focus for investors now moves to the BOJ’s efforts to contain a surge in yields amid a global bond sell-off. The central bank’s shift in policy framework in September to yield-curve control was meant to make its stimulus program more sustainable as it neared the practical limits of asset purchases.
Speaking in a news conference later Tuesday, Kuroda said it was too soon to discuss raising the long-term yield target or even the specifics of raising rates. He said the BOJ won’t raise the target in response to hikes abroad.
Kuroda said an appropriate yield curve had been achieved and current policy should be continued.
“Differences in monetary policies can have some impact on currencies, but at this moment I don’t see the prospect of the yen becoming a problem by weakening excessively,” Kuroda said. “The currency is at a level similar to around February, so it’s not at a surprising level.”
The yen weakened as Kuroda spoke, trading at an intraday low of 117.96 per dollar around 3:50 p.m. in Tokyo. It hit a 10-month low last week. A weak yen generates inflationary pressures through higher import costs, while boosting corporate profits that could filter through to wage growth.
The yen had gained about 13 percent this year before the U.S. election, and has since tumbled about 10 percent. Credit Suisse Group AG last week revised down its three-month prediction for the dollar-yen rate to 122 from 111.
Separately to the BOJ, which won’t provide numerical forecasts until its next meeting, the Cabinet Office released upgrades for its estimates for the economy, and Finance Minister Taro Aso confirmed fiscal spending plans:
- Real gross domestic product will rise 1.5 percent in the next fiscal year starting April 1, versus a previous estimate of 1.2 percent.
- Nominal growth will increase to 2.5 percent, from previous estimate of 2.2 percent.
- Overall consumer prices will advance 1.1 percent, from previous estimate of 1.4 percent.
- Government’s initial budget for next year will be 97.5 trillion yen ($830 billion), an increase of 0.8 percent on the same figure this year.
- Like in 2016, the government is expected to follow up with supplementary budgets in 2017.
The BOJ kept its rate on some bank reserves at -0.1 percent and reiterated its pledge to keep the yield on the 10-year Japanese government bond at around 0 percent. Both rates are core elements of the new framework it announced in September.
Surging global yields are posing a challenge to the central bank. It conducted its first fixed-rate operation to contain rising yields last month, and it increased purchases during a bond-buying operation last week.
Market participants are speculating that the BOJ will need to do more after the 10-year JGB yield hit 0.1 percent last week, a level seen by some as the upper limit of the central bank’s tolerance.
“No need for more easing doesn’t mean the BOJ is free from problems,” said Naomi Muguruma, a senior market economist at Mitsubishi UFJ Morgan Stanley Securities Co. “They said they can control a bond market and the market is already giving them a challenge.”
Coronavirus – Africa: IMF Staff Completes Staff Visit to Senegal
IMF Visits Senegal to Assess COVID-19 Impacts
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
The Senegalese economy is expected to contract this year as a result of disruptions in economic activity due to the COVID-19 pandemic. A recovery is underway, but uncertainty regarding its speed and extent remains significant; execution of the revised 2020 budget is proceeding largely in line with expectations, with a robust implementation of the Economic and Social Resilience Program (PRES) to address the COVID-19 pandemic; the authorities and the IMF team made considerable progress on key parameters for the draft 2021 budget, ahead of the second PCI review mission planned for late October 2020.
A staff team from the International Monetary Fund (IMF), led by Ms. Corinne Deléchat, conducted a virtual mission from September 9-18, 2020, to update macroeconomic projections, discuss 2020 budget execution and plans for the 2021 budget. At the conclusion of this mission, Ms. Deléchat issued the following statement:
“The Senegalese economy has been severely hit by the COVID-19 pandemic, with real GDP growth now expected to contract by 0.7 percent this year, reflecting the larger-than-anticipated disruptions in economic activity stemming from the pandemic and strict containment measures. A gradual recovery started in May with the lifting of most COVID-19-related restrictions, followed by the reopening of borders in July. Senegal’s strong health response is showing encouraging signs with a steady decline in new COVID-19 cases and hospitalizations over the past four weeks. In 2021, output is projected to rebound back to above 5 percent, boosted in part by favorable prospects for agriculture. This projection is however subject to significant downside risks, reflecting uncertainties around the speed of the global recovery and the evolution of the pandemic, which could continue to affect important sectors of the economy such as tourism, transport and hospitality.
“Budget execution through end-August 2020 was broadly satisfactory, and the objectives for the remainder of the year set in the revised 2020 budget remain within reach. Uncertainties related to the mobilization of programmed resources however remain. Therefore, the mission encourages the authorities to continue with their prudent approach in order to maintain the deficit at around 6 percent of GDP as envisaged in the 2020 revised budget. The mission commends the authorities for the strong and transparent implementation of their Economic and Social Resilience Program (PRES). Most of the planned COVID-19 measures have already been executed, as detailed in the June 2020 quarterly budget implementation report. The mission welcomes the recent repeal of the decree on derogatory procurement procedures for COVID-19 related spending, which will from now on follow the normal procurement procedure. The authorities have also finalized a new recovery plan which aims to support a return to strong and inclusive private sector-led growth, focusing on accelerating the structural transformation process and enhancing the economy’s resilience through diversification of the productive base.
“The mission and the authorities made significant inroads in discussing the contours of the draft 2021 budget. Given high uncertainty and lingering effects of the pandemic on some sectors of the economy, the draft 2021 budget should aim to strike a balance between supporting the recovery, including through a robust investment plan on the one hand, and fiscal and debt sustainability also consistent with the WAEMU’s external stability on the other. To that effect, the 2021 fiscal stance should continue to signal a strong commitment to return gradually to a budget deficit of 3 percent of GDP by 2022, in line with the WAEMU convergence criterion, as the situation normalizes. Discussion on the draft budget will continue in the coming weeks.
“The second PCI review mission will take place in late October 2020, with a Board meeting tentatively planned for December 2020.
“The mission wishes to thank the authorities for the frank, open and constructive dialogue.”
Over 60% of The global Gold Demand is for Jewelry and Investment
More Than 60% of Global Gold Demand is for Jewelry, Investment
Data presented by Buy Shares indicates that jewelry and investment account for 37.29% and 26% respectively of the total global gold demand. As of September 2020, the total global demand for gold stood at 5.29 million kilograms or 186.8 million ounces.
Gold’s role as a safe haven for investment
Central bank’s demand for gold accounts for 12.14%. Other notable sectors in gold demand include bar demand (7.45%), industry (6.07%), electronics (4.86%), coin (3.85%), medals (1.13%), other (0.92%). Dentistry recorded the least demand at 12,587 kilograms or 0.23%.
The research highlighted the growth of gold as an investment avenue. According to the research report:
“Gold as an investment is subject to cyclical volatility since many investors speculate on its value. The high demand for gold for investment can be linked to the fact that the precious metal is considered a safe haven in the event of market volatility. This year, the market experienced the highest volatility rate due to the economic impact of the coronavirus pandemic. In general, gold can be used in portfolios to protect the purchasing power, reduce volatility, and minimize losses during moments of market shock.”
The Buy Shares research also overviewed countries with the highest demand for gold. The research reviewed 15 top countries with the demand totaling to 2,042,725 kilograms as of September 2020.
China has the largest share at 700,442 kilograms, while India is second at 625,561 kilograms. The United States is a distant third with its goal demand almost five times less than China at 148,316 kilograms. Turkey and Germany emerged fourth and fifth at 100,380 kilograms and 90,472 kilograms.
US 2020 Election: Leading Organisations Donate Over $255m for Campaigns
Top 1o Leading Organisations Donate Over $255m Towards US Election campaigns
Ten leading global business organisations have donated over $255 million towards the US 2020 election campaigns, according to recent data compiled by Buy Shares.
The data indicates that the top ten organisations contributed a combined $255.20 million towards the U.S elections campaign as of September 8, 2020.
The report also noted that the Democratic Party receives the largest donations at $135.59 million while the Republican Party followed with $119.61 million.
Across both parties, Uline Inc led with $40.09 million contributions towards the Republican Party campaign.
Other top donors towards the Republican Party include Blackstone Group ($31.97 million), American Action Network ($19.88 million), Las Vegas Sands ($14.06 million), and Adelson Clinic for Drug AbuseTreatment & Research ($13.59 million).
On the other hand, Fahr LLC is the largest contributor towards Democratic Party campaigns at $39.65 million. Other leading donors include Sixteen Thirty Fund ($34.33 million), Paloma Partners ($21.76 million), Senate Majority PAC ($21.41 million), and Carpenters & Joiners Union ($18.42 million).
According to the research report: “There is still debate if the organization’s donations influence politics. According to experts, successful companies usually bet their contributions towards the winning candidates. On the other hand, small firms are likely to back candidates who will lose. Political pundits argue that big companies are in a better position at foreseeing future events. To a large extent, the company’s usually support candidates or political parties that are likely to support their priorities. Additionally, in some incidents, stocks of companies that backed the winning candidate might rise after the election. The boost in stock prices tends to attract investors.”
Campaign contributions are used to cover the cost of travel, political consulting, and other the direct costs of communicating the party’s agenda.
Business2 months ago
Nneka Ede Purchases Portuguese Football Club, Lusitano Ginasio Clube
News2 months ago
British High Commission to Start Accepting Visa Applications From Nigerians Soon
Business2 months ago
Seplat Appoints Emeka Onwuka as CFO, Executive Director
Forex3 months ago
Naira-USD Exchange Rate to Hit N430 – Report
Finance3 months ago
DSS Arrests EFCC, Acting Chairman, Magu
Government2 months ago
FG Puts School Resumption Plan on Hold as COVID-19 Cases Hit 30,000
Forex2 months ago
Naira Declines Against Pound, Euro After Devaluation
Business2 months ago
TAJBank Joins e-Commerce Giants- Launches Nigeria’s 1st Ethical Online Mall