 Vietnam currency re-denomination: The Southeast Asian country has the distinction of having the world’s biggest banknote, James Clark writes. Nowhere else in the world can you get a note for half a million of something. At the time of writing, 1 US dollar was equal to 22,728 dong. It takes US$44 to become a dong millionaire. Countries never start off with high denominations, and Vietnam is no different. The dong experienced rapid inflation during the 1980s. In 1986 the rate was 1USD/23VND, by 1987 it was 78VND, 630VND in 1988, and 4,500VND in 1989. Most countries that have had their currency inflate into high denominations eventually re-denominate. A contemporary model for Vietnam is Belarus. In 2016 the Belarusian ruble was re-denominated by taking four zeros off the currency. Before re-denomination, US$1 was about 20,000 rubles, making it comparable to the current dong. What was 10,000 BYR is now 1 BYN, so 1 USD is about 2 BYR. READ THE STORY HERE
 
 China’s debt woes: Headlines from the 19th National Congress unfolding in Beijing this week focus on Xi Jinping’s vision for a “new era” in the next five years of his presidency, William Pesek writes. What’s really happening, though, is an elaborate campaign to hide the financial risks that face the country. President Xi’s big talk of giving market forces a “decisive role” is belied by his intensifying war on the global media, the internet and mainland gateways to information flows. Xi’s efforts to use the internet and big data to control the domestic narrative make China less transparent, effectively turning Asia’s biggest economy into more of a Black Box. It means that when China’s debt reckoning arrives, it may come out of nowhere for investors and governments alike. Beijing also faces runaway local-government debt – which in recent years topped Germany’s annual gross domestic product – and a shadow banking system that generated tens of trillions of dollars of credit since the 2008 global crisis. READ THE STORY HERE
 Indian central bank: In his three years as governor from 2013 to 2016, Raghuram Rajan restored calm to Asia’s No. 3 economy, William Pesek writes. In short order, the former IMF economist tamed inflation, stabilized the rupee, worked to reduce bad loans in the banking system and talked credit-rating companies out of downgrading New Delhi. And then, in September 2016, Rajan, who’s often listed among Nobel Prize candidates, was out of a job. The popular excuse: he was too slow to cut interest rates. Prime Minister Narendra Modi opted instead for Urjit Patel, Rajan’s deputy. Fears that Modi had hired a yes-man seemed confirmed by the demonetization debacle of November 2016. Dozens literally died scrambling to exchange their life savings as 86% of currency in circulation was suddenly ruled useless. Dismal logistics cratered national growth rates and dented Modi’s reputation for competence. It remains to be seen whether Patel can turn things around and rehabilitate the Reserve Bank of India’s credibility. READ THE STORY HERE
Behind the curve at the Federal Reserve
Desmond Lachman | AEIdeas Don’t envy the next Fed chair Desmond Lachman | The Hill  Pakistan investment climate: On October 4, the Karachi Stock Exchange 100 index closed at 40,461 points, touching as low as 39,869.88 intraday, Kunwar Khuldune Shaid writes. The market had lost 1,948 points in three days as selling pressures took their toll. However, the tumble in the markets was just the tip of the iceberg. While investors and market analysts feel that the Pakistani government is “distracted,” they are also worried about taxation policies. Altogether, they anticipate that this is going to start hurting the economy and the country’s investment climate. The main driver behind all of this is the ongoing political turmoil in the country following the ouster of Nawaz Sharif as prime minister in July. He had been serving for a third time before his disqualification by Pakistan’s Supreme Court. The KSE-100 Index shed 1,670 points (3.6%) in the immediate hours after the apex court’s verdict. READ THE STORY HERE
 China’s top banker: Next week’s 19th National Congress in Beijing is President Xi Jinping’s party, but the real focus of the conclave is likely to be on who will replace outgoing People’s Bank of China governor Zhou Xiaochuan, William Pesek writes. Zhou, who turns 70 in January, is a tough act to follow. Over the past 15 years, he’s been Beijing’s most consistent and forceful reformer, its economic face across three presidencies and the longest-serving governor among the top 20 economies. During that time, he scrapped China’s dollar peg, modernized monetary-policy tools, ended caps on deposit rates and engineered the yuan’s elevation toward reserve-currency status. Who might replace Zhou? Speculation often centers on Jiang Chaoliang, party secretary in Hubei Province. Political heavyweight Guo Shuqing, chairman of the Banking Regulatory Commission, gets mentioned, as does Yi Gang, one of Zhou’s deputies. READ THE STORY HERE
The next Fed chair will be handed a big stick of dynamite with a short fuse
Desmond Lachman | The Hill
 Asian manufacturing output: Factories cranked up activity in September as a synchronized upswing in growth globally pointed to solid consumption of manufactured goods heading into the lucrative end-of-year shopping season, Shri Navaratnam writes. However, pockets of weakness in regional economies are likely to keep Asian central banks slanted towards more accommodative monetary policy, even as their Western counterparts move to scale back stimulus. China’s central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lackluster private sector. READ THE STORY HERE
|
BRAD SETER FOLLOW THE MONEY
US-CHINA TRADE WAR EXAMINED
TRADE WAR DIARIES
CROSS BORDER CAPITAL FLOWS
THE CHINA DIGEST
WHAT WILL INDIA LOOK LIKE IN 2025
Archives
March 2023
Categories |
||||||||||||||
RSS Feed