JAPAN
Household spending falls
Households pared back their spending in January during the rapid spread of the Omicron variant of SARS-CoV-2 and renewed restrictions on activity, adding to the risk that the economy will shrink this quarter. Outlays fell 1.2 percent from December last year for the sixth drop in the past nine months as people cut spending on entertainment, clothing and extra schooling, the Ministry of Internal Affairs reported yesterday. Compared with the low levels of a full state of emergency a year ago, spending rose 6.9 percent. Economists had forecast a 3.4 percent gain. The fall in spending from the prior month could contribute to the nation’s recovery slipping back into reverse this quarter. Household spending accounts for more than half of GDP.
UNITED KINGDOM
Economy beats expectations
The economy surged at the strongest pace in seven months in January, surpassing levels prevailing before the COVID-19 pandemic. GDP rose 0.8 percent, recovering from an 0.2 percent in December last year, Office for National Statistics figures showed yesterday. The gain was much stronger than the 0.1 percent pace expected by economists. The increase left output about 0.8 percent higher than in February 2020, with all parts of the economy expanding. The figures might embolden the Bank of England to raise interest rates for a third time next week to control inflation, which has leaped to its strongest pace in three decades.
COMMODITIES
Uranium spot prices soar
Uranium spot prices soared to the highest level since the 2011 Fukushima Dai-ichi nuclear disaster on concern that potential sanctions aimed at Russia are poised to roil an already tight market. The price for benchmark Ux U3O8 uranium jumped to US$59.75 per pound on Thursday, data compiled by UxC LLC showed. That is the highest since March 2011, when meltdowns at the Fukushima facility shut Japan’s fleet of nuclear plants, sent a shockwave across the atomic industry and dashed demand for uranium — the fuel used in reactors. The White House is considering sanctions on Russia’s state-owned atomic energy company, Rosatom Corp, intensifying concerns over disruptions to uranium exports from Russia. Rosatom is a delicate target, because the company and its subsidiaries account for more than 35 percent of global uranium enrichment. Russia accounted for 16.5 percent of the uranium imported into the US in 2020.
RIDE HAILING
Didi HK listing denied
Didi Global Inc (滴滴) has suspended preparations for its planned Hong Kong listing after failing to appease Chinese regulators’ demands that it overhaul its systems for handling sensitive user data, people familiar with the matter said. The Cyberspace Administration of China informed Didi executives that their proposals to prevent security and data leaks had fallen short, the people said. Its main apps, removed from local app stores last year, will remain suspended for the time being, said one of the people, who asked not to be identified as the information is private. The company and its bankers have halted work on the Hong Kong listing by way of introduction originally slated for around the summer of this year, the people said. In addition to dealing with the cyberspace agency’s review, Didi is also working to finalize its fourth-quarter results as required for a listing prospectus, they said. Didi’s American depositary shares plunged as much as 20 percent in US pre-market trading yesterday.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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