International News 08 January 2025
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China Struggles to Prop up Slumping Yuan and Stock Market
China's stock exchanges and central bank are facing challenges in stabilising the falling yuan and plunging stock market, as concerns about Donald Trump's return to the White House and China's economic recovery persist. Tariff threats from the US have contributed to a weakening yuan, with Chinese bond yields and stocks also experiencing a downward trend. The yuan has reached its lowest level in 16 months, while the benchmark stock index has experienced its weakest level since September. Despite this, the Shanghai and Shenzhen stock exchanges have assured investors that they will continue to open China's capital markets. In order to counteract speculation, the People's Bank of China is considering releasing additional yuan notes in Hong Kong, while the central bank asserts that it possesses the requisite tools and expertise to address yuan depreciation.
BOJ will start raising interest rates
Bank of Japan Governor Kazuo Ueda has indicated that he is willing to consider an increase in interest rates should the Japanese economy demonstrate further signs of improvement. However, a decision on a rate hike cannot be made without careful consideration of several important factors. Previous comments by Ueda have highlighted economic uncertainty, the impact of Donald Trump's economic policies, and Japan's domestic wages as key risk factors. The Bank of Japan has repeatedly emphasised that sustained and comprehensive wage increases are a prerequisite for raising interest rates. Meanwhile, Japanese Prime Minister Shigeru Ishiba has pledged to take measures to increase the country's minimum wage and stimulate consumption. Ishiba attributes the lack of domestic investment and consumption during the deflationary period to companies prioritising dividends and foreign investment. However, he recognises encouraging signs of change. Governor Ueda is optimistic that the Bank of Japan's inflation target of 2% will be achieved by 2025.
https://internasional.kontan.co.id/news/boj-bakal-mulai-menaikkan-suku-bunga
Wheat Prices Soar to Record Highs, Indian Flour Mills in Raw Material Crisis
Wheat prices in India have reached unprecedented levels due to constrained supply and robust demand from flour millers. This price increase is anticipated to have an impact on retail inflation and could influence the Reserve Bank of India's decision regarding an interest rate reduction. Despite record-breaking investments in wheat, flour millers are encountering challenges in sourcing sufficient supplies to operate at full capacity. In an effort to address this imbalance, the government introduced measures to increase wheat availability and reduce prices by removing the cap on wheat inventories held by traders and millers. However, these efforts have not yet yielded the desired outcomes in terms of lowering prices. Wheat prices in New Delhi are currently around 33,000 rupees per metric tonne, well above the government-set minimum support price. The limitations on wheat stocks have been identified as a contributing factor to the current situation.
Brazil Announces Indonesia as Full Member of BRICS
Indonesia has officially become the tenth member of the BRICS group, joining the emerging economies of Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates.The announcement was made by Brazil, which currently holds the rotating presidency of the bloc.The Brazilian government has welcomed Indonesia's entry, highlighting its significant population and economy in Southeast Asia and its commitment to global governance reform and South-South cooperation. Indonesia's candidacy was initially endorsed by BRICS leaders in August 2023, but the country chose to delay its official accession until the formation of a newly elected government. The BRICS group was established in 2009 as a counterweight to the advanced economies of the G7, which includes the United States.Vietnam's economy grew by 7.09% in 2024, surpassing the previous year's growth rate of 5.05%. This expansion was driven by strong exports and a significant influx of foreign investment. Despite the impact of a major typhoon, Vietnam experienced a recovery in global consumption, contributing to its economic growth.The country's General Statistics Office reported that GDP expanded by 7.55% in the fourth quarter of 2024.Exports increased by 14.3% to $405.53 billion, with electronic products, smartphones, garments, and agricultural goods being the main contributors. Imports also rose by 16.7% to $380.76 billion, resulting in a trade surplus of $24.77 billion for Vietnam.In addition, the government increased coal imports for power generation to prevent electricity shortages experienced in previous years, with coal imports rising by 24.8% and electricity production increasing by 9.6% in 2024.