One big news widely reported in Taiwan right now is that the national flag of the Republic of China (R.O.C. Taiwan) appears on ISIS web site video. Above is a screenshot of the video with Taiwan's flag prominently displayed along side that of the U.S. and U.K. The flags are supposedly in alphabetical order by country name. The video was posted on ISIS web site on Wednesday, Nov. 25, 2015.
According to a partial video on a Taiwan TV news show, ISIS also sends this errie message:
Our number only increases with faith. And we are counting your banners, which our prophet says when it reaches 80, then the Blaze of War will find you.
You might wonder how ISIS came as far as seeing Taiwan as an equal threat as the U.S.? Taiwan's news media linked ISIS's sudden recognition of Taiwan to a statement made by U.S. President Obama at an Association of Southeast Asian Nations (ASEAN) summit in Malaysia last week. Obama said that Taiwan was one of the Asia-Pacific countries in a coalition against ISIS.
It is true that Taiwan's military and Special Forces have heavy American military DNA. Due to the constant threat from China across a narrow straint, Taiwan has relatively heavy military defense (for a small island). A lot of Taiwan's defense miliary technology is supplied by the U.S. companies. Taiwan regularly sends military personnel to train in the U.S. while Taiwan's media reported U.S. Navy SEAL also sends trainers every so often to train one of the island's elite special forces units.
In response to Obama's latest 'recognition', Taiwan governmnet simply said its current focus is on providing humanitarian assistance (i.e., We are NOT involved with Obama's 'Coalition'). Indeed, Taiwan's involvemetn with the chaos in the Middle East has been humanitarian aid to the region such as donating 300 prefabricated houses and nearly US$10 million in medical supplies to the refugees.
This stance is understandable as Taiwan had a ISIS panic attack when in February 2015, ISIS official Twitter channel twitted a picture of what looks like Taipei 101 Building (never confirmed) under atack. This out-of-nowhere recognition by ISIS has prompted the Taiwan government to step up security measures, while President Ma Ying-jeou (馬英九) urged the public not to panic (Good luck with that).
Ever since the Chinese Nationalists Party (KMT) retreated to Taiwan in 1949, it goes without saying that China has always viewed Taiwan as a renegade province that may be reclaimed by force if necessary. In the 60+ years since then, the tiny island country has transformed itself quite successfully thanks to a series of financial and economic reforms by the Nationalist Party (KMT), while millions were killed by Mao's Cultural Revolution and the Great Leap Forward. (On a side note, I'm not sure how the UK shadow chancellor thought it was funny to quote Mao in the Spending Review meeting.)
On the diplomatic front, Taiwan has sufferred many losses and betrayals. Despite the fact that the Republic of China (Taiwan) was one of the the five founding and PERMANENT members of the United Nation (U.N.), Taiwan was ousted by the U.N. on Oct. 25, 1971 when U.N voted to recongnize Mainland China and to expel the R.O.C Taiwan. Since then, U.N. only recognizes the Communist China as the only lawful representative of China and has rejected calls to make Taiwan a member. And Taiwan has almost always been excluded in any international economic pac (such as the TPP or AIIB) due to China's influeence.
Taiwan instead strives to maintain extensive unofficial ties with countries that do not recognise it, focusing on trade, investment, culture and cooperation in non-political areas. Today, Taiwan has more than 100 representative offices in over 70 countries, including four offices in Australia (hense this detailed Taiwan brief on Australian Government site).
The sad fact remains that currently only 22 states (most of them you have never heard of) in the entire world recognize Taiwan as the Republic of China (ROC). I guess the number should be 23 now, adding ISIS?
Citizens in Taiwan actually do not appreciate Obama's sudden 'warm and fuzzy' officially putting the island on ISIS radar. After all, the U.S. does not even recognize Taiwan nor has helped Taiwan in anything of real economic or polical benefits. And now Taiwan is a close ally of the U.S. in a coaltion against ISIS? But of course.
ISIS already angered China after executing a Chinese captive last week. Then, there's rising tension between China and U.S. over disputes in the South China Sea and The East Pacific. So when Obama opens his mouth 'recognizing' Taiwan, ISIS jumps on it just to provoke China even more.
This is a chess match between ISIS, China and the U.S. using Taiwan as a game piece. If ISIS strikes Taiwan (think the casualties at Paris in the much larger and stronger France), on whose hands will the blood be?
South Africa's central bank raised its benchmark repurchase rate by a further 25 basis points to 6.25 percent to prevent a rise in inflation expectations and more generalised inflation in light of growing downside risks from persistent exchange rate depreciation, higher electricity tariffs and a rise in food prices from drought.
The South African Reserve Bank (SARB) has now raised its rate by 50 basis points this year and said four members of its monetary policy committee had voted to raise the rate while two members had preferred to retain the policy stance.
"Complicating the decision was the deteriorating economic outlook," SARB Governor Lesetja Kganyago said, adding that the risks to the outlook were now considered to be on the downside while they were more of less balanced at the previous meeting in September.
While changes to SARB's forecast for inflation was only minor, Kganyago underlined that the upside risks were now more pronounced and expected to outweigh the possible downside risks from lower global oil prices and a subdued pass-through of changes to the exchange rate.
"While these factors cannot be dealt with directly through monetary policy, the concern of the Committee is that failure to act could cause inflation expectations to become unanchored and generate second-round effects and more generalized inflation," he said.
Despite the rate rise, SARB still considers its policy stance to be accommodative and future actions will continue to focus on anchoring inflation within the bank's 3-6 percent range while remaining sensitive to the fragile state of the country's economy.
The forecast for headline inflation this year was trimmed to 4.6 percent from a previous forecast of 4.7 percent and the forecast for core inflation was unchanged at 5.5 percent.
For 2016 inflation was seen at 6.0 percent, down from 6.2 percent and core inflation at 5.5 percent, up from 5.4 percent. For 2017 headline inflation was forecast at an unchanged 5.8 percent and core inflation at 5.4 percent, up from 5.3 percent.
Headline inflation in October was 4.7 percent, up from 4.6 percent in September.
The forecast for Gross Domestic Product growth in 2015 was trimmed to 1.4 percent from 1.5 percent and 1.5 percent for 2016 from 1.6 percent. For 2017 GDP was forecast to expand by an unchanged 2.1 percent.
In the second quarter of this year, South African's GDP grew by an annual rate of 1.2 percent, down from 2.1 percent in the first quarter.
The Rand has been on a weakening trend since mid-2011 when it was above 7 to the U.S. dollar. The rand has experienced volatile trading in recent years, not only due to expectations about U.S. monetary policy but also domestic factors, such as labor unrest.
Since the last meeting by the central bank's monetary policy committee in September, the rand has depreciated 3 percent against the dollar and today it was trading at 14.12 to the dollar, down 17.8 percent this year alone.
"As before, the extent to which Fed tightening has been priced into the exchange rate remains uncertain," SARB said, adding that volatility and overshooting of the exchange rate is likely ahead of and in the immediate aftermath of any change to U.S. rates.
The latest inflation forecast of the Bank shows a slight near-term improvement, while the medium-term forecast is marginally higher. Inflation is now expected to average 4,6 per cent in 2015, and 6,0 per cent and 5,8 per cent in the next two years. The anticipated breach of the upper end of the target range in the first quarter of 2016 is now expected to average 6,4 per cent, compared with 6,7 per cent previously. The trajectory for the rest of the year is also slightly lower than previously forecast, with the temporary breach in the fourth quarter of 6,1 per cent. The forecast for 2017 follows a slow downward trend, with inflation still expected to measure 5,7 per cent in the final quarter. The changes in the forecast are due to a lower starting point for the forecast, lower international oil price assumptions, and an adjustment to fees for higher education which are more or less offset by a more depreciated starting point for the real effective exchange rate.
Russia and Brazil remain in recession, while the strong performance of the Indian economy has been sustained following a number of structural reforms. The outlook for sub-Saharan Africa, while still positive, has deteriorated in the wake of lower commodity prices, and further weakening could create greater headwinds for South African manufactured exports to this region.
Although volatility in global asset markets has moderated amid improving risk sentiment, emerging market foreign exchange markets have been relatively volatile and vulnerable to capital outflows. In the past three months South Africa has also seen net portfolio outflows: since the end of August, according to the JSE data, non-resident sales of equities amounted to R25,9 billion, while net bond sales amounted to R5,9 billion.
The manufacturing sector recovered somewhat in the third quarter, mainly due to a surprisingly strong performance in September, and is expected to have contributed positively to GDP growth. However, the Barclays PMI declined further in October, and has been below the neutral level of 50 for three consecutive months, suggesting a constrained outlook for the sector. The mining sector is expected to subtract from GDP growth following a further contraction in the third quarter, while the continuing drought points to a third successive quarterly contraction for the agricultural sector. The outlook for the construction sector is constrained following significant declines in new building plans passed, and reflected in a 9 point drop in the FNB/BER Building Confidence Index.
Consumption expenditure is also constrained by the continued slow growth in credit extension to households by banks. Unsecured lending remains subdued, and is likely to be impacted further by the recently announced caps on interest rates by the DTI, while the decline in growth in instalment sale credit and leasing finance is indicative of the softer motor vehicle sales. Credit extension to corporates remains robust, particularly commercial mortgage finance, which reflects in part a switch away from funding in the bond market by property funds.
A higher food price trajectory has been incorporated in the forecast for some time, but food price inflation has surprised on the downside in recent months, despite sharp increases in maize and cereals prices earlier in the year. However, the increased intensity of the drought which has led to downward revisions of the domestic maize crop estimate, as well as incipient pressures evident in both the PPI and CPI, suggest that an acceleration in food price inflation is likely, adding to the upside risk to the inflation outlook.
Although the inflation forecast is relatively unchanged since the previous meeting, the upside risks to the inflation outlook are more pronounced. As noted, these risks relate to the persistent exchange rate depreciation, electricity tariffs and food prices, and are assessed to outweigh possible downside risks from lower international oil prices and subdued exchange rate pass-through. While these factors cannot be dealt with directly through monetary policy, the concern of the Committee is that failure to act could cause inflation expectations to become unanchored and generate second-round effects and more generalised inflation. Although core inflation has remained steady and inflation expectations to date have been relatively anchored, they remain at uncomfortably elevated levels.
Despite the increase, the MPC still views the monetary policy stance to be accommodative. The continuing challenge is for monetary policy to achieve a fine balance between achieving our core mandate of price stability and not undermining short-term growth unduly. Monetary policy actions will continue to focus on anchoring inflation within the target range while remaining sensitive, to the extent possible, to the fragile state of the economy. As before, any future moves will therefore be highly data dependent."
Japan's central kept its monetary policy stance steady, confirming that it will increase the country's monetary base by about 80 trillion yen on an annual basis, and repeated that it expects the economy to continue its moderate recovery despite exports and production being hit by the slowdown in emerging economies.
The Bank of Japan (BOJ), which embarked on Quantitative and Qualitative Easing (QQE) in April 2013 and expanded the target by 10-20 trillion yen in October last year, also repeated that it will continue with QQE with the aim of reaching its target of 2 percent inflation.
Last month the BOJ once again pushed back its expectation for when inflation will reach its target to the second half of fiscal 2016 from the first half of fiscal 2016, which begins April 1.
The BOJ and the government's efforts to boost economic growth and inflation has been dealt a setback by the fall in oil prices and the slowdown in China, with the economy falling into its fourth recession in five years and inflation hitting zero percent in September.
In the third quarter of this year Japan's Gross Domestic Product contracted by 0.2 percent from the second quarter, the same result as in the second quarter. On an annual basis the economy expanded by 1.0 percent, the same rate as in the second quarter.
In last month's semi-annual economic outlook, the BOJ cut its forecast for economic growth in the current 2015 fiscal year to an average of 1.2 percent and to 1.4 percent for fiscal 2016, with growth in fiscal 2017 then expected to fall to only 0.3 percent as consumption is once again is likely to be hit by a planned increase in sales tax on April 1, 2017.
The forecast for inflation in the current fiscal year was cut to 0.1 percent and to 1.4 percent for fiscal 2016.
The Bank of Japan issued the following statement:
[Note 1] Voting for the action: Mr. H. Kuroda, Mr. K. Iwata, Mr. H. Nakaso, Ms. S. Shirai, Mr. K. Ishida, Mr. T. Sato, Mr. Y. Harada, and Mr. Y. Funo. Voting against the action: Mr. T. Kiuchi. Mr. T. Kiuchi proposed that the Bank will conduct money market operations and asset purchases so that the monetary base and the amount outstanding of its JGB holdings will increase at an annual pace of about 45 trillion yen, respectively. The proposal was defeated by a majority vote.
[Note 2] Mr. T. Kiuchi proposed that the Bank will, with the aim to achieve the price stability target of 2 percent in the medium to long term, continue with asset purchases and a virtually zero interest rate policy as long as each of these policy measures is deemed appropriate under flexible policy conduct based on the examination from the two perspectives of the monetary policy framework. The proposal was defeated by an 8-1 majority vote. Voting for the proposal: Mr. T. Kiuchi. Voting against the proposal: Mr. H. Kuroda, Mr. K. Iwata, Mr. H. Nakaso, Ms. S. Shirai, Mr. K. Ishida, Mr. T. Sato, Mr. Y. Harada, and Mr. Y. Funo.
Hungary's central bank left its base rate steady at 1.35 percent, as expected, and repeated its guidance from October that it would maintain the current rate "for an extended period" as long as its current assumptions are consistent with inflation returning to its target.
The National Bank of Hungary (MNB), which ended its easing cycle in July after cuts this year totaling 75 basis points, said the country's economy continues to grow but there is still unused capacity that is having a disinflationary impact and inflation remains below its target.
Hungary's economy expanded by 0.5 percent in the third quarter, the same rate as in the first and second quarters, for annual growth of 2.3 percent, down from 2.7 percent in the second quarter, and below expectations due to slower external demand that hit industrial production.
Domestic demand continues to contribute to growth, the MNB said, but government investment is likely to fall as funding from the European Union drops. But this is expected to be offset by a gradual pick-up in private sector investment and the central bank's Funding for Growth schemes.
Hungary's inflation rate returned to positive territory in October with headline inflation rising to 0.1 percent compared with minus 0.4 percent in September and zero percent in August.
Core inflation - 1.5 percent in October - is expected to rise gradually due to higher wages and demand but the MNB repeated that the persistently low cost environment will contain consumer prices so they will first rise to levels around the inflation target at the end of the forecast horizon.
Last month the bank's deputy governor, Marton Nagy, said the central bank may keep rates at their current level until 2018 or even 2019, and first expects to reach its inflation objective by the end of 2017.
The MNB targets inflation at a midpoint of 3.0 percent, within a range of plus or minus 1 percentage point.
The National Bank of Hungary issued the following statement:
Kenya's central bank left its Central Bank Rate (CBR) unchanged at 11.50 percent, as expected, saying the current policy measures "are appropriate to maintain market stability and anchor inflation expectations."
The Central Bank of Kenya (CBK), which has raised its rate by 300 basis points this year, said recent "turbulent conditions" in financial markets had now abated and a decline in 3-month annualized non-food, non-fuel (NFNF) inflation indicated "moderating demand pressures."
Last week CBK Governor Patrick Njoroge said the central bank's tighter policy had helped bring down inflation expectations and inflation was "back in control," raising expectations that the bank would maintain rates today.
On Oct. 13 the central bank placed Imperial Bank Ltd, the country's 19th largest bank, in receivership for a year due to "unsafe and unsound business conditions," worrying some of its depositors while there was also pressure in markets due to the government's borrowing plan.
Two days later the central bank sought to calm market concern, saying the banking system was safe and robust and it was ready to use all instruments to provide adequate liquidity.
Kenya's headline inflation rate rose to 6.72 percent in October from 5.97 percent, but this remained within the government's target range while NFNF inflation rose to 4.8 percent from 4.7 percent due to an increase in some food prices and the comparison to last year.
The government targets inflation in a range of 2.5 percent to 7.5 percent.
But the CBK said 3-month annualized NFNF inflation declined to 2.5 percent in October from 3.4 percent in September, and the foreign exchange market had also been stable since September while the current account deficit had narrowed on lower cost of oil imports and lower consumer imports.
Kenya's shilling began depreciating sharply in March this year but after hitting 106 to the U.S. dollar in early September, it has been firming since early October. Today the shilling was trading at 102.2 to the dollar, down 11.4 percent since the beginning of the year.
The central bank's foreign exchange reserves rose to US$6.777 billion, or 4.3 months of imports, from $6.116 billion at the end of September, with the increase due to purchases of foreign exchange on the market and funds from the government's syndicated loan, the CBK said.
The Central Bank of Kenya issued the following statement:
"The Monetary Policy Committee (MPC) met on November 17, 2015, to review market developments and the outcomes of its previous monetary policy decisions. Since the MPC meeting of September 2015, turbulent conditions emerged in the financial markets, primarily due to pressures on the Government borrowing plan and the placement of Imperial Bank Limited into receivership. These adverse conditions have now abated. The following developments were also noted:
In September and October 2015, liquidity conditions were tight with short-term interest rates remaining above the Central Bank Rate (CBR). The significant rise in Treasury bill rates also reflected Government domestic borrowing. However, a notable improvement in liquidity conditions has been recorded in November, with the interbank and Treasury bill rates declining. The distribution of liquidity was also enhanced through Reverse Repos, thus addressing the temporary shortages in segments of the market.
The fiscal measures taken by the National Treasury, including the issuance of a syndicated loan in November, have eased pressures on Government domestic borrowing and interest rates. The Central Bank of Kenya (CBK) is working closely with the National Treasury to strengthen the coordination of monetary and fiscal policies to support overall macroeconomic stability.
Although the banking sector is liquid and well capitalized, credit and liquidity risks— largely from market segmentation—remain. The CBK is closely monitoring the sector and continues to address and support financial stability. In particular, it notes the recent reduction in short-term interest rates and expects them to be transmitted to commercial lending rates.
Overall month-on-month inflation increased to 6.7 percent in October 2015, from 6.0 percent in September, but remained within the Government target range. Month-onmonth non-food-non-fuel (NFNF) inflation rose marginally to 4.8 percent in October from 4.7 percent in September. The rise in inflation was largely due to increases in the prices of some food items, and a significant base effect. However, the 3-month annualised NFNF inflation declined to 2.5 percent in October from 3.4 percent in September, indicating moderating demand pressure due to the impact of the monetary policy measures.
The foreign exchange market has been stable since September supported by CBK’s monetary policy operations. Furthermore, the current account deficit narrowed, mainly due to a lower oil import bill, and a slowdown in consumer imports. Diaspora remittances remain strong.
The CBK’s foreign exchange reserves stands at USD 6,777.2 million (4.3 months of import cover) from USD 6,115.9 million (3.9 months of import cover) at the end of September. The build-up in reserves was supported by purchases of foreign exchange from the market and proceeds of the Government’s syndicated loan. These reserves, together with the Precautionary Arrangements with the International Monetary Fund (IMF), continue to provide an adequate buffer against short-term shocks.
The CBK’s Market Perceptions Survey of November 2015 showed that private sector firms expect growth to be resilient in 2015 and to pick up in 2016 supported mainly by infrastructure investments. The Survey also showed that inflation expectations are moderating supported by lower oil and food prices. However, respondents flagged a rise in U.S. interest rates as a risk to the inflation outlook through its impact on the exchange rate. In addition, the El Niño rains remain a threat to stability of food prices if it disrupts the food supply chains.
Global economic growth has been weaker than expected, but indications are for a gradual pickup in 2016, driven mainly by the U.S. economy. However, the prospects for slower growth in China could lower growth in emerging and frontier market economies. In addition, the financial markets remain uncertain in respect of the timing of the increase in U.S. interest rates and the easing of monetary policy in the Euro Area.
The Committee concluded that the monetary policy measures in place are appropriate to maintain market stability and anchor inflation expectations. The MPC therefore decided to retain the CBR at 11.50 percent. The CBK will continue to use the instruments at its disposal to maintain overall price and financial sector stability. "
Indonesia's central bank maintained its benchmark BI rate at 7.50 percent but lived up to its guidance from last month that it had room to ease its policy by lowering the reserve requirement by 50 basis points to 7.50 percent to "boost bank financing capacity to support escalating economic activity during the third quarter and beyond."
Bank Indonesia (BI), which cut its rate by 25 basis points in February, also repeated its view from October that continued improvement in macroeconomic stability is "making room for monetary policy easing" and that it remains confident that inflation will be at the lower end of its target while the current account deficit is seen at 2 percent of Gross Domestic Product.
However, BI is also acutely aware of the uncertain conditions in global financial markets from the expected increase in U.S. rates along with what it described as "the diversity of monetary policies form ECB, BoJ, and PBoC," and said it would "remain vigilant in easing its monetary policy," tempering any expectations for a series of rate cuts.
The BI's guidance from October had raised expectations among some economists that it would ease its policy stance today while others had expected the BI to keep its policy steady given the concern that the rupiah's exchange rate could weaken in response to a rate cut, dealing a setback to the central bank's efforts to bring down inflation following a jump last year after the government cut fuel subsidies, pushing up fuel prices.
Indonesia's inflation rate immediately jumped to 8.36 percent in December last year and has remained well-above the BI's target of 4.0 percent, plus/minus 1 percentage point this year.
But in October the inflation rate eased to 6.25 percent from 6.83 percent in September, for a year-to-date rate of 2.16, BI said, adding that core inflation eased further to 5.02 percent in October, reflecting appreciation of the rupiah, limited domestic demand and anchored inflation expectations.
Last month the rupiah appreciated after renewed optimism about the economic outlook for the country following new government policy packages, intervention by the BI to stabilize the currency, and what it described as a "dovish announcement" by the U.S. Federal Reserve in September.
During the third quarter the rupiah appreciated on average by 5.35 percent to 13,873 to the U.S. dollar but it is still down 9.4 percent this year, trading at 13,737 today.
Indonesia's economy expanded by an annual 4.73 percent in the third quarter, up from 4.67 percent in the second quarter, due to higher government spending, but sluggish growth in trading partners and low commodity prices "precipitated a deeper contraction in exports," BI said.
Although it expects growth to continue in the fourth quarter as government infrastructure projects gains momentum, the BI said growth was projected "at the lower end of the 4.7-5.1% range for 2015. Last month the BI had only forecast growth in the 4.7 to 5.1 percent range.
For 2016 growth is expected to increase to 5.2 to 5.6 percent.
Bank Indonesia issued the following statement: