Friday 13 September 2013

Indonesia raises interest rates again as largest emerging markets lose favour

Emerging economies have been hit by currency turmoil recently, and on Thursday, Indonesia's central bank felt compelled to raise interest rates for the second time in two weeks.

Bank Indonesia increased its benchmark rate by 25 basis points to 7.25 per cent, bringing the total increase since June to 150 basis points.

This comes even as it lowered its economic growth forecast for 2013 to between 5.5 and 5.9 per cent from 5.8 to 6.2 per cent.

However, another emerging economy that has been hit by the currency turmoil, India, did report a 2.6 percent year-on-year gain in industrial production for July on Thursday, snapping two months of contraction.

Still, a recent Bloomberg poll showed that the largest developing nations have some of the worst market opportunities, with India faring the poorest.

Not that developed economies had particularly positive data to report on Thursday.

Japan's core machinery orders were flat in July after having fallen 2.7 percent in June.

Industrial production in the euro area fell 1.5 percent in July, more than reversing the 0.6 percent increase in June.

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