The major emerging markets are under pressure to secure their currencies and restrict the outflow because of the tightening of global monetary policy, higher oil prices, and dollar strength. The central banks are worried as they have to consider inflation targets too amidst this instability. The rise in the crude costs has spotted policymakers in South-East Asia adding fuel subsidies as a strategy to fight inflation as their interest rate policy is very less consistent.
Even after looking at their economies and getting slammed, bankers all around South-East Asia are taking disparate policy stances. Malaysia and Thailand have planned to stick with a more forbearing plan, whereas the Philippines and Indonesia are in search of better needs to improve their policies for various reasons.
There seems to be no way in which inflation is going to decrease in the Philippines as the prices surged by 5.2% from one year in the month of June according to the data that was made available on Thursday. The agents are thinking of tightening the currency outflow as the markets emerging now are trying to increase the outflow as the peso has been one of the weakest currencies in Asia this year.
Indonesia’s bank surprised the world last week by increasing their benchmark interest rate by 50 points even after the previous two increments in the month of may. The officials have fixed their mind to stabilize their currency amidst the outflows. As the currency is under stress even after the third relief in inflation, the rise in the price is not the first priority of the central bankers in Indonesia.
Though the inflation cooled down a bit in the month of June in Thailand, the officers are planning to strengthen their monetary policy. Brent crude prices are at a high price of $80/barrel as the value of baht is down by 1.6% against the dollar this year.
Due to the unexpected resignation of the governor in Malaysia, inflation has caught less attention in the country. As Malaysia is a net energy exporter, increase in the oil prices has had no harmful effects on the inflation. Inflation is relaxing steadily after the interest-rate hike in the month of January, giving only a little time for them to tighten their monetary policy.