Optimism found its way back in Japan today after the central bank
announced not only their rate decision holding it steady at 0.1% but
also they expressed improving their view regarding the future
developments of the second largest economy in the world after being
mysterious for some time.
Japan's central bank after announcing holding rates announced that
its economy during the first quarter of this year has bottomed out
while during the second quarter stability started to materialize
especially with the economic data starting to get better and the
Chinese economy starting to improve.
This sudden improvement in the future outlook from the central bank
is the first economic assessment since the mid 2006, and indicating
that they might not extend the program of buying corporate and
government debt however accepted to purchase foreign currency dominated
bonds in order to ease lending and provide cash as deflation is nearing.
The global economy began to improve, and this appears from various
economic data indicating that the first quarter witnessed the most
challenging times as the second largest economy in the world contracted
by 15.2% however exports and industrial production witnessed the
starting of the recovery in China and the stability in the United
Moving to Taiwan we witness that the first quarter was also bad
since the GDP contracted by 10.24% which was revised fro the previous
reading of -8.61%, while the central bank expected its economy to
contract in 2009 by 4.25% worse than its previous expectations of -3.0%
since like other country suffers from the sharp decline in exports and
consumption from major economies.
Therefore exports in Taiwan fell by 27.15% in the first quarter
while in April exports fell by 34.3%, and since the country relies
mainly on exports in its growth consisting 60% of the GDP almost 400
billion dollars, this sharp decline in demand on exports damaged local
trade and consumption especially since unemployment rose to 5.84% in
March from the previous 5.72%.
Fai-Nan Perng the chairman of the Central Bank of Taiwan lowered
rates by 2.25% since the 25th of September to 1.25%, however since
borrowing rates reached such a low level in the markets expect that the
easing in the monetary policy might not reach to an end holding rates
steady during the next meeting of the central bank based on fact that
might indicate the worst in gone.http://www.actionforex.com/fundamental-analysis/daily-forex-fundamentals/japan%27s-central-bank-holds-rates-steady-however-improving-its-outlook-of-the-economy-2009052287915/