Despite earlier policy easing, several domestic and international challenges are limiting the scope for fresh rate cuts.Why RBI may keep rates unchangedThe SBI report said government bond yields have remained firm even after earlier rate cuts, showing that monetary policy measures have not fully transmitted to the market.It added that the impact of Open Market Operations (OMOs) may depend on the type of securities selected, which could reduce the effectiveness of liquidity support. Because of this, the RBI ...

The Monetary Policy Committee (MPC) of the Reserve Bank of India is likely to maintain a status quo on the repo rate in its policy announcement scheduled for Friday, amid continued global economic uncertainty, pressure on government bond yields and volatility in the domestic currency, according to a report by State Bank of India.The report stated that, despite earlier policy-rate easing, the central bank will hold rates this time, as several macroeconomic and global factors continue to pose challenges. It n ...

加元延续区间震荡走势，商品货币属性、美加货币政策博弈与贸易不确定性形成三重制衡，兑美元短线 小幅走强，整体仍未脱离开年以来的震荡格局，成为非美货币中走势偏纠结的品种。 1月26日，美元兑加元盘中下探1.3677日内新低，截至发稿交投于该位置，日内跌幅0.1679%，开盘与前 一交易日收盘均为1.3697，日内最高触及1.3709。开年以来加元兑人民币先经历连续贬值，1月1日至19 日累计贬值约1.55%，近期随非美货币集体走强小幅回弹，整体仍显弱势。 加拿大央行始终维持2.25%基准利率不变，行长明确当前利率处于"合适水平"，市场75%机构预测2026 年全年利率维稳，降息周期基本收尾，偏稳基调为加元提供基础托底。同时加央行正启动五年一度的货 币政策框架审查，政策端的短期不确定性，叠加机构对其长期操作的分歧，制约了加元的上行动能。 美联储则呈现"偏鹰但宽松基调未改"的特征，降息预期虽推迟至6月，但年内预计降息54个基点，美加 利差持续收窄弱化了美元的相对优势，为加元兑美元走强提供支撑，却因美联储利率仍处高位，无法推 动加元走出单边上行行情。 加元作为能源出口导向型货币，与国际油价深度绑定，近期地缘风险引发的能 ...

Core Viewpoint - Singapore's central bank, the Monetary Authority of Singapore (MAS), manages monetary policy by adjusting the exchange rate of the Singapore dollar instead of changing domestic interest rates, which is a unique approach compared to many other economies [1]. Group 1: Economic Context - Singapore is a small, trade-reliant economy where gross exports and imports exceed three times its GDP, indicating a significant reliance on international trade [2]. - Nearly 40% of every Singapore dollar spent domestically is on imports, highlighting the importance of the exchange rate in influencing inflation more than domestic interest rates [2]. Group 2: S$NEER Overview - The S$NEER is an index that reflects the trade-weighted exchange rate of the Singapore dollar against the currencies of its major trading partners, which is crucial for determining general price levels in Singapore [4]. - The MAS allows the S$NEER to fluctuate within a policy band, which is not publicly disclosed, and intervenes by buying or selling Singapore dollars if the rate moves outside this band [5]. Group 3: Policy Band Mechanics - The MAS reviews the parameters of the policy band at least twice a year, with additional reviews possible in response to immediate economic conditions, such as high inflation [6]. - Starting in 2024, the MAS will announce monetary policy quarterly, enabling more timely assessments of the economic outlook [6]. - The three adjustable parameters of the policy band are the slope, level, and width, which influence the pace and extent of the Singapore dollar's appreciation or depreciation [7].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Asia-Pacific economic outlook for 2026, with specific emphasis on China, Japan, India, Taiwan, and New Zealand. Core Insights and Arguments 1. **China's GDP Growth**: - Expected real GDP growth of 4.8% in 2026, surpassing consensus expectations of 4.5%-4.6% due to strong export growth and easing fiscal policy [6][5][4] 2. **Housing Market in China**: - The housing market is not expected to bottom out across all indicators; housing starts are down approximately 80% from peak levels in 2020, while construction activity has fallen about 60% [7][4] - Home prices have significantly declined, with expectations that they will remain lower by the end of 2026 [7][4] 3. **China's Trade Surplus**: - Anticipated to increase further, with a record trade surplus of nearly $1.2 trillion in 2025 expected to rise in 2026 due to competitive manufacturing and a focus on exports [13][14][4] 4. **US Tariff Relief**: - Modest tariff relief expected for Asia, particularly benefiting India, as negotiations continue to lower trade barriers [19][4] - Taiwan has signed an agreement to reduce US tariffs in exchange for significant investments in semiconductor and AI production [21][4] 5. **Japan's Fiscal Policy and Yields**: - No significant rise in bond yields expected post-election; fiscal policy may loosen but will be constrained by market pressures [25][26][4] - The yen is expected to strengthen slightly, moving away from the current weak levels [31][4] 6. **Growth Surprises in Asia-Pacific**: - Taiwan and New Zealand are projected to outperform consensus growth expectations, driven by tech exports and recovering economic conditions, respectively [33][4] 7. **Inflation Outlook**: - Inflation pressures are not expected to drive significant policy shifts among Asia-Pacific central banks, with CPI inflation returning to pre-COVID levels [41][4] - China and Thailand are expected to see continued easing in monetary policy due to low inflation [42][4] 8. **Central Bank Policy Rate Expectations**: - Anticipated tightening in Japan, Taiwan, and New Zealand, with the Bank of Japan expected to resume rate hikes [47][48][4] 9. **Asian Currencies Performance**: - Majority of Asian currencies expected to appreciate against the USD in 2026, with the CNY anticipated to strengthen due to strong fundamentals [52][4] Other Important Insights - The report highlights that most themes from the previous year were accurate, with notable surprises including the rise in government bond yields in China and the underperformance of the Indian Rupee [56][4] - The analysis includes a review of past predictions and their outcomes, reinforcing the credibility of the current forecasts [56][4]

Core Viewpoint - The Indian rupee is experiencing its largest annual decline in three years, primarily due to record equity outflows and the absence of a trade deal with the U.S., which has hindered its recovery compared to other Asian currencies [1][13]. Group 1: Currency Performance - The rupee was quoted at 89.8650 per U.S. dollar, reflecting a 4.74% decline for the year, marking its worst performance since 2022 when it dropped nearly 10% [1][13]. - The currency has faced sustained depreciation pressure, falling to record lows and slipping past the 91 level at one point [1][13]. Group 2: Economic Factors - The performance of the rupee this year is largely attributed to capital flows, with the Reserve Bank of India (RBI) adopting a more flexible approach to the exchange rate [2][13]. - India's balance of payments has slipped into a historical deficit of approximately $22 billion between April and November, indicating significant external economic strains [2][13]. Group 3: Trade and Investment Outlook - A potential trade deal with the U.S. could provide temporary relief, possibly lifting the rupee to around 88.50 by March, although underlying pressures are expected to return [5][13]. - Foreign investors withdrew a record $18 billion from Indian equities in 2025, contributing to the rupee's underperformance relative to its peers [8][13]. Group 4: RBI's Approach - Under the new leadership of Sanjay Malhotra, the RBI has become more tolerant of currency weakness, focusing on managing depreciation expectations rather than defending a specific exchange rate level [9][13]. - The RBI's interventions have aimed to counter speculative pressures, particularly evident when the rupee fell past the 91-per-dollar mark for the first time [9][13]. Group 5: Currency Valuation - The rupee's decline, alongside a rally in other currencies, suggests it is no longer overvalued, with India's trade-weighted real effective exchange rate dropping to 97.5 in November from 104.7 in January 2025 [10][13]. - A reading below 100 indicates that the rupee is undervalued, which may benefit exporters by cushioning their local currency earnings [11][13].

Summary of Japan Outlook Report Industry Overview - **Industry**: Japanese Economy and Financial Markets - **Key Focus**: Macroeconomic outlook, monetary policy, foreign exchange, and equity strategy for Japan in 2026 Key Points Economic Recovery - Japan's economy is expected to continue its recovery in 2026, supported by consumer spending from PM Takaichi's economic package and strong capital expenditures (capex) to address labor shortages [1][6][7] - Core CPI inflation is projected to fall below 2% year-on-year in Q1 2026 and remain there for the year, driven by slower food inflation, stable energy prices, and policy measures like scrapping the provisional gasoline tax [1][25][27] Monetary Policy - The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 0.75% on December 19, 2025, but is expected to keep rates unchanged throughout 2026 [2][34] - Market expectations suggest an 80% probability of a rate hike to 1.0% by July 2026, which may be overestimated [2][34] - Future rate hikes are anticipated in January and July 2027, with a terminal rate of 1.25% expected by mid-2027 [29][30] Foreign Exchange Dynamics - The yen is under downward pressure, with expectations that it will remain weak in H1 2026, potentially stabilizing between 150-160 USD/JPY before correcting to 140-150 in H2 2026 [3][62] - The Takaichi administration's tolerance for a weak yen is a key factor influencing exchange rates, with expectations of increased inflation potentially leading to upward pressure on the yen later in 2026 [3][62] Capital Expenditures and Corporate Strategy - Capex is crucial for economic recovery, with a shift towards labor-saving investments and automation due to labor shortages [11][15] - Companies are expected to adjust their capital investments to replace human labor with technology, which may lead to a more stable capex trend [17][15] Risks and Challenges - Key risks include the extent of fiscal expansion under the Takaichi administration, potential yen depreciation, and geopolitical tensions, particularly between Japan and China [1][18][19] - A downturn in spending by inbound visitors from China could negatively impact Japanese GDP, with estimates suggesting a potential decline of around 0.1% [18] Equity Market Outlook - The Japanese equity market may benefit from improved earnings growth prospects in FY26, with expected returns around 7% becoming more feasible [4][19] - Market participants are advised not to excessively fear moderately high-pressure economic policies, as many companies are improving margins by halting unprofitable operations [4][19] Policy Implications - The Takaichi administration's economic policies focus on supporting household activity in the short term while aiming to raise potential GDP in the long term [19][22] - The lack of an output gap suggests limited need for demand stimulation, with fiscal policy likely to be influenced by political considerations rather than economic indicators [21][22] Additional Insights - The report emphasizes the importance of monitoring the evolving political landscape in Japan, as changes could significantly impact economic policies and market expectations [63][64] - The anticipated recovery in the Japanese economy is seen as a gradual process, with structural changes in corporate behavior and investment strategies being critical for sustainable growth [11][17]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Japan's Economy - **Forecast Period**: 2026 Core Insights and Arguments - **GDP Growth**: Japan's GDP is expected to grow at +1.0% in 2026, a slight decrease from +1.3% in 2025, indicating resilience despite modest decline [1][4] - **Inflation Trends**: Headline inflation is projected to temporarily fall below 2%, with strong wage growth expected to ease consumer purchasing power headwinds [1][4] - **Bank of Japan (BoJ) Rate Hikes**: Anticipation of semiannual rate hikes by the BoJ, with the first expected in July 2026, and a terminal rate projected at +1.5% [5][6] - **Fiscal Policy Constraints**: Fiscal leeway is limited due to high government debt/GDP ratio and the JGB market's exit from quantitative easing, leading to moderate fiscal impulses [1][4][13] Additional Important Points - **Wage Growth**: Expected base pay increase of approximately 3.3% in spring negotiations, supported by labor shortages and corporate profits [20] - **Inflation Deceleration**: Core CPI is projected to decelerate to +1.7% in 2026 from +3.1% in 2025, influenced by government anti-inflation measures [22][23] - **Consumer Purchasing Power**: Recovery in purchasing power anticipated as food and energy inflation slows, allowing for higher service prices [23][24] - **Public Sector Price Adjustments**: Government considering price hikes in medical fees and other public services, which may impact CPI [25][26] - **Investment Trends**: Companies are increasingly investing in value-added products to manage rising costs, despite some sectors facing labor shortages [43][44] Risks and Considerations - **Exchange Rate Risks**: FX movements could impact the timing of rate hikes and overall economic stability [5][8] - **Geopolitical Tensions**: Recent tensions with China pose risks to service exports and tourism, which could affect GDP growth [56] - **Potential for Policy Missteps**: Concerns over unpredictable policy decisions may persist, particularly in the JGB market [1][4][13] This summary encapsulates the key insights and projections regarding Japan's economic outlook for 2026, highlighting growth expectations, inflation trends, fiscal policy constraints, and potential risks.

Currency Trend - The Chinese yuan's appreciation since April is unfolding at a pace that offsets the advantages of holding higher-yielding dollars [1] - The yuan is projected to reach 7 against the US dollar by the end of March next year [1]

Currency Market - The Indian Rupee (INR) has depreciated to a record low against the US Dollar (USD) [1] - The Reserve Bank of India (RBI) has intervened in the market, achieving the largest gains since May [1] Central Bank Intervention - The report questions whether the RBI's intervention is sufficient to stabilize the INR [1]