Yen upbeat as BOJ turns less gloomy, dollar set for monthly gain
TOKYO : The yen edged marginally higher today following the Bank of Japan's (BOJ) upward revision to its inflation forecasts and cautiously optimistic view on the economic outlook, even as it chose to stand pat on rates.
At the conclusion of its two-day policy meeting, the BOJ kept short-term interest rates steady at 0.5% in a unanimous vote, although upgrading its inflation forecasts for all three years through fiscal 2027 and saying risks to the price outlook were 'roughly balanced'.
The yen gained slightly after the decision as the central bank's latest assessment of the economy kept alive the possibility of a resumption in interest rate hikes this year.
It was last about 0.5% higher at ¥148.78 per US dollar.
'There is definitely a clear justification for them to hike rates,' said Khoon Goh, head of Asia research at ANZ.
'Now, the fact that Japan has finally reached a deal with the US does remove some element of that uncertainty for themselves.
'So I think the question is whether the BOJ is now prepared to hike in October,' Goh said.
Focus now turns to governor Kazuo Ueda's press conference later in the day for further clues on the timing of the BOJ's next rate hike.
In the broader market, the dollar flirted with a two-month peak after Federal Reserve (Fed) chair Jerome Powell stuck to his patient approach on rates in a closely watched policy decision and offered little insight on when they could be lowered.
The greenback was also on track for its first monthly gain for the year, bolstered by a hawkish Fed and US economic resilience, with uncertainty over tariffs beginning to ease given recent trade deals struck by Washington.
Against a basket of currencies, the dollar dipped slightly to 99.67, but was not far from a two-month peak hit in the previous session.
The dollar index was set for a monthly gain of about 3%.
US President Donald Trump's chaotic tariffs and fears of the dollar's demise earlier this year had undermined the currency and given it the worst start to the year since the floating exchange rate period.
Those worries have since abated, easing pressure on the dollar.
'We've seen the classic correlation still holding, in the sense that we've seen a hawkish Fed push up front-end yields and the US dollar, equities have struggled, and the credibility of the Fed has also been probably reinforced by the view that the Fed chair is still in command,' said Rodrigo Catril, senior currency strategist at National Australia Bank.
'The dollar is not just consolidating, but it's actually getting a little bit of upward momentum … The broader picture as well is that all these tariffs, there's at least an initial impression that the US is the one that's got the upper hand,' Catril said.
The euro was last 0.3% higher at US$1.1441, nursing some losses after sliding to a seven-week low in the previous session.
Still, it remained on track to lose nearly 3% for the month.
Sterling languished near a 2-1/2-month low and last bought US$1.3272. It was similarly headed for a nearly 3.3% monthly decline.
Traders have scaled back expectations for Fed cuts this year following Powell's comments, now pricing in about 36 basis points worth of easing by December.
Markets have also been faced with a blitz of tariff announcements ahead of an Aug 1 deadline for countries to secure trade deals or face steep levies.
South Korea became one of the latest nations to reach an agreement with the US, after Trump said yesterday that Washington will charge a 15% tariff on imports from the key Asian ally.
The South Korean won strengthened on the news and last stood at 1,389.60 per dollar.
Yesterday, Trump also slapped a 50% tariff on most Brazilian goods and said the US is still negotiating with India on trade.
In other currencies, the Australian and New Zealand dollars recouped some of their losses after sliding more than 1% each in the previous session.
The Aussie was up 0.5% to US$0.6468, while the kiwi advanced 0.54% to US$0.5926.
Still, both currencies were headed for monthly losses of 1.7% and 2.8%, respectively.
The onshore yuan struggled near an almost two-month low and last stood at 7.1918 per dollar.
Data today showed China's manufacturing activity shrank for a fourth straight month in July, suggesting a surge in exports ahead of higher US tariffs has started to fade while domestic demand remained sluggish.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
27 minutes ago
- The Star
Asia's factory activity worsens as US trade uncertainty bites
Workers assemble garments at a factory on the outskirts of the Laotian capital, Vientiane. - Reuters TOKYO: Asia's factory activity deteriorated in July as soft global demand and lingering uncertainty over U.S. tariffs weighed on business morale, private sector surveys showed on Friday, clouding the outlook for the region's fragile recovery. The surveys were taken before Japan and South Korea clinched trade deals with Washington, offering some hope that receding uncertainty could prop up manufacturing activity in coming months, some analysts say. Factory activity shrank in export power-houses Japan and South Korea, surveys for July showed, underscoring the challenge Asia faces as President Donald Trump's policies threaten the global free trade system the region relied upon for growth. China's factory activity also deteriorated in July as softening business growth led manufacturers to scale back production, boding ill for the region's economy. The S&P Global China General Manufacturing PMI fell to 49.5 in July from 50.4 in June, undershooting analysts' expectations of 50.4 in a Reuters poll and dropping below the 50 threshold that separates growth from contraction. The reading comes a day after an official survey showed China's manufacturing activity shrank for a fourth straight month in July, suggesting a surge in exports ahead of higher U.S. tariffs has started to fade while domestic demand remained sluggish. The survey "provides further evidence that China's economy lost some momentum last month, largely due to domestic weakness," said Zichun Huang, an economist at Capital Economics. The S&P Global Japan manufacturing purchasing managers' index (PMI) also fell to 48.9 in July from 50.1 in June, a sign U.S. tariffs were hurting the world's fourth-largest economy. Most of the survey data was collected before the announcement of a Japan-U.S. trade agreement last month, which lowers tariffs imposed on Japan to 15% from a previously threatened 25%. As the trade deal with Washington kicks in, "it will be important to see if this will translate into greater client confidence and improved sales in the months ahead," said Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiles the survey. South Korea also saw factory activity contract in July for the sixth straight month with the S&P Global PMI falling to 48.0 in July, from 48.7 in June. "Both production volumes and new orders fell at a steeper rate than that in June, with anecdotal evidence indicating that weakness in the domestic economy was compounded by the impacts of U.S. tariff policy," said Usamah Bhatti, economist at S&P Global Market Intelligence. The survey was conducted from July 10 to July 23, before South Korea reached on Wednesday a trade deal with the U.S. lowering tariffs to 15% from a threatened 25%. Factory activity in July expanded in the Philippines and Vietnam, but shrank in Taiwan, Indonesia and Malaysia, PMIs showed. - Reuters
Malay Mail
27 minutes ago
- Malay Mail
Federal Court validates share issuance in family company dispute: What it means for Malaysians and their rights — Justin Wee Kim Fang
AUGUST 1 — In a significant recent decision, the Federal Court of Malaysia resolved a complex legal battle involving a prominent Sarawak-based family business over the validity of shares issued in several private companies. The outcome affirms the principle that Malaysia courts can, in certain circumstances, validate share issuances even if proper approval procedures were not followed so long as it is fair and just to do so. The case, WTK Realty & Ors v Kathryn Ma Wai Fong & Ors, sheds light on the rights of shareholders, the responsibilities of directors, and how Malaysian courts balance formal legal requirements with real-world family and business dynamics. In a significant recent decision, the Federal Court of Malaysia resolved a complex legal battle involving a prominent Sarawak-based family business over the validity of shares issued in several private companies. — istock pic The dispute: A family affair turns contentious The late Wong Tuong Kwong built a successful group of companies, including WTK Realty Sdn Bhd, Southwind Plantation Sdn Bhd, and Ocarina Development Sdn Bhd. When he passed away, control of the group fell to his three sons — Wong Kie Nai ('WKN'), Wong Kie Yik ('WKY'), and Wong Kie Chie ('WKC'). In the mid-2000s, WKN was allotted and issued millions of new shares in the 3 companies. His two brothers, WKY and WKC, did not object at the time. However, after WKN passed away in 2013, his widow and estate executor, Kathryn Ma, tried to have those shares officially registered under his estate. That's when the dispute began. WKY and WKC filed suits in the High Court to nullify the shares issued to WKN, claiming they were issued without the approval of shareholders, as required under section 132D (1) of the Companies Act 1965 ('CA 1965'). They claim the issuance of the shares breached company law and internal company rules being the Articles of Association ('Articles'). Kathryn, in response, opposed the nullification suits and reciprocated by filing her own suits asking the court to validate the shares under section 63 and/or 355 of the CA 1965 despite any procedural issues. High Court — Strict compliance of the law required The High Court sided with WKY and WKC, ruling that because proper shareholder approval had not been obtained in advance, the shares were invalid. The High Court found that meetings approving the share issuance had either not happened or lacked proper documentation. Kathryn's argument — that the family had known about and accepted the shares over many years — was rejected. Her applications to validate the shares were also dismissed. The High Court reasoned that allowing the shares to stand would unfairly dilute the ownership of the other siblings and went against the legal requirement for prior approval under the CA 1965. Court of Appeal — Informal agreements may count Kathryn appealed. The Court of Appeal reversed the decision of the High Court. It found that even though the proper procedures weren't followed, the family had known about the issued shares for years and signed documents that referred to the new shareholdings. According to the Court of Appeal, this amounted to 'informal assent' — in other words, the brothers had accepted the share issuance through their conduct, even if there was no formal meeting or written approval. The delay by WKC and WKY in seeking reliefs through the nullification suits, which were commenced almost six to seven years after the shares were issued to WKN connotes knowledge and acquiescence on their part. The court relied on the Duomatic principle, a concept from English law, which says that if all shareholders agree — even informally — their decision can be as good as a formal resolution. This is particularly applicable to family run companies as it is a distinctive hallmark of family-run companies where the affairs are frequently conducted informally and often without adhering to the formal requirements of statutes or the company's Articles. Federal Court — Formal rules matter, but so does fairness The dispute didn't end there. WKY and WKC took the matter to the Federal Court, the apex court in Malaysia. The primary question was: Can informal agreement by the shareholders override legal requirements under the CA 1965? Or must the courts follow the law strictly? In its judgment, the Federal Court took a middle path. While agreeing that the shares were not validly issued under the law, the Federal Court took a different view. It held that the Duomatic principle cannot override clear statutory requirements under the CA 1965, but the CA 1965 itself allows the court to cure procedural errors, if it is fair to do so. Importantly, the Federal Court held that this validation should be done under sections 63 and 355 of the CA 1965, which give judges the power to cure certain legal mistakes as long as it won't cause serious injustice. In this case, the Federal Court amongst others found that: WKN had paid for the shares and the companies kept the money. His brothers knew about the shares for years, signed off on company accounts, and used the shares to get bank loans. The delay in objecting (6-7 years) showed they had accepted the situation. No one offered to return the money paid by WKN to his estate. Based on these factors, the court ruled that it would be unfair to nullify the shares. The share issuances were therefore validated. What does this mean for you? This case has broad lessons for Malaysian shareholders, business owners, and families who run companies together: 1. Follow statutory requirements — Share issuances and key decisions should always be properly approved in writing. Informality can lead to legal disputes later on. 2. Your conduct matters — If you know about something and benefit from it for years without objection, the court may treat that as acceptance. 3. The Courts can intervene — Even when procedures aren't followed strictly, the courts have the power to cure the problem, if it's fair and no one is unfairly prejudiced. 4. Time is of the essence — Delaying your objections can weaken your case. Courts may view long silence as acceptance. Final thoughts This decision reflects the maturity and flexibility of Malaysian company law, which tries to balance formal legal requirements with commercial reality and fairness. For family-run businesses, it's a timely reminder that mixing business and personal relationships without clear documentary records can lead to bitter legal fights. If you're a shareholder, director, or company owner, this case is a lesson: Document your decisions, know your rights, and act early when something seems wrong. P/S: Sections 63 and 355 of the CA 1965 have been repealed. Similar provisions are now found in sections 108 and 582 of the Companies Act 2016 respectively. * Justin Wee Kim Fang (Advocate & Solicitor), Partner of Messrs Justin Wee ** This article is for informational purposes only and does not constitute legal advice. If you're facing a similar situation, consult a qualified lawyer. *** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Free Malaysia Today
an hour ago
- Free Malaysia Today
Hong Kong sees 3.1% growth in second quarter
Hong Kong is a special administrative region in China with its own trade policies but is still vulnerable to tariff threats. (EPA Images pic) HONG KONG : Hong Kong's economy grew by 3.1% in the second quarter, according to government estimates released today, beating expectations, with strong exports buoyed by businesses racing to take advantage of US tariff easing. Hong Kong is a special administrative region in China with its own trade policies, but is still vulnerable to tariff threats from US President Donald Trump, thanks to its significant re-exporting of Chinese goods. Improved domestic demand coupled with an increase of 11.5% in exports saw the economy 'expand solidly', a Hong Kong government spokesman said. The 'temporary easing of US tariff measures led to some 'rush shipments'' which also helped growth, they added. Earlier in the year tariffs between China and the US reached triple digits before a truce slashed them to more manageable levels. A 90-day grace period is meant to end on Aug 12, but the latest round of trade talks ended Tuesday without a deal. The US president yesterday announced tariffs on major trading partners South Korea, Brazil and India – a pattern Hong Kong's government said would also affect its economy in the second half of the year. 'The US' renewed tariff hikes of late will exert pressure on global trade flows as well as its domestic economic activity and inflation. The uncertain pace of US interest rate cuts will also affect investment sentiment,' the government spokesman said. Trouble ahead? Today's estimates showed private consumption, which had declined for four consecutive quarters, increased 1.9%, while exports of services saw 7.5% growth. Hong Kong's capital market has rebounded strongly this year, with dozens of companies from China piling into the city to raise overseas capital due to policy support from the Chinese government and optimised listing rules by Hong Kong regulators. But China's regulator this month approved the fewest number of listing applications in eight months, Bloomberg reported, raising concerns that the IPO boom in the first half of this year may be slowing. Hong Kong's government warned that the second half of the year could be harder. 'Given the geopolitical landscape, there is enormous uncertainty and volatility (for Hong Kong),' financial secretary Paul Chan told a press conference yesterday. Growth in the first quarter was 3%, but nevertheless authorities have set a goal of 2% to 3% for the whole year – which would be 'prudent to keep', Chan said. 'The seemingly modest growth has not been fully reflected in the labour market,' Gary Ng, senior economist at Natixis Corporate and Investment Banking, told AFP. 'It is hard to say the recovery is solid and shielded from geopolitical and trade tensions.'
