Daily Archives: January 19, 2010

India’s central bank said on Tuesday it was permitting the introduction of currency futures in euro, yen, and pound sterling with immediate effect. Prior to this, the Reserve Bank of India had only allowed
currency futures trading in dollar-rupee contracts. (From Reuters)

Sri Lanka has shelved plans to allow the free flow of foreign currency into and out of the country following political upset over the plan. Sri Lankan central bank governor Ajith Nivard Cabraal said over the weekend that the plans were now on hold until after the Presidential election, scheduled for January 26, 2010.

The central bank, which yesterday kept its rates on hold, said on January 4 that it would allow the free flow of foreign exchange, so anyone could send money in or out, or set up foreign bank accounts. Read more

Chris Giles

Everyone knew inflation would jump in December. The City expected the annual rate to rise from 1.9 per cent in November to 2.6 per cent in December. The actual figure: 2.9 per cent. Ouch.

Mervyn King, Bank governor, is giving a speech this evening in Exeter, where I am sure he will touch on the issue. I predict  - and I have no inside knowledge – that he will insist the Bank is far from complacent about the inflation surge, but will explain the rise away as the result of a series of extraordinary and temporary factors. The weakness of the economy is likely to keep inflation in check, he will say. We shall see at 1900 GMT when he speaks. He may well signal the end of the active phase of quantitative easing, but not link that to today’s inflation news. Read more

Robin Harding

For the first time since the data series began in 2004, more Japanese people expect prices to be lower in a year’s time than flat or higher.

The data is part of the survey of consumer confidence by Japan’s cabinet office Read more

China’s central bank has raised the yield on one-year government debt to 1.9264 per cent, significantly above forecasts, which were in the  1.84 – 1.89 per cent range. The People’s Bank of China auctioned 24 billion yuan ($3.5 bn) of one-year bills at 1.9264 per cent, up 8 basis points from last week’s level of 1.8434 per cent.

The rapid yield increase shows quicker-than-expected tightening from the Chinese central bank. Increasing the yield makes debt more attractive to investors, taking more money out of the system and into the central bank. “The central bank wants to lock up funds for a longer period because of concerns of the risk in inflation in the longer term,” a trader at a major Chinese bank in Shanghai told Reuters. Read more