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Main » Articles » Forex for Beginners

Japan's Central Bank Holds Rates Steady However Improving Its Outlook Of The Economy

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 States.

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.

Category: Forex for Beginners | Added by: forex-market (2009-05-22)
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