Latest news with #AsiaDecoded
Nikkei Asia
29-05-2025
- Business
- Nikkei Asia
Decoupling from the US will not solve ASEAN's problems
Priyanka Kishore is the founder and principal economist at research company Asia Decoded in Singapore. "These are not actions one does to a friend," Singaporean Prime Minister Lawrence Wong pointedly remarked after the city-state was hit by a blanket 10% U.S. tariff on April 2. He mirrored the mood across Southeast Asia.
Yahoo
10-05-2025
- Business
- Yahoo
U.S. dollar's slide is the ‘bane' of Asia's central bankers
The New Taiwan Dollar made headlines this week after it gained over 5% against the U.S. dollar before the island's central bank stepped in to curb what it deemed 'excessive' inflows. The NTD's shift may have been the most dramatic move this week, but the U.S. dollar strengthened against several currencies this week, including the Malaysian ringgit, the Singapore dollar, and the Indonesian rupiah. Even the Hong Kong Monetary Authority, the city's de facto central bank, had to recently sell Hong Kong dollars to maintain the city's peg against the U.S. dollar. For years, some Asian countries griped about a too-strong U.S. dollar, complaining that it contributed to inflation by making needed imports like food and fuel more expensive. Now, countries are getting what they wished for—a weakening dollar—but the results appear to be decidedly negative for one set of officials: Central bankers. On Monday, Yang Chin-long, governor of Taiwan's central bank, said that officials had intervened in the market to curb 'excessive' inflows, without giving details. Yang made the comments after a sudden 9% two-day rise in the NTD's value versus the dollar. The central bank leader also denied that the currency exchange rates were part of trade negotiations with the U.S. 'Foreign exchange volatility is the bane of central bankers,' noted Priyanka Kishore, director and principal economist at the consultancy Asia Decoded. Central bankers may not care about the direction of a currency's move, but they still want shifts to be orderly. 'Heightened volatility, if sustained over a period of time, fuels uncertainty and has financial and real economic consequences,' Kishore said. For example, a quickly strengthening currency will hurt exporters, already under strain from tariffs. 'Sharp appreciation impacts their outlook and planning, and also erodes competitiveness,' Kishore added. Taiwan's insurance firms have also invested heavily in the U.S., particularly in bonds. Insurers may have been 'somewhat under-hedged' against the dollar, suggested Danny Khoo, country head of sales trading for Saxo Bank in Singapore. 'When all of them try to do that at the same time, that could be why the New Taiwan dollar got hit slightly harder compared to other Asian currencies,' he added. Still, a weakening U.S. dollar is still good news for some Asian economies, particularly those that hold U.S. dollar-denominated debt. A weaker U.S. dollar reduces the debt burden for these countries. Some emerging Asian economies prefer to take advantage of relatively lower interest rates by borrowing in U.S. dollars instead of in their local currencies. A weaker dollar may also be good for Asian consumers, as it makes imports less expensive. The U.S. dollar has sunk this year in the wake of U.S. President Donald Trump's changes to trade policy. 'Trump's very harsh tariff policies don't give a lot of confidence in the U.S.,' Khoo said. 'People are not as confident in the U.S. economy and the political landscape.' The dollar index trended upward in the latter part of this week, after the U.S. announced a trade deal with the U.K. Asian countries currently in negotiations with the Trump administration might see a stronger currency as an asset. The U.S. president has complained that a strong dollar makes U.S. exports less competitive, and has accused countries like Japan and China of manipulating their currencies. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-04-2025
- Business
- Yahoo
How will India navigate a world on the brink of a trade war?
Donald Trump's blanket tariffs have put the world on the brink of a possible global trade war. The European Union has vowed a united response, and China has threatened countermeasures. Ratings agencies like Fitch have warned that the mass tariff hikes could result in lower growth, higher inflation and potentially a recession in some parts of the world. How will India - Asia's third largest economy - navigate these global tremors? Trump has dealt the most brutal blow to Asian countries, slapping 34% tariffs on China in addition to the 20% previously levied. Vietnam and Cambodia will have to pay 46% and 49% respectively. In relative terms, at 27% India has fared better. But the rate is still steep and will severely affect major "labour intensive exports", says Priyanka Kishore of the consultancy Asia Decoded. "That will likely have a knock-on impact on domestic demand and headline gross domestic product at a time when growth is already stuttering," said Ms Kishore. But the new trade realities also throw up opportunities for India. Its new tariff differential with Asian peers may potentially lead to some export re-routing. "We can bring the footwear and garments business from Asian peers if we get our act together," says Nilesh Shah, a veteran fund manager. This will take time though. Prime Minister Narendra Modi's government will thus have to be strategic in how it navigates the situation. Foremost, the announcement should "give the government a greater sense of urgency in wrapping up a trade deal with the US", says Rahul Ahluwalia, a public policy expert who previously worked for a government department. "The US is our largest export market, so this is serious stuff." India exports some $91bn (£69bn) in goods to the US, which account for 18% of its overall exports. Hectic trade negotiations have been under way with a fall deadline for conclusion. Ahluwalia says that deadline could now be compressed and brought forward. While doing that, India must also expand export markets beyond the US and focus on regions where tariffs remain low, such as Europe, Southeast Asia, and Africa, recommends Indian trade research agency GTRI. In the last couple of years, India has shown a renewed appetite for trade deals, launching free trade agreement (FTA) talks with a range of countries and blocs, including the European Union and the United Kingdom. Last year, Delhi signed a $100bn free trade agreement with the European Free Trade Association (EFTA) - a group of four European countries that are not members of the European Union. Experts say talks with other partners could now be expedited as cracks deepen between the US and many other global economies over Trump's actions. But even as trade negotiations carry on with global partners, the government will need a plan on how it deals with the domestic fallout of Trump's decision. Impact on sectors that employ millions of people - like gems and jewellery and textiles - is likely to be significant. The government will need to extend support through means like expanding production-linked subsidies to ensure that India's domestic industry stays globally competitive and can leverage the new opportunities this has thrown up, according to the consultancy, Ernst & Young The tariffs are "fundamentally reshaping the global trading system", says Agneshwar Sen, a trade policy expert at Ernst & Young India. This will require a "fundamental revaluation of trading strategies" as new supply chains emerge, he adds. India will also have to be mindful of other risk factors that emerge from this - such as "Chinese dumping", says Mr Shah. As it becomes more difficult for Chinese goods to enter the US, these will have to find other markets. And there are few others that are as large as India. "The global South accounts for more than 20% of global consumption and is where the new middle class is being created. This is where China will attempt to sell," according to Akash Prakash of Amansa Capital, an investment management company in Singapore. For the moment there's little clarity and no official word from the government on what its plans are. India has already reduced tariffs on some goods including high-end motorbikes and bourbon whiskey. Unlike Canada, Mexico or the European Union, Modi's government has adopted a conciliatory approach to Trump and these announcements are unlikely to trigger a retaliation, say experts. Indian businesses will now most likely face a period of uncertainty which is unlikely to go away anytime soon. "Clearly, the (Trump) administration wants even broader and deeper tariff cuts. The question is what, if anything, will satisfy the Trump administration?", Milan Vaishnav, a senior fellow at Carnegie Endowment told the BBC. It is a million dollar question, for which there are no immediate answers. Follow BBC News India on Instagram, YouTube, X and Facebook.
BBC News
03-04-2025
- Business
- BBC News
Trump tariffs: How will India navigate a world on the brink of a trade war?
Donald Trump's blanket tariffs have put the world on the brink of a possible global trade war. The European Union has vowed a united response, and China has threatened agencies like Fitch have warned that the mass tariff hikes could result in lower growth, higher inflation and potentially a recession in some parts of the will India - Asia's third largest economy - navigate these global tremors?Trump has dealt the most brutal blow to Asian countries, slapping 34% tariffs on China in addition to the 20% previously levied. Vietnam and Cambodia will have to pay 46% and 49% relative terms, at 27% India has fared the rate is still steep and will severely affect major "labour intensive exports", says Priyanka Kishore of the consultancy Asia Decoded. "That will likely have a knock-on impact on domestic demand and headline gross domestic product at a time when growth is already stuttering," said Ms the new trade realities also throw up opportunities for new tariff differential with Asian peers may potentially lead to some export re-routing. "We can bring the footwear and garments business from Asian peers if we get our act together," says Nilesh Shah, a veteran fund will take time Minister Narendra Modi's government will thus have to be strategic in how it navigates the the announcement should "give the government a greater sense of urgency in wrapping up a trade deal with the US", says Rahul Ahluwalia, a public policy expert who previously worked for a government department. "The US is our largest export market, so this is serious stuff." India exports some $91bn (£69bn) in goods to the US, which account for 18% of its overall exports. Hectic trade negotiations have been under way with a fall deadline for conclusion. Ahluwalia says that deadline could now be compressed and brought doing that, India must also expand export markets beyond the US and focus on regions where tariffs remain low, such as Europe, Southeast Asia, and Africa, recommends Indian trade research agency the last couple of years, India has shown a renewed appetite for trade deals, launching free trade agreement (FTA) talks with a range of countries and blocs, including the European Union and the United year, Delhi signed a $100bn free trade agreement with the European Free Trade Association (EFTA) - a group of four European countries that are not members of the European say talks with other partners could now be expedited as cracks deepen between the US and many other global economies over Trump's actions. But even as trade negotiations carry on with global partners, the government will need a plan on how it deals with the domestic fallout of Trump's on sectors that employ millions of people - like gems and jewellery and textiles - is likely to be significant. The government will need to extend support through means like expanding production-linked subsidies to ensure that India's domestic industry stays globally competitive and can leverage the new opportunities this has thrown up, according to the consultancy, Ernst & YoungThe tariffs are "fundamentally reshaping the global trading system", says Agneshwar Sen, a trade policy expert at Ernst & Young India. This will require a "fundamental revaluation of trading strategies" as new supply chains emerge, he will also have to be mindful of other risk factors that emerge from this - such as "Chinese dumping", says Mr it becomes more difficult for Chinese goods to enter the US, these will have to find other markets. And there are few others that are as large as India."The global South accounts for more than 20% of global consumption and is where the new middle class is being created. This is where China will attempt to sell," according to Akash Prakash of Amansa Capital, an investment management company in Singapore. For the moment there's little clarity and no official word from the government on what its plans has already reduced tariffs on some goods including high-end motorbikes and bourbon whiskey. Unlike Canada, Mexico or the European Union, Modi's government has adopted a conciliatory approach to Trump and these announcements are unlikely to trigger a retaliation, say businesses will now most likely face a period of uncertainty which is unlikely to go away anytime soon."Clearly, the (Trump) administration wants even broader and deeper tariff cuts. The question is what, if anything, will satisfy the Trump administration?", Milan Vaishnav, a senior fellow at Carnegie Endowment told the is a million dollar question, for which there are no immediate BBC News India on Instagram, YouTube, X and Facebook.
Reuters
29-01-2025
- Business
- Reuters
India's Modi may tackle economic slowdown, impending trade turmoil in annual budget
NEW DELHI, Jan 29 (Reuters) - Indian Prime Minister Narendra Modi may seek to shore up faltering economic growth, placate a middle class squeezed by high prices and low wage growth, and prepare for an uncertain year of global trade in the nation's budget this week. Finance Minister Nirmala Sitharaman will present the budget for the next fiscal year on Feb. 1 at 0530 GMT. The budget may provide a policy boost for the world's fifth-largest economy, which is expected to post its slowest pace of growth in four years, amid frail urban demand and inflation risks fuelled by a weak currency. Economists expect measures to raise disposable incomes and tariff cuts to encourage local manufacturing. "We could see a nod from the government, to signal to the middle class that we aware of your challenges and we would like to raise disposable incomes, which increases spending power," Priyanka Kishore, director and principal economist at research firm Asia Decoded said. Reuters reported last month that India is considering cutting tax on personal incomes to provide some relief. The budget could also introduce tax cuts on fuel prices or cooking gas, Dhiraj Nim, an economist at ANZ said. Despite world-beating growth, India's job market offers insufficient opportunities for its large youthful population to earn regular wages. In the last budget, India earmarked nearly $24 billion to be spent over five years in various schemes to create jobs but those programmes have not yet been implemented as discussions on details drag on. "They will focus more on direct measures for employment generation and skilling," Kishore said. India will also have to cope with possible global disruptions from U.S. President Donald Trump's trade policies. To support local production, the government could offer concessional tax rates to companies that use the country as a manufacturing hub, lower custom duties on intermediate inputs and raise tariffs to counter goods dumped from China, Nomura economists said in a note. India will also see an opportunity to clinch a larger share from further global supply chain shifts spurred by Trump's new tariffs, Nomura economists said. To that effect, India has drawn up a list of products that act as inputs for various local production units and is considering cutting import taxes on them, a senior government sources aware of the matter said. The list likely includes components for mobile phone assembly such as printed circuit board assembly, parts of camera modules, and USB cables, two industry sources said. The government source and the two industry sources, who joined the finance ministry's budget consultations, refused to be identified as such discussions were private. Moreover, India may also boost its textile and garment industry with financial support, tariff cuts on key inputs and incentives to produce locally, as a political crisis has hit neighbouring Bangladesh's exports. The budget is also likely to continue to prioritise spending on infrastructure, ICRA economists said in a note. Government infrastructure spending has been key to India's strong growth in recent years, though it is likely to undershoot a record spending allocation of 11.1 trillion rupees($128.22 billion) in the current fiscal year. India also plans to raise its spending for the agriculture sector by about 15%, marking the biggest increase in six years, and moderately increase key subsidy payouts to sustain a recovery in its rural economy. FISCAL BALANCE, GROWTH HOPES In the budget, India plans to project higher economic growth for the next fiscal year, Reuters has reported, an upbeat outlook that could help dispel worries over an economic slowdown which have bothered investors and equity markets since October. Indian stocks are set for their longest monthly losing streak in over 23 years, tumbling from record highs in September. However, the government will be walking a fine line on support measures given its relative lack of fiscal space, ANZ's Nim said. "The fiscal debt-to-GDP ratio is still over 80%, which is very high for emerging markets ... It needs to be brought down," Nim said. India is likely to continue fiscal consolidation and pursue its targeted fiscal deficit of 4.5% of gross domestic product for the next financial year that starts April 1, a Reuters poll of economists found. That will put the onus of reviving the economy on the central bank. Economists polled by Reuters forecast New Delhi's gross borrowing at 14.28 trillion Indian rupees ($164.95 billion) in the next fiscal year, up from this year's 14.01 trillion rupees borrowing. ($1 = 86.5725 Indian rupees)
