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BOJ Announces Easing After Emergency Meeting

CNBC Asia Pacific
Monday, 30 Aug 2010 | 7:35 AM ET

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello and a warm welcome to our viewers all over China.

You're watching “Asia Market Daily”, co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel and here are the top stories across Asia today.

Japan's central bank is easing its monetary policy further - bowing to rising political pressure to take action as the strong yen threatens a faltering economic recovery.

The decision came during an emergency board meeting called by the BoJ, after Governor Shirakawa cut his trip short his to the U.S.

It's keeping the key interest rate at 0.1 percent.

And to boost liquidity, it will expand a low-interest loan program for the financial sector by 10 trillion yen to a sum of 30 trillion.

But already, analysts are questioning whether the BoJ's action would be effective in stemming the yen's rise, which is preventing Japan's exit from deflation.

The yen had climbed back to the day's highs on the announcement.

Meantime in financial markets, Asian stocks rose the most in four weeks as Federal Reserve's Chairman Ben Bernanke pledged to safeguard the U.S. economic recovery.

In Japan, the benchmark Nikkei 225 closed up 1-point-8 percent.

The market lost some early gains as investors were disappointed with the BoJ's announcement - expecting stronger measures.

Exporters advanced the most - heavy weights, Honda, Toyota and Sony all tracked higher.

Meantime, South Korea's KOSPI gained almost 1.8 percent

South Korean developers got a boost after the government

announced measures to encourage buyers back to the property market.

In M&A news, South Korea's POSCO is in talks to buy a Norwegian supplier of silicon for solar panels,

In Australia, the S&P ASX 200 saw its biggest one-day gain in 5 weeks ending 1.9 percent higher.

The banking sector and miners led the way up.

Finally in Greater China, where markets also tracked gains in the region.

Baosteel jumped after posting more than a 7-fold increase in its second-quarter profit.

Thailand's economy is holding up despite a period of prolonged violence and unrest in the capital city of Bangkok earlier in the year.

Even a strong Thai baht doesn't seem to have hit exporters very much.

Recent data show the economy grew 9.1 percent year-on-year in the second quarter - defying expectations for a contraction.

But Finance Minister Korn Chatikavanij is a little cautious about the second half, as he tells CNBC's Martin Soong in this exclusive interview.

(Package begins)

Chatikavanij: Okay, well for second half, probably lower rates of growth than we saw in the first half. It's a no brainer really, because the competitive base is higher so 6% probably, I would like to say still somewhat conservative, but 8%, a little hard to reach. Something between, depending on the world economy, but I would like to say, probably on the weaker US economy is more so called in the price and less of a concern than if the Chinese economy would significantly slow down.

Soong: That was what I wanted to talk to you about. They seemed to have overcooked things a bit and are trying to cool things down. And by some matrix, they are succeeding. I would have thought china helped at least partially offset this side form the west, then what?

Chatikavanij: Then I think that would be less pleasant, if that was to take place. What we have seen in Thailand actually is growth in all sectors, Exports have been the star, but the government stimulus plans has had a significant impact. The total equivalent injection into the economy will probably be about 5% of GDP, so declining from about 8% of simulative impact last year, but still there, so the government sector will keep it, the economy bubbling to a certain degree. Private sector has picked up significantly, first half showed something like 18% increase year-on-year, domestic consumption also about 6-7% up from last year, agricultural sector income still good, so it is not just exports, but if China were to significantly weaken, without a doubt, that would have an impact, a major impact on all the Asian economies.

Soong: A lot of private analysts have noted that there has been a very sharp ramp up in foreign buying in papers in the case of Thailand as well as Indonesia, and Korea. Do you feel that Thailand is in this kind of situation, because word is, that if you are, and you are forced to play catch up very quickly, that foreign money could exit as easily as it came in?

Chatikavanij: Well, we have seen two rate increases now, below 1.25% to 1.75% now. I mentioned earlier that there is expectations of maybe another 25 places point increase for what remains of the calendar year. It pretty much depends on the economic indices that will come out over the next month or so, in my opinion. If there are signs that the global economy is to turn negative in a significant manner, then it might be reason enough for the bank of Thailand to maybe have another increase, and then wait and see from there on, because the year gap and the baht is increasingly wide and there is no obvious window of when the US rate will begin to increase, given the weakness of their economy, The baht itself of course has strengthened against the US Dollar, about 5% this year. That is not exactly out of whack, with the rest of the Asia; I think Malaysia has increase about 7%, even Indonesia by about 3%. We have actually weakened against the yen. In terms of our basket, our competitiveness has actually been retained.

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It will be another week of important data out of the U.S. this week.

Non-farm payrolls for August data out on Friday will give us an indication about the depth of the slowdown.

Consensus expectations are calling for a decline of 99,000. That's according to Reuters forecasts

And it reflects the unwinding of government census hiring

Data in July shows employment fell 131,000.

The closely-watched unemployment rate is expected to tick higher to 9.6 percent, compared to 9.5 percent in July.

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

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