The recent rupee appreciation, followed by rumours of RBI appreciation, has set off fears that we’re in for a repeat of the sad episode of monetary policy 2006/2007 all over again.
Writing in the Business Standard, Shankar Acharya repeats the advice that he gave RBI in 2006 and 2007. But new perspectives are now visible: see a striking piece by Ravi Jagannathan in DNA, and Pratap Bhanu Mehta in the Indian Express.
Ila Patnaik, in the Indian Express, emphasises that monetary tightening and exchange rate appreciation go together.
Singapore Dollar Jumps, South Korean Won Up, and Intel Beats Yet Again.
The Singapore government announced early Wednesday that its economy is likely to expand by 9% this year. Coincidentally, South Korea also announced that its economic growth is accelerating. Meanwhile, economists surveyed by Bloomberg have estimated that China’s economy probably grew by 11.7% in the first quarter, the fastest rate in nearly three years. Stocks rallying in early Wednesday trading as Intel’s global sales performance release late Tuesday continues to show Intel on a blistering growth trajectory. Intel shares rose as much as 3.6% in extended trading after the chip giant beat the street yet again.
The growth results in Singapore and the largest reported drop in Korean unemployment in a decade underscored Asia’s leadership in the global recovery. Stateside, Intel’s new forward-looking estimates punctuate a recovery that is taking solid root.
“Companies are demonstrating that economic conditions are improving, and the data points to an ongoing theme of recovery,” said Prasad Patkar, at Platypus Asset Management Ltd. in Sydney.
“Risk appetite is improving, buoyed by solid economic data and corporate profits,” said Norihiro Tsuruta, chief strategist in Tokyo at Shinko Research Institute Ltd.
And the U.S. Economic engine driven primarily by retail sales is also revving up. On Tuesday the ICSC-Goldman report registered a very strong plus 4.0 percent year-on-year pace. According to Goldman forecasts, strength in April will prove to be a key indication of U.S. consumer strength. Their forecasters expect a “very healthy” plus 4.0 percent year-on-year rate for the months of March and April combined.
An acceleration in the U.S. GDP would mean (by definition) that Q1 GDP will be above the rate measured in Q4.
The Mortgage Bankers’ purchase index was released at 7:00 AM EDT, and there was a week to week decrease of 10.5% last week, due to an increase in FHA mortgage premiums and causing concern about the housing market as the second federal stimulus program comes to an end.
At 8:30 AM EDT, the Consumer Price Index report for March will be released. The consensus is that CPI will be up 0.1% for last month, with a 0.1% increase in CPI when food and energy are removed.
Also at 8:30 AM EDT, the Retail Sales report for March will be released. The consensus is that retail sales increased 1.2% from February because of poor weather in February, strong auto sales, and an early Easter.
At 10:00 AM EDT, the Business Inventories report for February will be released. The consensus is that inventories increased 0.5% from January, after no change in the previous month.
Also at 10:00 AM EDT, Federal Reserve Chairman Ben Bernanke will testify to the Joint Economic Committee about the economic outlook in Washington.
At 10:30 AM EDT, the weekly Energy Information Administration Petroleum Status Report will be released, giving investors an update on oil inventories as oil prices continue to move higher.
At 2:00 PM EDT, the Federal Reserve will release its next Beige Book report, providing reports on economic conditions in each of the 12 Federal Reserve districts.
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