Indonesia: having it and eating it?
Despite a deteriorating current account, downward pressure on the rupiah and an upward tick in inflation, Indonesia’s central bank decided to keep its benchmark interest rate on hold at a historic low of 5.75 per cent on Thursday.
While some economists, led by the bears at Credit Suisse, have warned that southeast Asia’s biggest economy is showing signs of overheating, Bank Indonesia seems more interested in stoking growth. Continue reading »
Putin’s central banker: how dovish?
It’s official. The Duma has confirmed Vladimir Putin’s pick, Elvira Nabiullina, as Russia’s next central banker with a vote of 360 in support, 20 against and one abstaining.
Nabiullina will be the first female central banker for a G8 country. But for investors the more important question is how dovish she will be when it comes to interest rates and economic growth. Continue reading »
Hungarian c. bank deputy governor resigns in protest
Julia Király, deputy-governor of the Hungarian central bank (pictured left), resigned on Monday saying that moves made by György Matolcsy, the newly appointed governor, were damaging both the bank’s hard-earned credibility and the national economy over the longer term.
Last week Matolcsy announced a new central bank funding scheme which aims to get cheaper lending to small businesses and also reduce their exposure to euro-denominated loans. Continue reading »
Guest post: will Hungary’s risky new postmodernist policy work?
By Peter Attard Montalto of Nomura
The Hungarian central bank has on Thursday embarked on a risky strategy of postmodern policy in a bid to boost growth through lending via the provision of liquidity. It is labelled as a “Funding for Growth Scheme”.
So will it work? And longer term, what does it mean for the forint? Continue reading »
Nigeria asks investors to throw good money into its bad bank
Two years on from the start of its cleanup operation for Nigeria’s banking crisis, the Asset Management Corporation of Nigeria (AMCON) – the country’s ‘bad bank’ – is courting foreign investors.
Since its establishment in 2010, Amcon has issued five series of zero-coupon bonds with a combined face value of just under N5.7tn – that’s almost $36bn – which it has used to buy non-performing loans and recapitalise struggling banks. The first series – face value N1.7tn ($11bn) – matures in December 2013, and with African sovereign debt in high demand, Amcon is considering turning to international markets for refinancing. Continue reading »
[video] Orthodox rate cut from Hungary’s central bank
Hungary’s new central bank governor, the dovish György Matolcsy, has cut rates by 25 basis points to an all-time low of 5 per cent – a pretty orthodox move. Hungary’s currency is one of emerging markets worst performers as markets have been concerned that prime minister Victor Orbán’s unorthodox economic approach would spread to the central bank.
Neil Buckley, the FT’s eastern Europe editor, discusses with emerging markets editor, Stefan Wagstyl whether this cautious cut will help the forint. Continue reading »
Colombia steps up currency fight
Get ready to rumble. Colombia is stepping up the fight against the appreciation of its currency, the peso.
Having spent nearly $5bn last year buying dollars to stem the peso’s rise, the government this week said it was willing to deploy double the amount – or $10bn – this year keep the currency in check. Continue reading »
Egypt: first rate hike since 2011
The Central Bank of Egypt raised its main interest rates for the first time since November 2011, prompted by the jump in February headline inflation and despite the slowdown in economic growth.
The bank raised the overnight deposit rate and overnight lending rate by 50 basis points to 9.75 per cent and 10.75 per cent, respectively, and raised its discount rate by 75bp to 10.25 per cent. Continue reading »
Nabiullina: Vladimir Putin’s new broom at Russia’s central bank
President Vladimir Putin on Tuesday nominated Elvira Nabiullina, his chief economic adviser (pictured), as head of Russia’s central bank, in a move which raises concerns about the institution’s independence.
While Nabiullina is seen an ultra-bright economist/technocrat, she has little personal political clout and won’t be well-placed to resist Kremlin pressures. Investors might have preferred Alexei Ulyukayev, the bank’s hawkish first deputy governor, who has a strong record for sticking to his guns. But they didn’t get a say. Continue reading »
Hungary’s new central banker: it’s Matolcsy for “stability and predictability”
“So as widely expected Matolcsy moves from the Ministry of National Economy to replace Simor at the MNB, with Varga replacing him.”
That was how Peter Attard Montalto of Nomura put Friday’s news in his morning email.
Hungarians tended to be more terse. Continue reading »
Matolcsy: Hungary’s finance minister, conspiracy theorist, and central banker?
Hungary’s next central bank governor is expected to be named on Friday and György Matolcsy, finance minister, is the most hotly-tipped candidate. So Matolcsy’s weekly newspaper column on economics, society and culture attracted more than the usual amount of interest on Thursday when he used it to accuse foreign businesses and banks of orchestrating attacks on Hungary and to assert that a planned loan agreement with the IMF and EU would have destabilised the government and led Hungary into default. Continue reading »
“No pressure” says Indonesia’s ousted fin min but supporters see dark forces
When news broke over the weekend that Indonesia’s president was proposing to move Agus Martowardojo, the highly regarded finance minister, to the less influential role of central bank governor, most political observers in Jakarta sensed dark forces at play.
Since replacing ousted fellow reformist Sri Mulyani Indrawati in 2010, Martowardojo had clashed on a number of occasions with vested interests in the political and business elite who were unhappy about his desire to keep a tight grip on the national purse-strings. Continue reading »
Indonesia: finance minister faces hurdles over nomination to central bank
Agus Martowardojo
Indonesian President Susilo Bambang Yudhoyono has set the cat among the pigeons with a surprise choice of nominee as central bank governor to succeed Darmin Nasution, whose term ends in May.
The rupiah has barely moved since Saturday’s news that the president had plumped for finance minister Agus Martowardojo (pictured left). But his record has been questioned by some members of parliament, which will have the final say on the appointment. Prepare for rumbles, with politicians increasingly focusing on the 2014 presidential election. Continue reading »
Guest post: does succession question weigh on Russia’s central bank?
By Ivan Tchakarov of Renaissance Capital
Despite the chorus of complaint about high interest rates from president Vladimir Putin down, The Central Bank of Russia (CBR) on Tuesday stuck to its guns and left borrowing costs unchanged.
Courage under pressure? Perhaps. The bank’s made no secret about its concerns over inflation, notwithstanding the slowdown in GDP growth. But could the decision have as much to do with politics as economics? After all, Putin is due to nominate a new central bank governor next month. Continue reading »
Snip, snip: Colombia cuts again
Last July, Colombia made its first rate cut since 2010. Since then, it has been on a chopping spree. On Monday, the Andean country’s central bank trimmed rates once again by a quarter point to 4 per cent.
So far the bank, with governor José Darío Uribe at the helm, has lowered interest rates at five of its last seven meetings. Now, it has reached the lowest level in Latin America. Continue reading »
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