3 Apr 2020
International Economy
The novel coronavirus or COVID-19 pandemic continues to grow in severity, with most parts of the world seeing no signs of easing or control of viral spread in the near future. The pandemic has plunged the world economy into a state of higher negative risk, as it enters a recession this year. Governments and central banks worldwide have issued stimulus packages - in the forms of monetary and fiscal measures - to mitigate the impact of the COVID-19 pandemic via massive amount of funds. Generally, fiscal measures accentuate reduction of household and business debt burdens as well as ensuring that households and businesses continues to generate income. On the other hand, monetary measures place emphasis on enhancing liquidity, including the launch of soft loan schemes and relief of debt burdens. ... Read more
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7 Aug 2019
The People's Bank of China allowed its currency to fall below 7 Yuan to the US Dollar for the first time in 11 years after the US announced last week that it would slap a 10 percent tariff on USD300 billion of Chinese goods. The latest move by Beijing signals its readiness to retaliate against the US by allowing the Yuan currency to depreciate. China may use additional currency depreciation measures as a retaliatory action, and to ease the negative impact of tariffs on the Chinese economy. KResearch views that the Chinese authorities are unlikely to let the Yuan currency significantly weaken, because a drastic change in currency value could adversely affect China’s financial stability and shake investor confidence. ... Read more
10 Oct 2018
It is apparent that the Thai currency and the Thai government bond yields - especially the long-term bond yields - have begun to ostensibly “swing” in the last quarter of the year. The Thai Baht weakened to touch THB33.10 against the greenback on October 9 (when the net sales of equities and bonds by foreign investors totaled THB4.63 billion and THB3.26 billion, respectively) or down by 2.6 percent from THB32.25/USD registered early October. Meanwhile, the Thai government 10-year bond yields steadily increased to 2.88 percent, the highest level in 21 months.... Read more
21 Sep 2018
KResearch expects the Federal Reserve (Fed) will raise the policy interest rate by 0.25 percent from 1.75-2.00 percent to 2.00-2.25 percent in its meeting slated for September 25-26, 2018. The Fed will also likely announce an increase in its balance sheet normalization process to the maximum of USD50 billion per month. The US is still pursuing strong economic growth while its inflation is moving consistently with the Fed’s inflation target; such factors are supportive to the Fed’s continual policy rate hikes. Both the uptrend of the Fed’s policy rate and its accelerated balance sheet reduction remain a challenge for the emerging countries, which may face greater fund volatilities.... Read more
16 Aug 2018
Financial markets worldwide are keeping close watch on possible risks and impacts that may be caused by the Turkish Lira crisis. Although the Lira has picked up somewhat (after hitting a historical low at 7.2362/USD on August 13), it will likely face many sell-offs ahead amid limited tools/resources to deal with such volatilities. Meanwhile, the fragility of Turkey’s economic fundamentals is not something that can be fixed in the foreseeable future. ... Read more
15 Aug 2018
In 2018, the Turkish economy is facing pressures from all sides amid risks threatening its economic stability such as the Federal Reserve interest rate hike, which accelerates fund outflows and continuously and quickly increases borrowing costs. An increasing oil price and weaker Turkish lira have caused Turkish inflation to surge. This latest crisis was triggered by intensified political tensions between the US and Turkey. Due to an anticipation of Washington’s harsh trade protective measures against Istanbul, investors have seemed to lose confidence in the Turkish economy, triggering the currency freefall.... Read more
26 Jul 2018
In 2018, the trade war provoked by the US may not produce significant repercussions on Thailand, given that the measures to impose new tariffs on solar panels, large washing machines, iron and aluminum since the beginning of the year has not involved considerable value. Despite, the first round of new tariffs worth USD50 billion and the second round to be collected in the remainder of this year, Thailand’s export opportunity loss amounts to only USD280-420 million. However, ongoing tensions that will be underlined with another USD200 billion of tariffs on Chinese goods will very likely be hurtful for Thai exports and business sectors next year. In 2019, trade conflicts between the US and China will surely intensify. KResearch believes this trade war will persist throughout the year. Due to the tariffs of USD50 billion and USD200 billion, net loss of Thai exports in 2019 will total around USD2.4-2.9 billion, or be equal to 0.5-0.6 percent of our GDP. Considering the list of goods that has been announced by the US, Thai goods may be classified into three groups: 1) Goods that could replace Chinese goods in the US market, e.g. plastics, integrated circuit boards and hard disk drives; 2) Electric and electronic goods (E&E) – E&E parts and components will be losers as they are part of the supply chain of China’s exports, while E&E consumer products that market in ASEAN will risk losing their markets to China; and 3) Iron products, also facing competition from China in ASEAN. ... Read more