Those higher interest rates in the US next year could make big problems for China Higher interest rates in the United States could make it harder for China to manage its exploding debt, as the Asian giant increasingly depends on borrowing in order to keep growing — while simultaneously trying to block capital from fleeing for more fruitful shores in America.
"If the Federal Reserve [keeps increasing] interest rates in the United States, the single biggest casualty of that this time is going to be China, because there's so much money just waiting to leave" the country, said Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley Investment Management. Sharma spoke Tuesday evening as part of a panel at the Asia Society in New York.
The Bank of Japan is expected to hold its negative interest rates and 10-year government bond yield target steady next week as a weaker yen and positive overseas conditions augur well for Japan's economic prospects, a Reuters poll showed on Friday.
The BOJ is expected to maintain the minus 0.1 percent interest rate it imposes on some excess reserves and to hold the 10-year government bond yield target at around zero, the poll of 15 analysts showed.
The BOJ is also expected to keep the pace of the annual increase in JGB holdings at around 80 trillion yen ($676.93 billion), it showed.
"There is no change that the BOJ's 2 percent inflation target is a long way to reach. But a need for more stimulus by the BOJ has declined further because of the weaker yen and higher share prices. The focus for next week will be how the BOJ will change its view on the economy" said Tuyoshi Ueno, senior economist at NLI Research Institute.
Singapore's exports unexpectedly jumped in November from a year earlier, helped by an rise in shipments to the European Union and China, official data showed on Friday.
Non-oil domestic exports (NODX) last month rose 11.5 percent from a year earlier, the trade agency International Singapore (IE Singapore) said in a statement.
The median forecast in a Reuters poll was for a contraction of 3.0 percent.
On a month-on-month, seasonally adjusted basis, non-oil domestic exports soared 13.1 percent in November, IE Singapore said, well ahead of the median forecast of 0.5 percent growth.
The People's Bank of China Friday set the mid-point rate for the yuan at the lowest level in eight-and-a-half years as heavy capital outflows and a hawkish Federal Reserve raise currency pressures in the world's second-largest economy that the government says are manageable.
The yuan's mid-point was set at 6.9508 per dollar Friday, the lowest since May 2008, compared with 6.9289 on Thursday. China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.
Haibin Zhu, China chief economist for JP Morgan, said a rally in the dollar following a Fed rate hike this week and a hawkish forecast of three increases in 2017 was the key reason for the yuan's depreciation alongside other currencies.
Oil prices rose on Friday after Kuwait appeared to be lining up bigger supply cuts than had been initially expected from January as part of a coordinated effort by oil producers to drain a global glut.
International Brent crude oil futures were trading at $54.29 per barrel at 0538 GMT, up 75 cents, or 0.5 percent from their last settlement.
U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.61 percent, at $51.21 per barrel.
The higher prices came after Kuwait, a member of the Organization of the Petroleum Exporting Countries (OPEC), notified customers that it would cut supplies from January as part of an effort by OPEC and other producers led by Russia.
Reference: CNBC,Reuters
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