Asian nations are delaying interest rate increases amid the chaos brought about Europe's debt crisis and the U.S. credit rating downgrade.
China will leave borrowing costs unchanged for the rest of this year. South Korea is expected to extend a pause for a second month tomorrow, while Indonesia stayed on hold yesterday, reports Bloomberg.
In India, a rally in bonds has signaled that investors no longer expect an interest-rate increase as soon as next month.
“The probability of a rate hike from the Reserve Bank of India has become very, very low,” Manish Wadhawan, Mumbai- based head of interest-rate trading at HSBC Holdings Plc. told Bloomberg. “Nobody’s expecting a rate cut in the near future, but it could very well be a pause situation.”
According to Bloomberg, Indonesia’s central bank left interest rates unchanged yesterday for a sixth month, maintaining the reference rate at 6.75 percent, while Malaysia and the Philippines last month opted to ask banks to set aside more cash as reserves.
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