India Keeps Rate Steady And New Zealand Still Suffers From Lower Exports

Daily Forex Fundamentals | Written by ecPulse.com | Jul 28 09 07:17 GMT |

New Zealand surprised markets today when its trade balance indicated an unexpected deficit during June, after demand on imports increased while exports shrank more than expected, indicating that the worst recession since in more than 30 years is still weakening the economy by hurting companies and households. The trade balance recorded in June a deficit by 417.0 million New Zealand dollars from the previous revised reading of 907.0 million of surplus and the expected 215.0 million surplus; on an annual basis the deficit reached to 3176 million in June from the previous -2973.0 million and the expected -2614 million. Imports rose to 3.62 billion New Zealand dollars in June from the previous 3.10 billion and more than the expected 3.20 billion, since Jetstar Airways Pty made some aircraft orders intending to start a new service; meanwhile, imports rose to 3.20 billion dollars in June, however less than the previous 3.96 billion and the expected 3.40 billion. The rise in imports is not based on the improvement in domestic consumption, which remains weak, therefore hopes were hanged on an increase in demand on exports since China is showing real recovery signs, while many other major economies are showing signs of stability, but this did not happen. As demand on various commodities remain low since the industrial production did not grow enough, therefore companies revenues remain low and this what determines it, then to curb investment and refrain from hiring, since this is only hurting the jobs sector and might keep the unemployment rate elevated. Moving to India, where its central bank kept their interest rate unchanged at 3.25%, just like some other countries like England and Japan; indicating that sharpest round of cuts might be ending, not only because signs of recovery have emerged but also because of fears the fears from inflation. As the Indian central bank raised their inflation expectations for this year which started on 31st of March to 5% from their previous estimations of 4%, due to not only to the rise in food and commodities prices but also because of the government spending plans, which might increase confidence, domestic spending and boost growth. The Indian central bank expects the economy to grow this year by 6.5% from the previous estimations of 5.7%, therefore the central bank should be careful regarding its next monetary policy step, since it might be hurting to the economy to continue cutting rates, while moving to a tighter monetary policy is still too soon since demand on exports and real growth is not seen yet. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk