Rupee Exchange Rate Passthrough

The last few days have seen a sharp depreciation of the rupee. At a time when inflation is already high and there are significant inflationary pressures in the economy, an exchange rate depreciation is feeding into higher prices. There has recently been a lot of debate on whether there is a passthrough or not. I […]

Chinese monetary policy is driven primarily by RMB speculation

There is an article in this week’s Caijing that summarizes a survey by Deutsche Bank’s Jun Ma (here, for those who can read Chinese). I haven’t managed to get it translated yet but one of my regular blog readers, Kar Kheng Giam, summarized it for me. According to the survey, the ways enterprises bring into […]

Inflation won’t peak yet

According to today’s Credit Suisse Emerging Markets Economics Daily, a government official for the first time suggested that we are not going to see inflation peak this year. Earlier this year most commentators and nearly all government officials suggested that inflation would peak in the second quarter before coming down over the rest of 2008. […]

Lower inflation in May?

According to today’s China Daily Morgan Stanley is predicting that year on year inflation for May is likely to decline dramatically from 8.5% in April to 7-6-8.0% in May. I haven’t seen the Morgan Stanley report but the article says “vegetable prices in the third week of May dropped 5.6 percent week-on-week, meat was down […]

An Additional Consideration in Thinking About Optimal Currency Areas

Traditionally, when we think about currency pegging, we think that if two countries are exposed to highly correlated shocks, then pegging is not a bad idea. E.g. if Austria and Germany have the same business cycle, it is not a bad idea for Austria to adopt German monetary policy. By this logic, it is a […]

ASEAN Economic Integration: Glass Half Empty or Half Full?

Ramkishen S. Rajan and Sunil Rongala When one thinks about economic integration among countries in a particular region, the first thing that comes to mind is the European Union (EU). The 1957 Treaty of Rome marked the start of the economic integration of Europe – beginning with Western Europe but gradually extending eastwards. Like the […]

No but this time really is different

Today is relatively quiet on the China-financial-news front (the SSE Composite was down 36 bps, but not much else happened), so rather than discuss the most recent numbers and events and their possible implications for financial policy, I want to write about something a tad more theoretical. For the past two months there has been […]

The informal banking sector is growing

After yesterday’s stock market excitement, the government “quashed” rumors today that they were going to relax prices on refined oil products.  According to China Daily, “the National Development and Reform Commission (NDRC), China’s economic planning agency, said rumors that the authorities plan to relax domestic oil and gas price controls are baseless.” The Shanghai Securities News, […]

PBoC is biased towards more tightening

My third-year finance undergrad, Liu Bing, who is following in the footsteps of Logan Wright and becoming a central-bank sleuth and obsessive (almost literally following in his footsteps, I guess, since he is interning at Stone & McCarthy), sent me the following email today.  I have edited it slightly: The PBOC released the Q1 monetary […]